Proof-of-Stake V1

The first Proof-of-Stake algorithm (PoSv1) was created by Sunny King in 2013 with Peercoin and was quickly adopted by many other coins. For awarding blocks and staking rewards, PoSv1 relied on a user’s coin holdings multiplied by the time their coins had remained unspent on the blockchain (“Coin Age”). The product of a user’s coin holdings and their respective “Coin Age” is known as “weight.” The higher a user’s “weight” the greater the chance they had of being selected to earn a block and therefore to earn a staking reward. Once selected, the user completed the block including transactions contained in the block and sent it to the network for inclusion into the overall distributed ledger. PoSv1 had unforeseen vulnerabilities due to the fact that it did not encourage users to stay connected to the blockchain network because coins gained “weight” whether connected to the network or not. If the number of connected users became low and one user was able to gain a majority of the network’s weight, they could fork the network in an attack and double-spend assets that didn’t exist. Numerous 51% Attacks have occurred on PoSv1 blockchains.