It’s not exactly breaking news that the second-largest Ethereum cryptocurrency is set to undergo a critical change in how it operates. A transition from the Proof-of-Work (PoW) consensus process to the Proof-of-Stake (PoS) consensus protocol is imminent for Ethereum.
The Ethereum community’s anxiety is rising as the September Merge date draws nearer. Users, however, are increasingly fretting over the prospect of censorship occurring during the protocol phase of the changeover.
As an alternative way of putting it, wallets that have been blacklisted may not be allowed to transact at the network’s foundational level, even if they engage with smart contracts.
Some in the crypto community are worried about the impending merge.
While many in the cryptocurrency industry are excited about the imminent switch, questions remain about the long-term viability of the chain. This is due to the fact that the protocol-level censorship will likely slow the network’s expansion following the merge.
As an illustration of the type of cryptocurrency you may anticipate to find on the privately controlled crypto mixing platform, look no further than Tornado Cash. The United States Department of the Treasury’s Office of Foreign Assets Control sanctioned and blacklisted Tornado Cash, prompting a new round of investigations on Ethereum.
The majority of the crypto community is concerned about whether or not the network has the fortitude to endure a regulatory blow.
But Gabriel Shapiro of Delphi Digitals is optimistic that Ethereum’s validators will take steps to prevent censorship in the protocol layer. By conforming, the system would be able to avoid violations and fines.
To counter this, Shapiro pointed out that organizations have a handicap because they can’t stop themselves from helping facilitate block transactions that the US punishes. Nonetheless, there are scenarios in which individuals might be able to drastically reduce their propensity.
The fact that some people think PoW consensus algorithms are the greatest fit for handling regulatory needs is also exciting to think about. As PoS has difficulty staking assets over several chains, the anonymity that PoW transactions provide is an attractive alternative.
Even while there is some disagreement, people like Justin Bons agree that PoS assets should be protected from censorship attacks by authorities. It would be difficult to pull off a battle with regulators on assets like Bitcoin and Ethereum, according to Cybercapital founder Justin Bond. In contrast to PoS chains, PoW networks are more vulnerable to censorship assaults because to their intricacy and physical presence. PoS tools have a lower energy consumption rate and can run more rapidly and efficiently in more locations around the world than their PoW counterparts.
Bons pointed out that because of the energy requirements of the PoW consensus protocol, everywhere it is employed, governments have more frequently implemented strict regulations. To ensure the long-term viability of the crypto sector, the vast majority of participants now understand that a PoS-based consensus mechanism is essential.
In response to regulators’ regular crackdown on crypto exchanges, Bons declared that they are not trying to prevent people from utilizing and adopting cryptocurrencies. In order to guarantee the impartiality of blockchain networks, the founder of Cybercapital has called for a compromise. It is also critical that individuals have the right to privacy and that businesses follow all applicable laws.