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Comment by pinkybanana | Hacker News Reader

No, it is very different because in practice the pools and exchanges are totally separate entities. With PoS the biggest holders will be exchanges and therefore exchanges will control the cryptocurrency. With PoS there will be clearly less decentralization compared to PoW.

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For some reason China seems to concentrate more than 50% of hashing rate due to "big money" coming in and building up huge data centers while using the dirty local energy available.

How's that decentralized.

The times of home mining with CPU/GPUs are long gone

Because the only threat from a 51% attack is rewriting a couple blocks until they recognized as attackers and they get kicked off the network because bitcoin users actually validate blocks. In a PoS system there is an incentive for large stakeholders to increase block sizes. 1. It increases the usability of the network which increases the marketcap. 2. It pushes out smaller stakers who can’t afford to validate anymore because tx throughput becomes too high. If everyday people can’t validate the chain how can they fork it if they think the current block validators are acting against their interests? The ether account set will be far too large. So they’ll start from scratch.

>because bitcoin users actually validate blocks

so do Ethereum users.

>In a PoS system there is an incentive for large stakeholders to increase block sizes.

this doesn't work because of Ethereum's social contract, just like it wouldn't work with Bitcoin.

Just because you stake a lot of ETH doesn't mean you suddenly have unilateral power to increase block sizes. There is a thing called consensus, and the entire community needs to achieve it to implement changes. Good luck trying to convince the community that bigger blocks that make it harder for small users to validate the chain is a good idea.

Except the barrier for entry on building a stake pooling operation is relatively low, so there will be a substantial amount of competition in the space over time. Coinbase for instance is taking a 25% commission on the staking earnings, so anyone who can come in under that, or offer options in terms of liquidity on the staked funds that can be reinvested, will attract a good amount of the share of stakes. There is even a fully decentralized pooling system that is nearing release.

In order to be a validator in PoS (at least Ethereum's implementation) you need to lock up the funds, so not sure how an exchange would be particularly well-suited for that – they need to keep most of the coins on their books liquid so that the customers who actually own them can quickly trade them.

You don't seem to understand how exchanges work. Locking the funds won't be problem to exchanges. Most of the funds just sit dormant in cold storage for long periods of times. For withdrawals you always use most recent deposits and you minimize the transfers between hot and cold wallet.

I don't know anyone who keeps large amounts of ETH sitting unused on an exchange.

Just take a look at any of the account tables. Most of it is in exchange cold wallets. These exchanges will be staking against your interests. It has happened before, it will happen again. Just say no to PoS.

But that's only because Ethereum is currently on PoW, so (naive) people don't care.

But as soon the switch happens, people will want to be staking their ETH in pools that will earn them money.

Yeah, in exchanges. Which will ignore the wishes of the actual currency owners, just like happens today. A vast, vast majority of staking users will not have the required 32 ETH for self-staking, and will be delegating this to third parties. PoS gives power to the exchanges, which should not have this power.

It only gives exchanges power if users choose to give them power, which is exactly how a decentralized democratized currency is supposed to work.

The difference to PoW is that the exchanges can do the staking with very minimal effort. I would guess majority of exchanges give the staking results to customers while taking some % fee.

I don't have any problem with this in general, I don't think it is wrong to do business like that. But I personally prefer PoW because it looks like it naturally separates the mining work from exchanges, creating more decentralized economy.

Right.. they keep them in secure web browser wallets... (

what about DEX? ain't it possible that CEX get outdated?

Also, pools are not miners.

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