Since my last article, I’ve been preparing to build a new ether mining rig. Then I started coming across reports stating that mining, proof of work (PoW), will soon be obsolete, and proof of stake (PoS) will become the new standard. This transition will merge the old blockchain with the new normal, which will be Ethereum 2.0. Ethereum states that PoS model will increase the speed and capacity of the blockchain. For the network, this is great! For Ethereum to compete with standard financial transactions, it needs to be able to process more transactions faster. A win for Ethereum and stakeholders, but a crippling loss for miners. Miners have invested much time and resources in building powerful mining rigs. But with this merger, something more was unveiled, that the Ethereum blockchain is not genuinely decentralized.
So…how did I come to this conclusion. Well, it’s simple, the blockchain sold us on decentralized control, meaning no one entity has control over the blockchain. The blockchain eliminated the middle man. So how can an entire blockchain merge or upgrade to a new standard without a central control authority? And let us look at the current state of cryptocurrency. It’s dominated by significant influencers, powerful private institutions, and billionaires. A tweet from Elon Musk can change the price of a cryptocurrency by 10%! The more cryptocurrency grows in popularity, the more it becomes regulated, not by governments but by private and powerful institutions.
Let us take a look at the PoS model. First, an individual will have to stake 32 ether. That’s approximately $64,000!!!! Meaning, only people or organizations with the capital can participate unless you join a staking pool. Staking pools allow people to combine their ether to participate in the PoS blockchain. This means the person or organization hosting the staking pool has some form of control.
Furthermore, the larger the stake pool, the more likely the pool can process transactions resulting in getting paid in ether. Also, node runners have more stringent requirements, and if they fail to meet those requirements, they will be penalized in ether. Additionally, to add insult to injury, the process of becoming a node runner is very selective. Finally, Ethereum 2.0 is an entirely new construct, not voted on by the people but implemented by a central authority.
Am I down on cryptocurrency? Not exactly. Our economy is built on debt, and our dollar is only backed by the power of the American economy. Cryptocurrency is just proving that it’s drifting toward modern financial norms.
Conclusion
I’m not going to build a new mining rig, and I’m not giving up on cryptocurrency. In my opinion, people are going to capitalize and maximize profits at any chance they get. However, the blockchain is still unique, and its applications are becoming more innovative each day. Also, if people are willing to invest and purchase cryptocurrency, you should take advantage of the opportunity. Look at GameStop…enough said. Investments into crypto should be smart, and you should gain as much knowledge as possible before leaping. So what’s next…mysterium?!?!?
