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Proof-of-stake is a strategy being used to make some cryptocurrencies more environmentally friendly. Instead of using lots of compute to compete create new bitc

Proof-of-stake is a strategy being used to make some cryptocurrencies more environmentally friendly. Instead of using lots of compute to compete create new bitcoins, cryptocurrencies using proof-of-stake, like Ethereum 2.0, dole out new coins to people relative to the amount of the currency they already own. Proof-of-stake uses orders of magnitude less compute than proof-of-work, so it's far more environmentally friendly. Gas prices are transaction fees. Right now, both Bitcoin and Ethereum have high transaction fees - too high to use those currencies for small purchases. The high transaction fees are also delaying "Web 3.0" - new decentralized applications that use blockchains as databases. Once transaction fees go down (and Bitcoin's transaction fees have gone down a lot in the past couple of months), that will make cryptocurrencies practical for more purchases and applications.

Jasper_ 5y ago
> cryptocurrencies using proof-of-stake, like Ethereum 2.0, dole out new coins to people relative to the amount of the currency they already own Doesn't this mean that those who don't have the funds to be able to safely stake their coins see their balance depreciate as the incoming coins go to people who have the ability to stake their wealth, implying that the most efficient way to use the system is to concentrate wealth? The goal of proof-of-work is to prevent supermajorities from taking over the chain's verification by turning verification into a lottery of labor. Proof of stake doesn't seem like it solves that problem.
- mkolodny 5y ago
  > Doesn't this mean that those who don't have the funds to be able to safely stake their coins see their balance depreciate as the incoming coins go to people who have the ability to stake their wealth, implying that the most efficient way to use the system is to concentrate wealth? Not necessarily. If the currency's market value keeps increasing, then even if you don't stake your coins, your balance will still appreciate. > The goal of proof-of-work is to prevent supermajorities from taking over the chain's verification by turning verification into a lottery of labor. Proof of stake doesn't seem like it solves that problem. From the Ethereum website: "The threat of a 51% attack still exists in proof-of-stake, but it's even more risky for the attackers. To do so, you'd need to control 51% of the staked ETH. Not only is this a lot of money, but it would probably cause ETH's value to drop. There's very little incentive to destroy the value of a currency you have a majority stake in. There are stronger incentives to keep the network secure and healthy. "Stake slashings, ejections, and other penalties, coordinated by the beacon chain, will exist to prevent other acts of bad behavior." [0] [0] https://ethereum.org/en/developers/docs/consensus-mechanisms/pos/#proof-of-stake-and-security https://ethereum.org/en/developers/docs/consensus-mechanisms...

Jasper_ 5y ago

> cryptocurrencies using proof-of-stake, like Ethereum 2.0, dole out new coins to people relative to the amount of the currency they already own Doesn't this mean that those who don't have the funds to be able to safely stake their coins see their balance depreciate as the incoming coins go to people who have the ability to stake their wealth, implying that the most efficient way to use the system is to concentrate wealth? The goal of proof-of-work is to prevent supermajorities from taking over the chain's verification by turning verification into a lottery of labor. Proof of stake doesn't seem like it solves that problem.

mkolodny 5y ago
> Doesn't this mean that those who don't have the funds to be able to safely stake their coins see their balance depreciate as the incoming coins go to people who have the ability to stake their wealth, implying that the most efficient way to use the system is to concentrate wealth? Not necessarily. If the currency's market value keeps increasing, then even if you don't stake your coins, your balance will still appreciate. > The goal of proof-of-work is to prevent supermajorities from taking over the chain's verification by turning verification into a lottery of labor. Proof of stake doesn't seem like it solves that problem. From the Ethereum website: "The threat of a 51% attack still exists in proof-of-stake, but it's even more risky for the attackers. To do so, you'd need to control 51% of the staked ETH. Not only is this a lot of money, but it would probably cause ETH's value to drop. There's very little incentive to destroy the value of a currency you have a majority stake in. There are stronger incentives to keep the network secure and healthy. "Stake slashings, ejections, and other penalties, coordinated by the beacon chain, will exist to prevent other acts of bad behavior." [0] [0] https://ethereum.org/en/developers/docs/consensus-mechanisms/pos/#proof-of-stake-and-security https://ethereum.org/en/developers/docs/consensus-mechanisms...