Some Crypto and Bitcoin (BTC) Industry Players Warn Against Proof of Stake

[ad_1]

The risk of corporate monopoly in proof-of-stake (PoS)-based systems is extreme, as they transform new financial systems into plutocracy, dozens of US companies warned in a letter to the US agency.Environmental Protection Agency, EPA).

Source: Adobe/gerasimov174

Businesses respond to congressman’s attack Jared Huffman He recently described Bitcoin (BTC) mining as “poison to our communities”, contributing to “air, water and noise pollution”. According to the companies, Huffman’s letter to the EPA is “based on various misconceptions about Bitcoin and digital asset mining that have already been disproved or have confused mining with other industries.”

The two largest crypto assets by market cap – Bitcoin (BTC) and Ethereum (ETH) – currently use the proof-of-work (PoW) consensus mechanism, but ETH plans to switch to PoS soon.

If the letter is signed by more than one bitcoin mining company, such as Core Scientific, Argo Blockchain, FoundryDigital and others, including one of the largest BTC holders, MicroStrategy, other major players in the crypto industry also signed the letter. The list specifically includes: Digital Currency Group, galaxy digital, Grayscale Investments, SBI Crypto and bitgo.

In his letter, Huffman writes that “less energy-intensive mining technologies such as PoS are available and have 99.99% lower energy demand than PoW to validate transactions.”

However, according to crypto industry players, the reason why PoS is not suitable as an alternative to the PoW-based bitcoin mining process is that it tends to accumulate power over the cryptocurrency network in a small number of hands. According to the letter, many cryptocurrency holders choose to store their assets in large custodians, which inevitably leads to risk and centralization in a PoS system.

“[…] In practice, these intermediaries tend to hoard most of the supply,” the letter said, adding that increased regulation has made it more difficult than ever for new protectors to enter the market, leading to further market consolidation.

“Therefore, the risk of corporate takeovers in proof-of-stake systems is excessive,” the letter states, citing the STEEM takeover by STEEM as an example. Justin SunFounder of Tron (TRX).

“Simply put, proof-of-stake is turning these new financial systems into plutocracy – an inconsistent result with tools intended to be decentralized, global, and completely devoid of political barriers to entry,” the letter says, before continuing. :

“Since Bitcoin was created specifically to neutralize middlemen, it is imperative that it stays on proof-of-work.”

According to the letter, since PoS and PoW are qualitatively different, talking about PoS as a more “efficient” form of PoW is misleading as it does not achieve the same result.

“A bicycle uses less energy than an airplane, but does something different and therefore cannot be considered more efficient,” they wrote, pointing out that PoS does not allow for decentralized distribution of a digital asset, as PoW does, for example.

Additionally, according to the letter, PoS should be understood as an industry term for a shareholder-led financial consortium.

“In contemporary PoS systems, even if it is not explicitly encoded in the protocol, it is the largest token holders that ultimately determine corporate governance,” the authors write.

However, the Ethereum community has denied similar claims in the past.

For example, during an interview Cryptonews.com, Marius van der WijdenThe Ethereum developer said that the community is doing everything they can to keep the PoS implementation on Ethereum decentralized, secure and fair for all users.

“There’s an argument that only the ‘rich get richer’ in PoS, but I would say it’s even more true in PoW because mining companies can benefit much better from not being able to take advantage of economies of scale. Any miner at home,” to van der Wijden.

At the same time, the letter from major crypto players sought to systematically counter each of the many points raised in the letter to Congress, including the “environmental and pollution risks” from mining, the reopening of coal plants, and the closure of gas by miners. misrepresentation of the power consumption of a single bitcoin transaction.

Follow our affiliate links:

  • Buying cryptocurrencies from SEPA Zone, European and French citizensVisit Coinhouse
  • To buy cryptocurrency in CanadaVisit Bitbuy
  • To generate interest with your bitcoinsGo to the BlockFi website
  • To secure or store your cryptocurrenciesGet Ledger or Trezor wallets
  • To trade your cryptos anonymouslyInstall the NordVPN app

To invest in cryptocurrency mining or master nodes:

To save money while playing:

  • In poker on the CoinPoker gaming platform
  • To a global fantasy football on the Sorare platform

stay informed with our free weekly newsletter and our social networks:

[ad_2]

Source link

Leave a Comment

Your email address will not be published.