Categories: CryptoNews

Casper May Cause Centralized Staking By Rich Ethereum Holders

The Ethereum developers have unveiled some more details regarding the Casper release. As part of this release, Ethereum will also transition from proof-of-work to proof-of-take. Securing the network at that time will be of the utmost importance, as PoS is inherently more prone to network attacks compared to PoW. But it looks like there will be some other issues regarding Casper that need to be addressed.

Ethereum’s Casper Is Causing Some Debates

On paper, the transition from proof-of-work to proof-of-stake will be a significant milestone for Ethereum. It is not financially viable to keep a cryptocurrency in an indefinite proof-of-work state, as that would only lead to inflationary concerns. Ethereum will become proof-of-take only shortly, and the new Casper release will be a critical part of this transition.

But there are some twists to this whole concept which have some community members concerned. When Casper is released, all of the stake held in user wallets will act as bets. That means that earning a stake is still possible, but it will also be possible some stakers will see their balances shrink over time. Such a strange scenario has never occurred in the cryptocurrency world before, and it is only reasonable people are concerned regarding their holdings.



Staking pools can be created, where pool owners can ‘gamble” with other people’s money. At this time, it remains unclear if there will be specific boundaries to ensure no erratic gambling can take place. At the same time, this creates a significant opportunity for staking pool owners to make a ton of money while managing other people’s assets. All of this sounds a lot like what banks around the world are doing with consumer funds these days.

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Assuming there would be some form of countermeasures to prevent staking pools from becoming too large, another issue will arise. Some community members feel Casper will lead to centralized staking by the rich. To be more precise, without large staking pools, one needs to be rich to have some competitive edge over other people trying to take on the network.

It is important to keep in mind nothing about Casper has been set in stone yet, and a lot of things may still change in the coming months. While it is commendable to see the developers look at PoS in a very different manner, this concept will have to be fleshed out a lot more before deciding on a course of action.

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JP Buntinx

JP Buntinx is a FinTech and Bitcoin enthusiast living in Belgium. His passion for finance and technology made him one of the world's leading freelance Bitcoin writers, and he aims to achieve the same level of respect in the FinTech sector.

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