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The migration of some cryptocurrencies to blockchains with Proof of Stake (PoS) protocol signals a maturing movement of the market. The use of PoS in lieu of Proof of Work (PoW) seeks to obtain greater efficiency, security and scalability for a blockchain.

The movement came to prominence with the announcement that the tether will run in a purely PoS blockchain from Algorand. In addition, the Ethereum itself will soon launch a blockchain with this consensus protocol. “This is part of the technology maturation process, as well as the Lightning Network of Bitcoin, Plasma, and blockchains of interoperability such as the Cosmos”, states the head of Blockchain and Bitcoin Operations of Transfero Swiss AG, Roberto Santacroce.

The migration of the PoW to Pos will not occur in all blockchains. It is believed that PoW and all the work of Satoshi Nakamoto in the design of the mining process will remain as a faithful model of immutability and competitive value generation.

Proof of Stake has been studied for some time

It´s important to point out that this shift is not overnight. The Ethereum, for example, already communicates with the Proof of Stake protocol, having experienced and improved its conclusions about it for the last three years.

The original bet of the technology market was that the GHOST would be the driving force of a PoS Protocol implementation in 2016. However, it is believed that the tether chose the Algorand due to its ability to implement a system that will finally be put to the test with a currency-sized as the tether – marketcap of US$ 4 million.

The Algorand has a great reputation in the market. The company is led by MIT Professor Silvio Micali and Turing Award, and financed by Union Square Ventures.

It is worth remembering that the Ethereum will continue to run on blockchains that use Proof of Work. It is foreseen a process developed to communicate and connect the two versions, called Beacon.

What is the difference from the PoS to the PoW?

The consensus mechanism is basically what allows the validation of transactions in the blockchain and, from that point, the inclusion of a new valid block in the blockchain.

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In this way, the PoS Protocol is a protocol of consensus in which participants (stakes) fix their positions on the network to keep it running. In this way, it seeks to prevent a malicious character to defraud the process. As if such occurs, the penalty is loss of reputation or other value mechanisms placed on the stake.

Just as the Proof of Stake, the Proof of Work seeks to be an efficient mechanism for consensus.  However, it is known that the network computers work redundantly in the solution of a problem in a given cycle. However, when the cycle closes, all the work not covered in this cycle is thrown away.