Long PoW, Short PoS! The Proof Of Stake Apocalypse Begins
The SEC Can Only Affect Weak Centralized Blockchains.
Several PoS networks gained popularity in 2021 due to significant investments from now-defunct VCs and Ethereum’s transition to proof-of-stake consensus, which increased their credibility.
However, does PoS ensure censorship resistance?
Leaving Ethereum aside, there is no doubt that every PoS network is entirely centralized.
Centralization leaves a blockchain vulnerable to attacks, no matter the good intentions of the team controlling it.
Investing in centralized tokens relies on the goodwill and trust of the team in control. Also, we rely on the belief that the state will not go after the private entity in control of the network. If a PoS network has a team in control, it should be a red flag for investors.
Centralized PoS networks demand too much.
Perhaps even Ethereum is still in the vicinity of the SEC, and we may hear news about it soon.
PoW networks like BTC, BCH, LTC, and even Doge are the winners.
Investors Move To PoW
The VCs circus has left town leaving ruins behind.
We already explored the consequences of SEC’s decision to label most PoS tokens as securities, and delistings now begin.
I have been consistently writing about PoS and the VC-funded Ethereum clones.
There’s no decentralization with staking for the most part, and Ethereum’s shift to PoS was questionable.
The latest market decline seems to be pointing in this direction, the influence of proof-of-stake is about to end:
As the market reshuffles, PoW coins also dropped in price but at a 50% lower rate than PoS.
Centralization is a point of failure.
A private company, a team, or a single person in control is detrimental to the viability of digital money.
These networks will always surrender to external pressure, and just a single decision to name them securities suggests they are about to lose 90% of their value, even after they already lost 90% of their price since the ATH of 2021.
Also important to note which coins are finding buyers immediately right after dropping:
We observe that BCH is finding massive support below $100, with buyers decisively entering and buying any BCH sold.
Meanwhile, LTC is not reacting similarly, suggesting price exhaustion. If there is a bet between LTC and BCH here, odds suggest Bitcoin Cash is in a better position.
PoW has different dynamics. The market will extract vulnerable networks to 51% of attacks.
The market punished Monacoin, XVG, Bitcoin Gold, ETC among several others. A successful 51% attack creates issues for the long-term survival of a network. These attacks only affect exchanges since the attackers will try to reverse transactions and resell their already sold coins in exchanges.
From the user’s part, it implies being unlucky having a transaction in one of the blocks the attackers reverse during the attack. Any other address is not affected.
Nonetheless, a successful 51% attack damages the credibility of a blockchain and reduces its popularity.
In Conclusion
It won’t be long before centralized proof-of-stake networks disappear from the top 20 of market cap indexes.
Every regulated financial institution in the US will de-list anything the SEC labels as security.
The reasons are clear. The SEC can sue the companies controlling these networks. However, the SEC can not sue Bitcoin (BTC), Bitcoin Cash (BCH), Litecoin (LTC), or Dogecoin (Doge).
Investors and crypto enthusiasts should finally recognize the decentralized networks with no team or company controlling them as safe cryptocurrencies from external regulations and pressure.
Cover Picture on Pixabay (modified)
Also Read:
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