Search on TFTC

Issue #316: Matt called it

Sep 12, 2018
Marty's Ƀent

Issue #316: Matt called it

As you freaks may know, there is a lot of contention in the world of cryptocurrencies when it comes to the idea that one can use Proof of Stake to secure blockchains. It is an unfounded claim that has been thoroughly debated, yet a lot of projects, including Ethereum, are banking their futures on this sketchy security protocol. One thing in particular that leads me to believe that PoS is inherently flawed when it comes to securing money is the fact that exchanges are going to have an insane amount of influence over PoS chains due to the amount of supply they'll control.

As Matt points out, the lure of attaining more coins on top of having access to their customers' coins is going to lead to exchanges offering special deals to users who agree to hold their PoS coins on exchange for staking. In fact, this trend has already started as Binance is using users' coins to stake STRAT + NEO, (terrible exchange) will be staking users' Tezos deposits, and Coinbase plans to offer staking capabilities for their customers in the future. This is not good in the long run due to the fact that these exchanges and their users are highly incentivized to keep the supply super-concentrated as they will be able to acquire more coins and collect more benefits respectively, further exacerbating centralization.

We should all be watching this closely as I believe this will be a growing trend, especially if Ethereum ever successfully transitions to PoS (I don't think that will happen). The incentives for the exchanges and their users are simply too strong to ignore, this trend is inevitable and should invalidate any argument from people trying to say that PoS is more secure + decentralized than PoW.

Here's a thread from @arbedout that touches on Matt's thesis that you freaks should peep.

Final thought...

One time on my college graduation day, my brother and I woke up on the couches in my dirty living room in our boxers to my roommate's family standing over us, a slew of empty beers, and a gravity bong with looks of horror on their faces. "Hey Mrs. [Redacted], big day isn't it?" is all I could muster.


Current Block Height

Current Mempool Size

Current Difficulty