How Do Cryptocurrencies without Proof-of-Work (PoW) Consensus Address the Double-Spending Problem?
Cryptocurrencies without PoW, such as those using Proof-of-Stake (PoS), address the double-spending problem by requiring validators to "stake" their own capital (the native coin) as collateral. If a validator attempts a double-spend by signing two conflicting blocks, they are penalized by having their staked coins "slashed" or forfeited.
This financial disincentive replaces the computational cost of PoW, ensuring that malicious behavior results in a direct, quantifiable loss of capital.
Glossar
Quantifiable Loss
Measurement ⎊ Quantifiable loss refers to the measurable financial impact resulting from adverse market movements or operational failures in derivatives trading.
Malicious Behavior
Exploitation ⎊ Malicious behavior within cryptocurrency, options trading, and financial derivatives frequently manifests as exploitation of systemic vulnerabilities, often targeting smart contract code or market microstructure inefficiencies.