Short answers, pulled from the story.
Proof of stake is a class of blockchain consensus mechanisms that selects validators in proportion to the quantity of cryptocurrency they hold. Validators, sometimes called minters, are chosen to append new transactions to the blockchain, and most protocols reward them for doing so. The system deters attackers by requiring them to acquire a large fraction of the total tokens on the network before they can take over majority validation.
Peercoin, introduced in 2012, was the first functioning implementation of a proof-of-stake cryptocurrency. Other cryptocurrencies including Blackcoin, Nxt, Cardano, and Algorand followed before the approach became widely adopted.
Ethereum switched from proof of work to proof of stake in September 2022. The transition, which came after several proposals and some delays, was estimated to have cut Ethereum's energy use by over 99%.
A 2021 study by the University of London found that Bitcoin, which runs on proof of work, consumed roughly a thousand times more energy than the highest-consuming proof-of-stake system studied. Most proof-of-stake systems cause less energy consumption than proof of work across most configurations.
The main vulnerabilities include long-range attacks, where a malicious group rewrites blockchain history by exploiting the low computational cost of adding blocks, and the Nothing-at-Stake attack, where validators have an incentive to approve every competing chain fork. Bribery attacks are also more potent in proof-of-stake systems because rewriting a large portion of history is computationally cheap.
The U.S. Securities and Exchange Commission has argued that staking rewards are the equivalent of interest, which would classify coins such as ether and ada as financial securities. In 2024, the SEC approved Ethereum market funds on the condition that they did not stake their coins, causing those funds to forgo roughly 3% of potential annual returns.