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@ -146,7 +146,7 @@ In this chapter, we will concentrate primarily on the technical characteristics
==== Consensus Innovation: Peercoin, Myriad, Blackcoin, Vericoin, NXT
((("alt-coins","consensus innovation")))((("consensus","innovation")))Bitcoin's consensus mechanism is based on Proof-Of-Work using the SHA256 algorithm. The first alt-coins introduced scrypt as an alternative Proof-Of-Work algorithms, as a way to make mining more CPU-friendly and less susceptible to centralization with ASICs. Since then, innovation in the consensus mechanism has continued at a frenetic pace. Several alt-coins adopted a variety of algorithms such as scrypt,((("Blake algorithm")))((("Groestl algorithm")))((("scrypt-N algorithm")))((("SHA3 algorithm")))((("Skein algorithm")))((("X11 algorithm"))) scrypt-N, Skein, Groestl, SHA3, X11, Blake, and others. Some alt-coins combined multiple algorithms for Proof-Of-Work. In 2013 we saw the invention of an alternative to Proof-Of-Work, called _Proof-Of-Stake_, which forms the basis of many modern alt-coins.
((("alt-coins","consensus innovation")))((("consensus","innovation")))Bitcoin's consensus mechanism is based on proof of work using the SHA256 algorithm. The first alt-coins introduced scrypt as an alternative proof-of-work algorithms, as a way to make mining more CPU-friendly and less susceptible to centralization with ASICs. Since then, innovation in the consensus mechanism has continued at a frenetic pace. Several alt-coins adopted a variety of algorithms such as scrypt,((("Blake algorithm")))((("Groestl algorithm")))((("scrypt-N algorithm")))((("SHA3 algorithm")))((("Skein algorithm")))((("X11 algorithm"))) scrypt-N, Skein, Groestl, SHA3, X11, Blake, and others. Some alt-coins combined multiple algorithms for Proof-Of-Work. In 2013 we saw the invention of an alternative to Proof-Of-Work, called _Proof-Of-Stake_, which forms the basis of many modern alt-coins.
Proof-Of-Stake is a system by which existing owners of a currency can "stake" currency as interest-bearing collateral. Somewhat like a Certificate of Deposit (CD), participants can reserve a portion of their currency holdings, while earning an investment return in the form of new currency (issued as interest payments) and transaction fees.