Analyst’s Take on Proof of Stake: Is It The Future Or A Formula To Enrich The Rich?
Once upon a time, Vitalik Buterin made a promise. The promise was to throw away the old proof of work mining system and use the revolutionary proof of stake system. Now, the world watched as Constantinople was delayed for another month.
A bug was found out at the last second in the protocol by a company called Chain Security, which prompted the developers into deciding to postpone the launch, which would delay the difficulty bomb and decrease the number of ETH gained for mining. The idea is that this will lay the space for the implementation of the proof of stake system.
In midst of all this, Ethereum World News has published an article affirming that this has remembered people of the proof of stake promises and started a debate on whether the system is good or not.
Is Proof Of Stake Really A Good Idea?
In fact, it is quite funny that Ethereum was the first company to ever talk about using proof of stake and other companies went ahead and did it first while proof of stake is far from a reality in the Ethereum ecosystem. Cardano and Tezos, for instance, already use it.
The main argument for it is that it does not need all the energy that mining needs and, therefore, it would not destroy the planet. As Bitcoin does spend a lot of energy, it is a valid argument, surely.
In a system like this, the holders stake their tokens and leave them locked up in order to passively earn money and to let the network run. Companies like EOS and Tron have followed a model in which only centralized nodes are able to stake. EOS has block producers and Tron has its super representatives.
They may be elected by the users and the community has the final say, but these are very centralized models. The article argues that Buterin will open the Pandora’s Box by using this system.
The author is clearly against it and he seems to think that only hedge funds will really benefit from having a huge bag of otherwise illiquid tokens by gaining huge interest rates over them.
A Way For Centralization?
Ethereumworld’s article uses tweets to show people that believe that Proof of Stake is bad. They argue that it centralizes the economy and that only large holders like funds and exchanges will be able to stake tokens while users will be out of it.
Without the level of difficulty of having to run actual full nodes, financial behemoths will be able to turn Ethereum into an easy way to profit.
The article finished by saying that proof of stake is a trap and that it will centralize Ethereum way more than people were starting to get worried that ASIC miners would.
Is this a valid preoccupation? Should Ethereum stay with its current system or move to a new one? The discussion is far from over and there will be a significant clash until this actually happens.