TRON and Ethereum: why cryptocurrencies switch to Proof-of-Stake
The very first cryptocurrencies, such as Bitcoin and Ethereum, were based on the principle of consensus Proof-of-Work (PoW), with miners taking center stage. But more and more companies are choosing the Proof-of-Stake (PoS) algorithm, transferring their blockchains to it. Why is that happening?
In mid-September, TRON founder and head Justin Sun announced on his Twitter that
cryptocurrency is considering switching to another consensus principle - Proof-of-Stake.
According to San, PoS has several advantages over Proof-of-Work. In particular, it will allow a more “fair” distribution of stacking profits and increase community’s involvement in the ecosystem. In particular, TRON fans will be able to vote for important events for the cryptocurrency. In addition, supposedly, more nodes should appear in the
blockchain, which will increase its decentralisation.
At the same time, San did not disclose details of exactly how the cryptocurrency is going to switch to the new protocol, nor did he name any time frame of doing that. That caused discontent among the crypto community, which has long paid attention to the love of the founder of TRON for PR and hype.
For example, this summer, Justy Sun paid $ 4.6 million for lunch with financial market legend Warren Buffett and unleashed a whole drama around it.
Allegedly, right before the meeting, San got kidney problems and had to postpone the lunch. The reason may lie elsewhere, however. Immediately after the statement about health problems, Chinese media reported that the Chinese authorities suspected Sang of several crimes, and therefore he could not leave the country.
In particular, the charges against him concerned the illegal collection of investments through TRON, the provision of gambling services to residents of the PRC, which is prohibited in the country, as well as the involvement of San’s startup Peiwo in the porn industry.
Sun denied the allegations and allegedly broadcast live on the Periscope social network from San Francisco. However, it left an unpleasant after-taste. Especially considering that TRON was repeatedly accused of plagiarising and centralising the project.
“Justin Sun looks like a scammer, he speaks like a scammer, maybe he is a scammer,” says SatoshiFund blockchain developer Andrei Sobol.
That is why the crypto community perceived San’s statements as another PR. On the other hand, the transition to PoS might be a real thing. Especially when you consider that other top coins have already embarked on this path.
Ethereum 2.0 and Proof-of-Stake
For several years now, Ethereum founder Vitalik Buterin has been hatching the idea of switching cryptocurrencies to the Proof-of-Stake consensus. According to him, the move will solve the problems with the scalability of the Ethereum blockchain and reduce the energy consumption spent on maintaining the life of the ecosystem.
However, so far those are only plans that are called Ethereum 2.0. According to Buterin, if in the first version of the blockchain the cryptocurrency was only going to become a "world computer", the update will start the implementation process.
There are quite a few problems. In fact, there is no exact plan for the transition to a new consensus. Although Ethereum developers claim that the transfer of the blockchain to Proof-of-Stake will be done by 2021.
The developers presented the first outline of this plan in the summer of 2019, when they publicly presented the code for the next Casper updates. It’s this project that is going to introduce a hybrid algorithm that will allow combining the Proof-of-Work and Proof-of-Stake algorithms under one roof.
Initially, the implementation of Casper was planned for 2019. It is not yet clear whether Ethereum developers will have time before the deadline.
To switch or not to switch
Justin Sun’s statements can be interpreted in different ways. Of course, they definitely have a certain amount of PR. But the fact that cryptocurrency is generally thinking about switching to Proof-of-Stake, speaks of a change in the trend in the industry. And if TRON succeeds in implementing its plan, then other companies might follow.