Proof-of-stake - Definition from the Hotspot Shield Encyclopedia

Proof of Stake is a concept in digital currencies that requires an owner of an amount of currency to prove their ownership and that they do indeed have a stake in it.

This form of proof of ownership is vital in digital currencies and a consensus must be made in order for transactions to be valid. Many forms of cryptocurrency use this method of distributed consensus including Peercoin, ShadowCash, Nxt and Blackcoin. There are many different methods of selection for the proof of stake variant including randomized block selection and coin age based selection. Proof of stake should not be confused with Proof of work as these are two very different processes.