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Staking vs Masternodes: Difference between Masternode & Proof of Stake (coinguides.org)

What is the difference between masternodes and staking? Here we’ve explained the difference along with the pros and cons of PoS & PoSe.

Masternodes and Staking: In cryptocurrency they both are a system that is known to provide passive income. But is that it; just paying interest or there is more to it? What are the difference between them, how do they work and in what ways do they benefit the network? Before we see the pros and cons of Staking vs Masternodes here is what we need to know about Blockchain technology.

Blockchain consensus mechanism: PoW / PoS / PoSe

Blockchain technology is the backbone of Bitcoin and many other cryptocurrencies. The main aspect of this technology is maintaining a digital ledger that is distributed and decentralized. The reason it is called decentralized is because there is no central location or database server that records all the transactions. Instead the records of transactions are publicly distributed to the network across the world. Have you ever wondered how all these transactions are being recorded to the public ledger? How it is operated, who verifies all these transactions and what ensures there is no invalid data appended to the blockchain?

Now, this is the job of consensus mechanism. The entire network is in consensus which verifies the information being recorded to the public ledger is valid. Every cryptocurrencies uses consensus algorithm and there are many different types of consensus mechanisms being used such as: Proof of Work (PoW), Proof of Stake (PoS), Delegated Proof of Stake (DPoS), Proof of Service (PoSe), Direct Acyclic Graph (DAG), Practical Byzantine Fault Tolerance (PBFT) etc. Each of these consensus mechanism has its pros and cons and here we are not going to discuss all of these. Instead we’ll just explain the difference between Proof of Stake and Proof of Service (Masternodes).

What do you think?

Posted by Modpatt

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