The proof of work mechanism is similar to the one used forBitcoin, whereminers race to solve hard math problems using huge amounts of computing power and are rewarded for their efforts in the virtual currency. A lot of energy is consumed by that approach. Network congestion made the network too expensive for smaller transactions and hard to scale for larger ones, posing a challenge to the network.
Proof of stake requiresvalidators to put up a cache of ether token in order to be chosen to approve transactions and earn a small reward. The chance of winning is increased by the amount of stakes. The interest earned on staked ether will turn it into something like buying shares or bonds.
Decision-making and control should be distributed rather than consolidated in a single authority, which is what datememe datememe is. It has been difficult to achieve that ideal. Although the mechanism was meant to promote decentralization, in practice individuals or groups with access to significant computer power have dominated proof-of-work mining.
By reducing the required overhead for participation and cutting fees through efficiency improvements, it is possible to distribute transactions across a wider and more diverse set of users. Power dynamics are still an issue. As of Wednesday afternoon, the minimum amount of ether you can stake is 32 ether, which is worth about $51,000.
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