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Blockchain 101: Your Easiest Guide to Proof of Stake Consensus Mechanism

Intermediate Apr 7, 2023

The Beginner’s Guide to the Proof-of-Stake

What Is Proof of Stake (PoS) in Crypto?

Proof Of Stake (PoS) in crypto is among the several consensus mechanisms used by blockchain networks to achieve a distributed consensus. Consensus mechanisms, moreover, are what we call the stack of protocols that allows a network of nodes to agree on the blockchain’s performance, as well as incentivize these nodes ensuring the efficiency of the network.

Furthermore, while Bitcoin uses the Proof of Work mechanism, Ethereum, on the other hand, uses the Proof of Stake mechanism. 

The Proof-of-Stake consensus mechanism is where validators stake capital (ETH) into a smart contract in the Ethereum blockchain. The validators are responsible for the proposal and validation of blocks in a Proof of Stake blockchain. Moreover, these participants with stakes are selected randomly as validators, depending on how much they have staked. These validators should ensure to attest that the blocks are verified. Only with adequate attestations would a block be added to the blockchain. Afterward, the validators receive rewards for these crucial tasks.

Furthermore, in Proof of Stake mechanism, offers a better node level of decentralization compared to the Proof of Work mechanism. What’s more, it gives improved scalability solutions like sharding.

Importance of Proof of Stake

One of the key highlights of the Proof of Stake mechanism is its freedom from mining. In this consensus, validators do not need an immense amount of computational power when mining blocks. 

Also, it gives validators the task to generate blocks when selected and even if they are not selected, they can validate the proposed blocks—attesting—and still receive rewards for this task.

Issues with Proof of Stake

Some find the Proof of Stake consensus a bit new and less battle-tested compared to its predecessor, Proof of Work.

Also, trailers find the Proof of Stake more complex to implement. Users even need to run three (3) pieces of software to participate in the Ethereum Proof of Stake consensus.

Cryptocurrencies Using Proof of Stake

Furthermore, when a cryptocurrency uses the Proof of Stake mechanism, they use staking rather than mining. 

Some of the major cryptocurrencies using the PoS consensus are:

  • Ethereum
  • Cardano
  • Solana
  • Polkadot


Nonetheless, the PoS consensus algorithm has had a significant impact on how we view cryptocurrencies today.

With that said, stay tuned to learn more about everything blockchain!

101 blockchains

101 Blockchain: Your Easiest Guide to Proof of Work Consensus Mechanism

Intermediate Jan 17, 2023

Proof of Work (PoW) in Blockchain, Explained

Cryptocurrencies use the Proof of Work (PoW) consensus to verify the accuracy of new transactions that blockchains record continually.

This Proof of Work consensus mechanism replaces the centralized governing of traditional systems. Instead, it relies on a distributed network of participants to validate all transactions coming into the blockchain, and at the same time, add them as new blocks on the chain or network.

More so, this type of consensus chooses which of the participants (called miners), can handle the lucrative task of verifying transactions and new data, as well as solving mathematical problems and complex equations that prevent the network from external attacks and hacks. Also, this allows miners to receive rewards in crypto—whenever they accurately perform and execute the said tasks.

Additionally, cryptocurrency widely uses the PoW mechanism. In fact, Bitcoin uses this consensus algorithm, wherein miners need to mine the new blocks and tokens to validate the transactions coming into the chain. In return, they are rewarded with bitcoin or altcoins as mentioned above.

Importance of Proof of Work

It is known that Satoshi Nakamoto introduced the very first cryptocurrency to the world around 2008. He did this by publishing the famous white paper regarding a digital currency based on the PoW protocol.

This white paper describes how a “peer-to-peer version of electronic cash” can solve the existing problems in online payments. Indeed, today we saw how cryptocurrency developed and introduced a new dawn for online payments. 

According to experts, this protocol solves the double-spend issue in a traditional payment. Moreover, it also provides a decentralized method of verifying transactions while promoting the highest level of securities. Not to mention, incentivizing the efforts that miners exert in verifying transactions and adding data on the chain.

Cryptocurrencies Using PoW

Analysts say that around 64% of the total market cap of cryptocurrencies uses the PoW mechanism. Some of the most popular ones are:

  • Bitcoin
  • Dogecoin
  • Bitcoin Cash
  • Litecoin
  • Monero

Issues with PoW Mechanism

As popular as it is, the PoW mechanism has also received criticism and backlash since its inception. One of the major reasons is its appetite for electric power.

Furthermore, PoW’s energy consumption exceeds the regular amount of electricity in a regular desktop computer—especially today, that bitcoin mining would require energy consumption that is equivalent to a standard home in nine years, just to mine one Bitcoin.

In hindsight, this intense computational energy demands in PoW make major outfits centralize mining operations. Moreover, this might result in manipulation and control of cryptocurrency operations for some.


Nonetheless, the PoW consensus algorithm has contributed so much to how we view cryptocurrencies today.

With that said, we will discuss what is Proof of Stake in the next article and differentiate it from the PoW mechanism. Stay tuned!

Blockchain 101

Blockchain 101: What Really Is Blockchain and How Does It Work?

Beginner Nov 8, 2022

We always hear the word blockchain—it’s everywhere. But, what is it, really? Why is it regarded as one of the most advanced technologies ever developed? Let’s find out.

Blockchain 101: What is a Blockchain?

In definition, a blockchain is a distributed ledger or database which is shared between nodes of a computer network. This database records transactions, stores information, and tracks assets. Moreover, assets can be anything virtual that holds value and can be traded on a blockchain network; this, reducing risks and cutting costs for everyone involved in the ledger and asset.

Key Elements of a Blockchain 

Distributed Ledger

Everyone involved in the transactions has access to the blockchain (distributed ledger, as defined above). The network participants share the same distributed ledger wherein transactions are only recorded once—eliminating any duplication efforts which cause problems in business networks.

Immutable Records

No participant in the distributed ledger is not allowed to change or tamper with any transaction after it is already recorded in the blockchain (distributed ledger). Even if a transaction contains an error, a new record or transaction shall be added to reverse it—nonetheless, both records are visible on the blockchain.

Smart Contracts

A set of rules, called Smart Contracts, are programs created to speed up transactions. They are stored on the blockchain and are executed automatically when the predetermined terms and conditions are met by the transactions. To put it simply, smart contracts in blockchain are used to automate the execution of the agreements so that the participants can be certain of the outcomes without an intermediary’s involvement or time loss.

How Blockchain Works

  1. As each transaction occurs, it is recorded in blocks of data. These transactions show the movements of assets. 
  2. Each block is connected to the blocks preceding and succeeding it. The blocks are securely linked together to prevent any block from alteration or having a block inserted between two existing blocks.
  3. The transactions are blocked together and are linked in an irreversible chain—a blockchain. Each additional block strengthens the entire blockchain; hence, making it immutable and tamper-resistant. This makes the ledger a network that all the members can trust.


To suffice, blockchain is all about immutable and unchangeable transactions recorded in blocks, executed by smart contracts, and linked together to create an irreversible chain.

There are many other technologies generated from the concept of blockchain technology—there is cryptocurrency, non-fungible tokens, metaverse, etc.

We will talk about it next time!

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Disclaimer: This article solely expresses the author’s thoughts, which may not reflect those of Hippo Wallet. Nothing in this article should be interpreted as investment guidance. Hippo Wallet encourages all users to do their research before investing in cryptocurrencies.