Cryptocurrency News

Users Are Concerned About Ethereum’s Shift to a Proof-of-Stake Consensus

Many individuals are concerned about the prospect of protocol-level restriction due to Ethereum, the 2nd-largest crypto by market size, proposing to implement a consensus modification in September. This implies that banned domains will not be able to do business or function on the basic layer, even when communicating directly with smart contracts. Issues concerning censorship have been expressed due to Ethereum’s switch from a proof-of-work (PoW) consensus mechanism to a proof-of-stake (PoS) consensus mechanism. The anonymity and privacy nature of Ethereum have come under the limelight after the identities of the payment systems of Tornado Cash, a privacy-focused mixing system, were penalized and banned by the U.S. Treasury’s Office of Foreign Assets Control.

According to Gabriel Shapiro, chief counsel at Delphi Digital, major Ethereum auditors would attempt to promote legislation that would enact censorship at the network level. They could conduct business lawfully and escape punishment for not incorporating unlawful transactions. In response to this, he stated that these businesses could not help themselves by simply refraining from facilitating blocks containing U.S. sanctioned trades since they risk having their financial resources drastically reduced if they do.

The co-founder of the Eth and bitcoin mining pool F2pool, Discusfish, asserted that proof-of-work (PoW) agreement assets were better suited to withstand constraints than its proof-of-stake-based equivalents.

There is one crucial element to focus on in the topic of PoS and PoW under mounting scrutiny today: the ability of the block creator to maintain anonymity and bundle certain payments that adhere to the chain’s consensus (which might have a few sensitive transactions). PoS presently faces several challenges due to the need to place the assets on the chain, whereas PoW can already handle it.

But not everybody agrees with this line of reasoning. Many believe that assets built on the proof-of-stake agreement, like Eth after The Merge, can better withstand a censoring attempt from governmental regulators. One of these individuals is Justin Bons, the founder and CEO of Cybercapital.

While the effort of this kind would be exceedingly challenging to execute over Bitcoin and Ethereum, according to Bons, PoW-based chains would’ve been simpler to approach than proof-of-stake assets due to their complexity and requirement for powerful proximity. PoS may be used everywhere in the world using low-power hardware.

Lastly, according to Bons, authorities aren’t yet out to harm cryptos. A reasonable center ground must be established to uphold the blockchains’ impartiality and credibility while guaranteeing people’s privacy and corporate compliance.

Paul Jolin

Paul Jolin is an economist having experience in financial research. He joined CoinNewsSpan in 2017 and since then has been working with the team to offer best price analysis and review stories on the crypto space. He is optimistic about blockchain technology's use cases in terms of financial freedom. He also has experience as an independent trader.

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button