There has been a few questions about Proof of Stake (PoS) recently so I thought I would write a short introduction about it. It is basically a way of maintaining a block chain (public ledger) by letting the stake holders make new blocks on the chain. It is very easy for anyone with the cryptocoin to do by simply opening up their cryptocoin wallet and unlocking it.
Miners compete with each other in kind of a lottery to find the next block, with each open wallet in the mix. Creating new cryptocoins by “minting” them can be done on most modern computers very easily and with enough memory multiple wallets from many different coins can be simultaneously run while still using the same computer for other tasks.
The first miner that finds the next block gets the block reward for it. When the reward is paid the block that generated it is typically split into two new blocks that have the reward added. (Technically these blocks are called UTXO or unspent transaction output) Without recombining the blocks eventually wallets like this will stop earning rewards because the blocks will get too small to mint – the solution is to send all the coins back to yourself to recombine the blocks when this happens.
If two miners find a block at roughly the same time the one that gets the block accepted by the majority of the wallets first will earn the block reward and the other will end up with an “orphan” or a block that was generated but not accepted by the chain. So the number of peers and how fast the connection is to them will be factors in who earns the block reward in this case.
How to Unlock the Wallet
Usually this is a fairly straightforward task – but if your concerned, perhaps you might consider not locking it. 😉 (Actually locking your wallet is a very good idea in case the wallet file is ever lost, stolen, or posted by your friends on Facebook) 😀
Most wallets will have a unlock icon under the menu. Some of them unlock by clicking on the little yellow lock icon on the bottom of the wallet. Clicking this opens a dialog where there is often a check box: “For Staking Only” which if checked will prevent anyone from sending out coins without reentering your password.
If a wallet doesn’t provide any other way, you can always use the command prompt in the debug dialog to lock and unlock the wallet. Type “walletlock” to lock the wallet. When it is used for the first time add a password and the wallet should shut down and encrypt the “wallet.dat” file. Type “walletpassphrase <passphrase> <timeout> [stakingonly]” to unlock the wallet. For example: “walletpassphrase mySuperCrypticPassword 999999 true” would unlock the wallet for staking while preventing the coins from being sent without entering the password.
For the specifics on your wallet you can always type “help” in the command window or “help walletpassphrase” for example on that command.
Note that by “unlocking” the wallet the file “wallet.dat” still remains encrypted on the disk so that the next time you load the wallet it will need to be unlocked again. This prevents it from being copied somewhere and accessed while you have it unlocked – this file has all the information someone would need to access your cryptocoins, see more about it here: backing up cryptocoins.
Have fun running PoS it is always nice to get some new blocks of cryptocoins. 🙂