Team members: @Youssef Chaabouni , @Jean-Sebastien G. , @Cyrus Pellet
The blockchain will be developed using the Proof-of-Stake algorithm (still subject to change) for validating transactions. Improvements and additions will be considered when this is done.
In this type of consensus algorithm, instead of investing in expensive computer equipment in a race to mine blocks, a 'validator' invests in the coins of the system. No coin creation (mining) exists in proof of stake. Instead, all the coins exist from day one, and validators (also called stakeholders, because they hold a stake in the system) are paid strictly in transaction fees.
In proof of stake, your chance of being picked to create the next block depends on the fraction of coins in the system you own (or set aside for staking). A validator with 300 coins will be three times as likely to be chosen as someone with 100 coins. Once a validator creates a block, that block still needs to be committed to the blockchain. Different proof-of-stake systems vary in how they handle this. In Tendermint, for example, every node in the system has to sign off on a block until a majority vote is reached, while in other systems, a random group of signers is chosen.
Now, we run into a problem. What is to discourage a validator from creating two blocks and claiming two sets of transaction fees? And what is to discourage a signer from signing both of those blocks? This has been called the 'nothing-at-stake' problem. A participant with nothing to lose has no reason not to behave badly. One answer is to require a validator to lock their currency in a type of virtual vault. If the validator tries to double sign or fork the system, those coins are slashed.
Peercoin was the first coin to implement proof of stake, followed by blackcoin and NXT. Ethereum currently relies on proof of work, but is planning a move to proof of stake in early 2018.
(what is this?)