Instead, the cryptocurrency’s protocol has been implemented so that a BP’s “chances of being selected as the next rely specifically on the number of coins held and time in the form of coin age and some amount of luck.”Įxperimenting With Different Variations Of PoS: Delegated Proof-Of-Stake (DPoS)Īfter the introduction of Peercoin’s PoS algorithm, the developers of many other cryptocurrency platforms began experimenting with various implementations of PoS-based blockchain consensus mechanisms. Moreover, Peercoin’s PoS consensus protocol does not require that BPs solve computationally difficult problems (which miners have to do on PoW chains). As noted in Peercoin’s official documentation, a BP with “a high coin age has a higher probability” of being selected to process the next block of transactions over a BP with a “low coin age.” In place of electricity, Peercoin’s PoS consensus mechanism uses “time as alternative scarce resource” to “emulate PoW competition.” In order to select the next BP to process batches of transactions, Peercoin’s consensus algorithm works by first multiplying the number of coins a BP has staked on the network by the number of days those coins have resided in their wallet.Ī BP who has staked a large number of coins for a long time will have a high “coin age.” By combining coin age with a randomization algorithm, Peercoin’s protocol selects the next eligible BP to validate sets of transactions.
Using Time Instead Of Electricity As An “Alternative Scarce Resource” As described in Peercoin University’s official blog post, the process of validating blocks of transactions is handled by Block Producers (BPs). Peercoin ( PPC) was the first cryptocurrency to implement a PoS-based blockchain consensus protocol in 2012. Partially due to problems associated with PoW, such as the enormous amount of electricity it requires to function, the proof-of-stake (PoS) consensus algorithm was proposed (for the first time) in 2011. These are being used to manage second and third generation blockchain networks. Beginning with the Bitcoin ( BTC) protocol which specified how a proof-of-work (PoW)-based consensus algorithm could be used to securely validate blocks of cryptocurrency transactions, there are now many different types of consensus protocols.
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