Proof of Stake

Proof of Stake is a method cryptocurrencies use to verify transactions and create new coins, where validators are chosen based on how much cryptocurrency they hold and are willing to lock up as collateral. Think of it like a lottery where holding more tickets increases your chances of being picked. You'll encounter this term when researching cryptocurrencies like Ethereum, since it determines how the network operates and who gets rewarded. It matters because it affects a crypto's energy use, security, and potential returns for investors. Unlike older methods that require massive computing power, Proof of Stake is more efficient—validators earn rewards for honest participation, but lose their locked-up coins if they cheat.