Proof of stake is a system used by the latest blockchain technology to validate every transaction on the platform in a transparent manner. It acts like a decentralized governing mechanism which makes sure that no one is allowed to tamper with any type of data on the blockchain.

Definition

As you might already know, decentralization is one of the biggest benefits of blockchain for anyone who uses it. There’s no one who can make rules and regulate the decentralized blockchain space. Every user participating in the consensus mechanism by staking their tokens on the blockchain plays his role in validating the transactions, and getting rewarded for doing that. This is how new blocks of information are added on the blockchains which use the Proof of Stake Mechanism.

Through this mechanism, a blockchain determines which node will be permitted to validate the next block of data on the blockchain. Making new blocks and validating transactions is a lucrative task as it rewards you with the same tokens as the ones you’ve staked.

Whenever all the participants on the Blockchain validate a transaction and store the data on the block, a consensus is reached. This is how the proof of stake system works in a nutshell.

In the PoS system, all the participants on a made agree to stake a certain amount of crypto tokens. This is made into a smart contract. In return to this, the Blockchain lets them validate new blocks of data. For doing this, the node is given a reward, which is then split into all the participants according to the percentage of share they had in the stake. You should always check crypto reviews before joining a node, because if the validation process is not done right, the participants can lose some, or all of their staked cryptocurrency as a penalty.