Money makes money, this is exactly the principle that PoS mining operates on, allowing you to mine coins without the use of farms and specialized equipment. The use of the PoS protocol began in 2011, in relation to the PeerCoin cryptocurrency. Subsequently, the mechanism became relevant for other coins. The owner of the currency, called the holder, blocks his capital during the voting period, artificially creating a deficit. Using the PoS protocol allows users to earn interest on the amount stored in their wallet. In fact, the holder of 1% of all funds receives an equivalent amount from all generated blocks for storing cryptocurrency in his own wallet, which is online.

General characteristics of the extraction method

Having found out the difference between PoS mining and what it is, it is not difficult to understand, and most importantly, it is easy to understand its advantages:

• no need to purchase equipment;
• minimizing energy costs;
• optimal use of resources in order to obtain maximum profits;
• transactions are characterized by a fixed commission fee, the amount of which does not depend on the amount of money involved in the transfer.

PoS was originally developed as a complement to the PoW protocol. It is a concept that guarantees the security of the network due to the total power of the computing systems of all users participating in the mining. The PoS system looked for vulnerabilities and optimized them, taking an attack that would allow one person to gain control of 51% of all coins as a critical level. This situation leads to an uneven distribution of capital.

In practice, pos mining involves accumulating the Nth number of coins in a wallet. They will begin to bring dividends 30 days after they were deposited into the account. Considering the current level of computational complexity during mining, the development of a block will take 2 months, and the reward to the capital holder will be 36% per annum. The process will start again after 30 days.

Attention! The first 30 days during which production is not carried out are also taken into account when calculating remuneration.

You can get many blocks by creating several virtual deposits containing equal amounts of coins. Withdrawing money does not reset the days. The user has the ability to select late transactions manually.

PoS mining (What's what?) - video

Shared mining pools - how it works

Using the poswallet.com service, participants gain access to cloud mining. You need to register in the system and top up your deposit in cryptocurrency, it works using the PoS protocol. The service offers users a Faucet section. It allows you to receive cryptocurrency for free and then invest it for PoS mining. You need to generate a wallet and select a faucet by solving the captcha and activating the process.

When using cranes, the following factors must be considered:

• indication using colors - red indicates a remote tap, green indicates the possibility of mining, and purple identifies functional but not active elements;
• It is allowed to use 1 tap no more than once every 24 hours;
• It is allowed to open no more than three taps within a quarter of an hour.

Using the Poswallet pool for PoS mining, you can mine cryptocurrency around the clock without wasting electricity and without even keeping the crypto client online. The pool charges a 1% fee when withdrawing money automatically. Here you can mine 56 types of currencies with the PoS concept.

Rules for calculating rewards and collecting commissions

The coins in the user’s wallet are designed to strengthen the network, and the older they are, the better it is for the system and guarantees greater profits for the owner. The calculation of remuneration is different for everyone, the following methods are mainly used:

1. Fixed reward – a certain amount of money per day.
2. Floating profit - depends on the weight of coins, which can increase over time or be redistributed evenly among network participants.

Profitability

Profitability from using PoS protocols varies between 0.5–20% and depends on the type of cryptocurrency.

The Proof-of-Stake protocol has a drawback that is expressed in the inevitable increase in the amount of currency, the number of which tends to infinity. Inflation can be avoided by developing the network and increasing the complexity of the algorithms used to calculate and open new blocks. A decrease in generation leads to a decrease in production, and eventually the total number of digital blocks will reach a limit. But until this point, the PoS concept will be profitable.

It’s easier to understand what PoS mining is by looking at examples and looking at the most popular cryptocurrencies that work according to this concept. A prominent representative of the system was the NovaCoin currency, which combined the PoS and PoW protocols. Each of the network blocks is characterized by the presence of personal complexity, which changes during its development. You can use the mined coins after receiving at least 520 confirmations.

The formation of PoS blocks occurs when the crypto client is activated automatically thanks to the Miner-SPU. Owners of funds are accrued an annual percentage of the amount of money stored on deposit. When making a transaction, a commission fee is required, which serves as a protective mechanism.

No commission is credited to anyone, and withdrawn funds are removed from the network, resulting in a reduction in the total number of coins. Previously generated blocks are divided in half in order to increase the number of inputs and to be able to use these blocks later. Spam protection is provided by limiting transactions to sizes less than 0.01.

You can understand in detail what pos mining is using Goldmine as an example. It suggests creating a passive source of income using the Arctic Core currency. You need to load 1 thousand ARC into your wallet to receive regular profits, calculated by the formula: (n/t) * r * b * a. Here the number of personal active accounts in the Goldmine system is taken into account. Their total number in the network and the size of the reward for generation is 25 ARC. Every day, miners mine 576 blocks, receiving an average of 45%.

Attention! It is possible to download and install special software that is regularly updated. If the user does not bother to complete the update in a timely manner, then his crypto-client is excluded from the list of participants to whose accounts the reward is transferred.

How to start working

You can start mining PoS cryptocurrency using the following step-by-step instructions:

1. Creating a wallet.
2. Purchasing currency;
3. Waiting for 1440 blocks to appear in the crypto client will take 24 hours.
4. Installation of the software client on a PC - launched through the run.bat file.
5. Wallet activation.

There is no need to purchase expensive equipment, making this method accessible to the vast majority of users. You can earn a lot by investing a large sum of money, since interest payments are small.

Is pos mining profitable? (video)

Read on to find out where it is most profitable to invest:

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Is passive income possible on cryptocurrencies and what is PoS? Many people have heard about cryptocurrency trading, since this topic receives the lion’s share of attention when it comes to making money in the cryptosphere. Trading is an active strategy with high risks and high rewards, accompanied by the emotional drama of sharp rises and falls in prices.

However, there is a quieter side to investing in cryptocurrencies that is often overlooked and worth paying attention to. Along with trading, the much more passive strategy of “buy and hold” is often mentioned, which implies a medium-term (from several months) to long-term (more than a year) time frame from the moment of purchase to sale. However, thanks to the Proof-of-Stake (PoS) consensus mechanism, which is becoming more and more popular, you can make money not only by selling, but also by holding the cryptocurrency itself.

By choosing the right crypto assets to invest in, you can easily receive dividends from them. In this article, we will look at some of these projects. The material will consist of 2 parts, and each of them will talk about the most interesting, in our opinion, cryptocurrencies for passive income.

Passive income and Proof-of-Stake

The Proof-of-Stake (PoS) consensus mechanism is essentially a lighter, more energy-efficient alternative to Proof-of-Work (PoW). Instead of using mining to discover blocks and validate transactions, PoS is similar to a lottery process, where each unit of cryptocurrency that is allocated by its owner to participation in the PoS consensus represents one lottery ticket.

In the simplest version of PoS (there are different variations), the owners of the cryptocurrency allocate it to a special mode where it participates in consensus and cannot be spent. When the blockchain needs to create a new block, wallets with allocated coins are randomly selected to verify the validity of that block and reach a consensus to include it in the blockchain. The more coins a certain wallet holds, the greater the chances of receiving such rights and, accordingly, receiving a reward from a confirmed block.

This mechanism not only significantly reduces the energy costs required for PoW consensus, but also creates an incentive for holders to invest in the cryptocurrency platform and use it on a regular basis. This is good for both the blockchain and the users, as they can earn a certain percentage of their assets on a monthly or annual basis. Such passive income can vary from a fraction of a percent to several tens, or even hundreds of percent per annum.

Choosing a cryptocurrency for PoS dividends

Finding a good cryptocurrency for PoS dividends is not as simple as it might seem at first glance. It's fairly easy to rank the top earners by interest accrual, but if the project doesn't have any underlying fundamentals, your investment can quickly lose value, even with dividends earned. After all, you're investing in the long-term success of the project.

Finding the right coin depends partly on personal taste and partly on the depth of your knowledge of the crypto sphere. It should be borne in mind that the crypto market often moves in unison, and even good projects sag along with the entire market. Many projects require a minimum amount of cryptocurrency required to begin participating in consensus and a mandatory continuous connection to the Internet of the device on which your wallet is installed. If you cannot provide both of these conditions, then such a project is clearly not suitable for you.

As with other forms of investing, the more information and knowledge you have, the better. Pick one coin that you think has potential, start small and add larger investments over time. Projects that lure you with high rates of passive income very often turn out to be a dummy. The more cryptocurrency advertising focuses on the passive component of income, the more wary one should be about such offers. Patience is the key to good passive income.

Our top cryptocurrencies for earning passive income using the PoS mechanism

The PoS coins we have selected are among the most stable sources of passive income on the cryptocurrency market. Your actual earnings will vary depending on a number of different factors, but if you are willing to try this strategy, the risk of making a mistake will be minimal.

The order of this list doesn't really matter. The list will be divided into 2 parts, the second of which we will consider in the continuation of this material.

NavCoin (NAV)

NavCoin is a fork created in 2014 as a non-profit project with completely open source code. It was also one of the earliest cryptocurrencies to use Proof-of-Stake and has remained a reliable source of passive income ever since.

All you need to start receiving dividends with NAV is the Core Wallet app installed and staking mode enabled. Just keep your NAV in your wallet and receive your dividends. Your device must remain turned on and online, but since PoS does not require significant power consumption, it can be run on even the most low-power computers, such as a Raspberry Pi.

NavCoin has a long history (for a cryptocurrency) and an active community. Making money passively with it is simple and convenient. NAV owners can count on a return of around 5% per annum.

NEO (NEO)

NEO is a smart contract platform often referred to as "Chinese". There is information about this project on our website, pay attention to it if you want to dive deeper. In short, NEO aims to compete for the main place on the Olympus of smart contract and ICO platforms

Owning NEO allows you to generate GAS, the internal currency of the platform, which operates on a dual-currency model. GAS is used to pay fees on the NEO blockchain. GAS fees are charged for each action and then distributed proportionally among the PoS participants.

The more NEO you allocate, the more GAS you generate.

NEO can generate GAS on almost any wallet that supports this cryptocurrency, including some crypto exchanges (we have one of each). Please note that not all exchanges support GAS generation, so you are better off using the official NEON wallet or storing NEO in cold storage.

You don't need to have a constantly connected device with a wallet to earn your GAS, making NEO one of the easiest ways to earn passive income.NEO is a pretty strong project with good long-term prospects. You can earn from 4-6% per annum.

Lisk (LSK)

The Lisk platform allows developers to build decentralized applications using JavaScript, one of the world's most widely used programming languages. It is quite similar to Ethereum, but with a greater focus on ease of use and adaptability.

Lisk uses a dPoS (Delegated Proof-of-Stake) system, which is slightly different from standard PoS. LSK owners do not directly participate in the consensus mechanism, but vote for 101 representatives. These representatives participate in the consensus, receiving all the rewards from the blocks and giving some of them to those who voted for them. Representatives return between 6.25% and 100% of their income.

Voting for Lisk representatives is best done using the Lisk Nano wallet. The process is a little more complicated than other projects, so you will need to understand this process in more detail, since there is enough information on the Internet.

Passive income varies by member and varies from month to month, but many users report dividends in the region of 10% of their initial investment after a year. It is also worth noting that to maximize profits, you need to bet at least 400 LSK. The process itself does not require devices to be turned on at all times, as your participation is limited to voting.

Ark (ARK)

Ark is not just a cryptocurrency; it's a whole ecosystem. The project aims to unite disparate blockchains to communicate with each other using SmartBridge technology. This ideology means that Ark has no competitors - it only has partners.

Similar to Lisk, Ark uses a dPoS system that relies on ARK holders as voters and representatives as participants in the consensus mechanism. Ark has 51 representatives. Like Lisk, selected representatives verify transactions, find blocks, receive rewards, and then distribute a percentage to users who voted for them.

In general, everything here is the same as with Lisk. A good passive income figure for serious investors is 10-12% per annum. The official Ark blog has a complete voting guide to help you get started.

Reddcoin (RDD)

Reddcoin is a cryptocurrency created for use in social media. The project integrates micropayments into social networks so that content consumers can support creators directly through tips.

Have you read the article or watched the video and liked it? Send some RDDs as a bonus to its creator. Reddcoin has 0% transaction fees, making it an excellent solution for micropayments.

Like the cryptocurrency itself, receiving dividends from RDD is quite simple. Start by downloading the Reddcoin Core wallet for any PC, and then get some RDDs from it. As soon as the wallet is synchronized with the blockchain and your coins have been on it for more than 8 hours (“ripe”), your earnings have begun.

Everything is quite simple, but beginners may encounter some difficulties. Synchronization with the blockchain may take several days, and your wallet must always remain online to receive income.

You can earn approximately 5% per year.

This concludes the first part of the article. See you in part two.

To start earning cryptocurrency, you don’t have to buy expensive video cards or ASICs that can quickly perform hash calculations with minimal energy consumption. There is PoS mining - another option for mining coins, which does not require expensive hardware at all. To earn money, you only need to have in your wallet a cryptocurrency from a system that supports PoS (Proof-of-Stake or “Proof of Stake”). Earnings are similar to investing in a bank deposit - the more crypto coins are stored in the account, the higher the income from mining.

What is PoS mining

Initially, “post-mining” appeared as an algorithm for protecting cryptocurrency networks from hacking. The first cryptocurrency - bitcoin - supports PoW mining, or Proof-of-Work. The phrase translates as “proof of work.” Participants in the system receive bitcoins for the fact that their computers calculate hashes - passwords that are used to sign new blocks of transactions in the cryptocurrency registry (blockchain).

The higher the calculation speed (hashrate), the greater the reward and the greater the likelihood that the system will “entrust” the calculation of the next hash to the holder of large capacities. However, the so-called “51% vulnerability” was discovered quite soon in this algorithm. It consists in the fact that if one of the network participants is able to take possession of computing power exceeding half the hashrate of all miners, the system will entrust the calculations to him. The problem here is not only that other miners will lose their earnings. During the generation of the next key, the owner of 51% can use his funds twice. This undermines trust in the system.

The popularity of Bitcoin itself perfectly protects it from the “51% vulnerability.” There is too much power involved in mining for anyone to provide more power than all the participants combined. However, lesser-known PoW cryptocurrencies are quite vulnerable. Therefore, another algorithm was proposed, which was originally planned to be used to increase security.

In this case, the reward for the issue is accrued to the holders of coins in proportion to their share in the total quantity. If the owner of the wallet has 2% of the entire cryptocurrency of the system, then when new coins are issued he will receive 2% of them.
To mine PoS cryptocurrency, you just need to be a participant in the system and store coins without movement in your wallet. You don’t have to buy ASICs to mine Bitcoin; cryptocurrencies on POS allow you to earn money with minimal investment.

The disadvantage of this method of earning money is that you cannot make transactions and the electronic wallet must be online all the time. If the first problem can be dealt with by allocating a separate wallet for PoS mining, then the second condition in the PoS algorithm causes serious problems for ordinary users. If there are interruptions in power supply or Internet access, the wallet will “go offline” and earnings will stop. To avoid this, cloud PoS mining is used, in which users can pool their funds and earn money using crypto wallets that are always online.

How to start PoS mining

To start earning cryptocurrency using the PoS algorithm, you need very little.

• Choose a cryptocurrency that supports PoS (this includes some systems using the SHA256 and SCRYPT algorithms).
• Create a wallet by registering on the system website.
• Buy electronic currency through a stock exchange or exchange site.
• Install the client program on a PC or remote server.
• Wait a day until the system has generated a sufficient number of blocks in the system.
• Activate wallet.

After activating the wallet, the coins contained in it will begin to generate profit in proportion to their total quantity. To do this, you need to hold them on your account for 30 days. These days are included in the calculation of remuneration.

In general, profit depends on several factors: the time the coins are in the account, their quantity, specific weight and volume of issue for the period.

It is worth noting that if you choose a cryptocurrency successfully, you will be able to earn money not only through mining, but also due to the increase in the value of coins on the exchange.

It’s better to have several wallets to diversify risks and reduce the chance of missing out on a cryptocurrency that will break into the “tops.”

Difference from PoW

Systems with PoW mining have significant disadvantages that the PoS algorithm does not have:

• Useless calculations. The enormous computing power involved in solving cryptographic problems works only for the sake of the “proof of work” itself. As a result, a large amount of resources (both energy and video cards with ASICs) are wasted;
• Gradual centralization. More than 80% of the hashrate comes from Chinese users. This theoretically encourages miners to unite to implement a 51% attack in order to capture the entire emission and make double payments.

PoS mining does not require constant calculation of hashes, which wastes electricity, and the system is protected from 51% attacks due to two factors:

• concentrating 51% of the currency in one hand would be too expensive;
• the holder of most of the currency will be the first to suffer in an attack.

The advantages of this way of earning money are as follows:

• there is no need to purchase expensive specific equipment;
• energy costs are minimal;
• transaction commission does not depend on the transfer amount.

Pos-mining allows you to optimize the use of resources and get maximum profit with a minimum investment.

Coins for POS mining

The most popular coins at the moment are: LEOcoin, ReddCoin, ClubCoin and NovaCoin. If you don’t want to take risks by investing in developing projects, then you should try PoS mining of these cryptocurrencies.

• The creators of NovaCoin promise a return of 100% per annum. The system has a capitalization of more than $8.5 million and is traded on 8 exchanges.
• ClubCoin, with a yield of 20%, is traded on only 2 exchanges, but the famous Bittrex is one of them. The capitalization of the system is over 43 million dollars.
• ReddCoin with a low yield of 5% per annum is more interesting as an investment with growth prospects. With a capitalization of over $41 million, it continues to grow. It is traded on Bittrex and 7 other exchanges.
• LEOcoin provides a 20% return when owning more than 50 thousand coins. Coins are traded on 5 exchanges, and the capitalization of the system exceeds $24 million.

Cloud PoS

The problem with PoS mining is that the owner of the wallet must maintain a constant connection to the server, and the profitability depends on the amount held in the account. To increase profitability and solve the problem of holding a wallet online, cloud services have been created that unite those who want to earn cryptocurrency.

The mining server has registered cryptocurrency wallets with support for post-mining and a reliable Internet connection. Owners of coins transfer them to a cloud service account, where they are accumulated to ensure maximum profitability. The profit received is distributed among investors in proportion to the size of their deposits.

Service fees allow server owners to pay for equipment maintenance and make a profit from their activities.

Investors in cloud mining also do not lose money thanks to the advantages that the service provides:

• the profitability of investments increases due to the accumulation of a large number of crypto coins in one wallet;
• There is no risk of losing profits due to a blackout of the Internet or power supply.

Cloud services for PoS mining minimize the barrier to entry, allowing even those who do not have a computer with stable access to the Internet to join cryptocurrency mining.

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Dividends, interest, and passive income from cryptocurrencies attract many investors. What determines the profitability of coins and what algorithm ensures the profitability of coins.

PoW and PoS are types of algorithms that determine how the distributed agreement problem will be solved. Ultimately, this determines how the block reward will be distributed. In PoS, the more currency a miner has in his wallet, the greater the likelihood of generating a new block into the common chain.

What is POS

The implementation of the PoS protocol in cryptocurrencies allowed coin holders earn interest from the amount that is in their wallet. This happens as follows: if your wallet contains, say, 1% of the total amount of coins mined by the community, then you will receive 1% of all generated blocks just for holding this cryptocurrency in your wallet. This is very similar to a bank deposit where you receive a certain percentage once a year for having your money in the bank account. So PoS works on the same principle. Only the time intervals here can be completely different.

Proof of stake (aka POS) has many technical advantages, but besides this, “proof of stake” provides various economic benefits/dividends to its holders by supporting a masternode or placing their coins in a special wallet.

This approach offers both security benefits and the ability for users to earn profits or dividends on their deposited funds. In this consensus model, what matters is the number of coins you hold in your wallet, as we discussed above. Accordingly, the larger the size of your deposit, the greater the chance that you will not crash the system (because you will have too much money that will become worthless if the system is compromised).

To put it in perspective, you can earn money simply by placing a lot of PoS cryptocurrencies in your wallets.

Does PoS have a future?

It is believed that PoW is a temporary, vulnerable solution, while PoS is the next stage in market development.

For several years now, there has been an active discussion of the transition to PoS for the second largest cryptocurrency by capitalization. It is obvious that the concept of PoS and its application is at the initial level, because... they have a fairly large and active community of developers, large foundation resources, and it took them more than 2 years to work out the application of the concept, and the implementation is still underway. But if the application of the technology proves to be effective in 2018, we could see significant growth in PoS coins overall.

Top 9 most profitable coins on PoS

1. DASH is one of the first cryptocurrencies firmly in the top 10 by capitalization. It was one of the first to use the PoS mechanism to confirm transactions.

DASH allows holders to receive dividends in the form of this currency for supporting masternodes. But there is also a peculiarity - you will need at least 1000 units of DASH to launch a masternode. At the time of writing, 1 DASH = 296 USD. So, if you want to invest 296,000 USD to receive an annual return of 7.5% plus the possible increase in the price of DASH in the future, then this is the optimal option, DASH is a good option for a long-term investment.

Ticker – DASH

% per annum – approximately 7.5%

2. NEO, formerly known as Antshares, is the first Chinese open-source blockchain project that positions itself as a “distributed network for the smart economy.”

The income you receive comes in the form of NeoGAS, which is currently worth 17.85 USD (at the time of writing).

Ticker – NEO

% per annum – approximately 5.5%

3. PIVX– abbreviation for Private Instant Verified Transaction. This is a PoS cryptocurrency that focuses on privacy and security of money transfers.

The peculiarity of this currency is that in addition to the standard income from placing coins on the blockchain, you also have no restrictions on the number of funds you can place (you can enter with both a small and a large number of coins).

Another way to make money with PIVX is to run and maintain a masternode (costs from 10,000 PIVX), which gives you another 5% per annum on your deposit.

Ticker – PIVX

% per annum – approximately 4.8%

4. OkCash is another PoS cryptocurrency that stands out for its focus on fast microtransactions.

Among all other currencies considered, it has the highest yield. There are also no deposit limits. You simply deposit coins into the deposit wallet and start earning OkCash coins at a fixed percentage with rewards for creating blocks.

Ticker – OK

% per annum – 10%

5. NAV Coin is the first cryptocurrency to have a dual blockchain for private transactions. There are no deposit limits.

Ticker – NAV

% per annum – Up to 5%

7. reddcoin aims to become a reward cryptocurrency for social networks.

You can thank someone using Reddcoin for any content among various social networks, or you can make a deposit to a wallet, which gives a nice profit. Like many other coins, there are no deposit restrictions.

Ticker – RDD

% per annum – Approx 5%

9. Neblio is a secure decentralized platform for enterprise applications and services, based on its own blockchain.

Ticker – NEBL

Block reward – 10% of Staked NEBL

What coins are still worth paying attention to?

• BlackCoin (BLK/BC)– currently works only in PoS format. Fixed remuneration for participation in equity financing 1.5 BLK + commission depending on the time of participation. The currency is present in large volumes and has an active community.
• CoinMagi (XMG)– available in M7M, PoW and PoS formats, income from 5% per annum. The currency is present on Bittrex and Poloniex in small volumes, but has an active community.
• Diamond (DMD)), Diamond-Groestl, 0.2 DMD PoW, 25% per annum when working in PoS format with subsequent decrease. The currency is listed on Bittrex and has an active community.
• Mintcoin (MINT), currently only works in PoS format. 10% per annum followed by a decrease down to 5%. The currency is present on Bittrex in large volumes, but has an active community.
• OK Cash (OK), currently only works in PoS format. 20% per annum with subsequent decrease down to 6%. The currency is represented on Bittrex in small volumes and has a small community.
• HyperStake (HYP), Currently it only works in PoS format. Up to 750% per annum with a limitation regarding the number of coins involved in equity financing. The currency is represented on Poloniex in small volumes, but has an active community.
• Hyper (HYPER), currently only works in PoS format. 5% per annum followed by a reduction to 2%. The currency is present on Bittrex in small volumes, but has an active community.
• Quotient (XQN), currently only works in PoS format. Up to 1618% per annum when working in PoS format. The currency is presented on Bittrex in small volumes.
• ZeitCoin (ZEIT), currently only works in PoS format. 15% per annum followed by reduction to 5%. The currency is presented exclusively on large exchangers in small volumes, but at the same time has an active community.

Alexey Russkikh

There is a lot of information on the Internet about what PoW and PoS are, how protection is built and who has a better chance of receiving a block reward. But there is almost no information on how these types of algorithms are related to PoS mining. Sit back comfortably, now we will tell you everything.

general characteristics

PoW and PoS are types of algorithms with which the blockchain determines how the problem of distributed consensus will be solved. Ultimately, this determines how the block reward will be distributed.

In PoW (from English proof of work - proof of work) - the likelihood of successfully solving a cryptographic puzzle, on which the creation of a new block depends, is greater for owners of more powerful computing equipment.

In PoS (from the English proof of stake, literally: “proof of share”), the creator of the next block is determined pseudo-randomly, and the probability that he will be chosen as the creator of the block depends on his wealth, or, in other words, the size of his wallet.

PoW is used in cryptocurrencies:

• on the SHA256 algorithm: Bitcoin, Mazacoin, Namecoin;
• on the Scrypt algorithm: Auroracoin, Coinye, Dogecoin, Litecoin;
• based on the CryptoNote algorithm: Bytecoin, Monero, DarkNote.

PoS is used in cryptocurrencies:

• on the SHA256 algorithm: Nxt (NXT);
• on the Scrypt algorithm: Gridcoin; BlackCoin.

Currencies with mixed types of algorithms (PoW and PoS):

• Peercoin;
• Emercoin;
• BitConnect.

In 2016, Vitalik Buterin’s Ethereum announced the transition from PoW to PoS. The final transition of ether to PoS should take place in 2018.

Features of PoW

PoW consensus (also called Nakomoto consensus) was the most innovative solution proposed in Satoshi’s article “Electronic Cash”. PoW solves many electronic money problems, such as Sybil attacks. In addition, PoW ensures fairness in the network: the success of a miner is proportional to the computing power of his equipment (hashrate). If a miner's hashrate is 1% of the entire network, then it is most likely that he will create 1% of the blocks and receive 1% of the reward. This is why Bitcoin appeared on the basis of PoW.

However, for all its coolness, PoW has its drawbacks. Some people consider them significant:

1. Lack of utility: Computations performed for proof of work serve no useful purpose (other than to provide security). Solving cryptographic problems occurs for the sake of solving them. At the same time, in order to make calculations, you need to spend resources, primarily electricity. It turns out that the resources spent on mining in PoW are wasted;
2. The problem of maintaining decentralization. About 80% of Bitcoin's hashrate is now located in China. Centralization, in theory, could help miners unite and conduct malicious activities. If such miners become the majority (the so-called 51% attack), they will be able to ignore blocks of other miners, distributing the reward only among themselves, or double-spend the same crypto coins.

Differences between PoS mining

In 2011, an alternative proof technology was proposed - proof of stake or proof of share. It differs from proof of work in that instead of performing computational operations, the block creator shows that he has a stake in the system (in the form of crypto in his wallet). Thus, the more digital currency a miner has, the higher his chance of being rewarded for a new block.

PoS is, first of all, a method, an algorithm, a proof that ensures the protection of the system. At the same time, users saw in this method of solving distributed consensus something that was not initially a basic characteristic of the algorithm - an investment opportunity. Thus, POS mining is also another way to make money on cryptocurrency. The main feature of this method is that you don’t need to invest anything (or almost nothing).

Unlike regular mining or cloud mining, you do not need computing power. Here you buy a cryptocurrency that mines you a new cryptocurrency just because you already have that cryptocurrency in your wallet. It seems like some kind of fantasy or even some kind of simple scam. But no. This condition is built into the PoS algorithm itself and is an integral part of it.

For the PoS blockchain to function, all that is needed is constantly running wallets on the miners’ computers. The longer you keep your coins, the more you earn.

Why is PoS considered secure from 51% attack?

• First, to gain control of the network, a miner must own a larger share of the network's cryptocurrency. Such an attack can be extremely expensive, because... it requires an investment of more than half of the total money supply of the entire cryptocurrency network.
• Secondly, by carrying out such an attack on the network, the attacker will become the biggest victim, since he will steal the reward from himself.

Stages and strategies of POS production

How to start mining PoS currency:

1. Select the PoS currency (below is a description of some currencies) that you will mine.
2. Create a crypto wallet.
3. Buy currency.
4. Wait until blocks appear in the feed (the process will take about 24 hours).
5. Install the software client on your computer.
6. Activate wallet.

There are several POS mining strategies.

The simplest is to purchase some kind of PoS currency (hybrid PoW-PoS currencies are also suitable, for example, PutinCoin), which is listed on at least one of the major exchanges. You start mining it, extracting new blocks and receiving a reward for them, your earnings will consist of two components:

• change in the price of a currency based on the results of trading on the exchange.
• reward for blocks in the form of cryptocurrency, which you can also sell on the exchange.

A slightly more complex strategy in terms of time investment is buying a new cryptocurrency that is not yet listed on the exchange. The goal is to purchase the maximum amount of currency at the minimum price in order to sell it when it appears on the exchange. This method has a significant drawback - the currency may never begin to be traded anywhere. However, you risk almost nothing, so you can try your luck. Crypts of new generations appear on the network every now and then, giving hope with their technological effectiveness.

Some craftsmen mine PoS currency collected from faucets. This method also has a right to exist, however, the profitability of such mining is relatively low.

Cloud PoS mining

We should also talk about the cloud mining method using PIC technology.

The most striking service for cloud POS mining is offered by PosWallet. You can start mining immediately after registering and replenishing your balance. Moreover, the service allows you to receive crypto for free and use it for mining using the PoS protocol (section called Faucet). PosWallet pool gives you the opportunity to get money around the clock. You don't even have to be online. Money is withdrawn automatically. The pool takes a commission of 1%.

Unfortunately, as of September 25, 2017, the pool does not register new users. Let's hope this is temporary.

Cryptocurrencies and profitability of PoS mining

The profitability of mining PoS currencies in 2017 depends on the declared reward of the cryptocurrency itself. This information can usually be found on the coin's website. Below we will talk about the most popular coins for POS mining that are relevant today and what the profitability is.

For the first time, a cryptocurrency with a new mining concept was announced in September 2013. The new type of digital money is called NXT. Today, other cryptocurrencies are already being heard, with their own chips and percentage of profitability. More details about each.

(http://www.leocoin.org):

• Claims an annual rate of 20% for the maximum investment in crypto (more than 50,000 coins).
• Traded on at least 5 exchanges.
• Capitalization $24,373,792 (as of September 25, 2017).
• Russian language on the site.

(https://www.reddcoin.com):

• The stated yield is 5% per annum.
• Traded on 8 exchanges, incl. on such a large one as Bittrex.com.
• Capitalization $40,698,653 (as of September 25, 2017).

(http://clubcoin.co):

• The stated yield is 20% per annum.
• Traded on 2 exchanges, incl. at Bittrex.com.
• Capitalization $43,108,009 (as of September 25, 2017).

(http://novacoin.org):

• Fantastic stated return of 100% per annum.
• Traded on 8 exchanges.
• Capitalization $8,664,226 (as of September 25, 2017).

Which currencies cannot be mined using the PoS algorithm:

• Bitcoin (uses PoW algorithm);
• Ethereum (uses PoW algorithm).
• Litecoin (uses PoW algorithm);
• NEM (uses the POI - proof-of-importance algorithm);
• Decred (uses both algorithms, but mining is carried out exclusively by PoW).