Ethereum becoming Proof of Stake May reduce decentralization.

• Ethereum transitions from Proof of Work, as a consensus mechanism, to Proof of Stake, as a consensus mechanism, this year.
• The Ethereum faithful, and many in the cryptocurrency community in general welcomed this change for many reasons, such as increased transaction speed, increased transactional capacity and reduced electricity consumption for starters.
• But a less known, but very significant change was the reduction in cost and complexity of the computers needed to run a node or be part of the distributed networks of computers running a copy of the Ethereum transaction ledger.
• This widespread distribution of computers running copies of the digital ledger is a core concept of decentralization, a core component of cryptographic security, and it was the job of thousands of Ethereum miners all over the world, under the concensus mechanism called Proof of Work since Ethereums birth.
• ‘There is perhaps no other task as important.
• Proof of Stake allows people to carry out the job of miners with much cheaper equipment.
• This change was initially touted as a democratization of Ethereum. As running copies of the ledger, participating in consensus and distributing the ledger copies all over the world would be cheaper. And it required much less complexity. This in theory meant Ethereum would become more decentralized, and thus more secure.

What happened? Humans and laziness.

• The task of running a node, and participating in this grand plan of democratizing consensus requires work from a diverse group of people, many of which were not miners. And the prospect of running the software at home has become to much work.
• Instead of staking their Ethereum individually, in their wallets and on their devices, running software to achieve consensus and protect the integrity of the Ethereum blockchain ledger. The vast majority are deciding to use a staking service, which is pooling Ethereum from all over the world.
• This laziness has become so far spread that it appears that the ultimate responsibility for consensus may be in the hands of three large staking pools.
• In fact one of these staking pools has grown so large that it will soon control over 51% of all staked Ethereum.
• This magic number, 51% means they have the ability to over rule all other computers in the world, determine what the true Ethereum ledger looks like, and they could manipulate the flow of Ethereum rewards and transactions to their financial benefit.
• This is in theory the worst threat to decentralization on Ethereum in it’s existence.
• This is not a dramatization.
• When Bitcoin solved the problem of the 51% attack, cryptocurrency became possible.
• It appears, that we have found a way to undermine the security of cryptographic protection on Ethereum by failing to insure a core component; a distributed decentralized network.
• I am waiting to see what the brilliant minds behind Ethereum figure out to reduce this existential threat to all that they hold dear.

@shortsegments

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