At Devcon 5, Ethereum developers conference held in Osaka, Japan; Ethereum’s co-founder Vitalik Buterin claimed that after a Proof of Stake (PoS) based consensus algorithm was developed over the next five years to replace the existing Proof of Work (PoW) algorithm, Ethereum will become more secure than Bitcoin.
Under a Proof-of-Stake system, users who wish to mine coins would have to lock up some of their crypto funds via smart contracts, which is known as staking. The more crypto funds they stake, the more blocks they can create. The users who stake their funds in this manner are called validators. The catch is that the blocks created by validators can be challenged for a set period. Any challenge to a block is run on the blockchain, and if it is confirmed that the block is illegitimate, then the validator who created that block loses a part of the crypto funds he has committed for staking. The challenger earns a part of the stake lost by the validator. Thus, any malicious actor would have first to put up a large amount of cryptocurrency to earn the right to create multiple blocks and then stands to lose a large share of the staked coins if his blocks are found to be illegitimate. Thus, in Proof-of-Stake, validators will have skin in the game even after creating a block and will stand to lose if their blocks are found to be illegitimate. Thus, the whole process of attacking the cryptocurrency will become more expensive, and this will deter malicious actors.
As per the latest update on Ethereum (ETH), Buterin also claimed that a PoS system would also assist in improving scalability as well as reducing computational power required for mining to make it compatible with mobile devices.