# Blockchain Technology for Intelligent Environments
## 2 Blockchains
### Consensus Protocols
#### 2.3.2 Proof-of-Stake (PoS)  
Proof-of-Stake (PoS) [25] is an alternative consensus mechanism, addressing the two main deficiencies of PoW, namely the huge waste of energy and the 51% attack. In order to get the terminology straight, in PoS terms, miners are called _validators_ and the act of mining a block is called _minting_ or _forging_ a block. Contrary to PoW miners, PoS validators are _not_ in direct competition against each other in terms of computational power for minting the next block. Instead, the network elects which validator should mint the next block, thus preventing the wasteful process of PoW mining.  
The selection of the next block's validator is not random. In order to become a validator, a node has to deposit something (essentially a pledge or collateral of something considered valuable by the community) as a security deposit, known as its _stake_. This stake remains reserved and is returned to its owner, along with all the transaction fees of the minted block, only after some time has passed. In case the validator has approved a fraudulent transaction, it loses all transaction fees _and_ its originally pledged stake. This creates a profit-based motivation to follow the protocol.  
The rationale behind electing a validator proportionally to its stake is straightforward: The more you risk losing, the less likely you are to cheat. This, however, encourages a rich-gets-richer pattern, where the richest nodes are repetitively appointed validators, collecting all transaction fees, and getting even richer. In order to alleviate this problem, the use of _coin age_ has been devised: A coin's power in increasing a node's chances to be appointed a validator is dependent on the time since the coin was last used as stake. That is, coins that were recently used as a stake are of no use in being used again, until a certain time period has passed.  
Although PoS significantly lowers its ecological impact as a consensus algorithm compared to PoW, it is not without drawbacks. The fact that PoS operation costs are negligible enables a single validator to participate in multiple PoS blockchains using the same machine. In particular, when a blockchain is forked into many concurrent versions, nothing prevents a validator from supporting any number or even all of them simultaneously, as its profits will increase regardless of which fork becomes dominant. As a result, forks on PoS chains may take an arbitrarily long time to settle, which diminishes the blockchain's append-only, tamper-proof nature. This constitutes a new attack vector known as _Nothing at Stake_. In contrast, when a fork occurs in a PoW blockchain, miners are indirectly forced to choose one fork to continue supporting due to the prohibitive computational capacity required.  
Additionally, the _Tragedy of the Commons_ also facilitates the above modus operandi. If the stake of a miner who wishes to initiate a fork in a PoS system is sufficiently large, other miners will join his fork in fear of losing their stake and being unable to overcome and prevent the fork.  
As this problem exists inherently in the absence of a restrictive resource for operating nodes in a PoS scheme, its solution remains the subject of academic research initiatives. One such initiative is called _Ouroboros_, led by the Universities of Edinburgh, Connecticut, and Aarhus, and a private organisation named IOHK. They explore a solution based on the forking mechanism of a blockchain.  
There are a number of systems using various flavours of PoS, including Cardano [26], Lisk [27], BlackCoin [28], Peercoin [29], and Nxt [30] (some of them discussed later in this paper). Ethereum has announced the intention to switch to PoS.