Crypto Taxation and Proof of Stake (PoS) vs. Proof of Work (PoW)

1. Cryptocurrencies and Blockchain

Cryptocurrencies are digital currencies that use cryptographic techniques to secure transactions and control the creation of new units. They operate on a technology known as blockchain. A blockchain is essentially a digital ledger of transactions that is duplicated and distributed across the entire network of computer systems on the blockchain. Each block in the chain contains a number of transactions, and every time a new transaction occurs on the blockchain, a record of that transaction is added to every participant's ledger.

2. Proof of Work (PoW)

Proof of Work (PoW) is one of the original consensus mechanisms in a blockchain network. It's used to confirm transactions and add new blocks to the chain. Here's how it works: