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Ethereum’s Pivot to Proof-of-Stake Consensus Has Users Worried About Potential Protocol-Level Censorship

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The upcoming consensus shift that Ethereum, the second-largest cryptocurrency by market capitalization, plans to execute in September has many users worried about the possibility of protocol-level censorship. This means that even when directly interacting with smart contracts, blacklisted addresses would not be able to transact or operate in the base layer..

Incoming Merger Event Triggers Concerns in Crypto Circles

Fusion, Ethereum’s migration from a proof-of-work (PoW) consensus algorithm to a proof-of-stake (PoS) consensus algorithm has raised concerns about the future of the chain regarding censorship. After the smart contract addresses of Tornado Cash, a privacy-centric mixing protocol, were sanctioned and blacklisted by the US Treasury’s Office of Foreign Assets Control, the privacy and censorship-resistant character of Ethereum was put in the spotlight.

Gabriel Shapiro, General Counsel at Delphi Digital, believes that the big Ethereum validators will try to push for a measure that brings censorship to the protocol level. This would allow them to operate within the rules and also avoid being penalized for not including illegal transactions. On this issue, he said these entities “cannot help each other by simply avoiding facilitating blocks containing US-sanctioned transactions, because under certain conditions they could be significantly prevented from doing so.” .

On the other hand, Discusfish, co-founder of F2pool, an Ethereum and Bitcoin mining pool operation, said Proof-of-Work (PoW) consensus assets were better able to withstand regulatory pressure than their Proof-of-Stakes. . counterparts. He Explain:

In the discussion of PoS and PoW under regulatory pressure these days, there is a key point to pay attention to: whether the block producer can remain anonymous and wrap certain on-chain consensus-compliant transactions (which can contain sensitive transactions). PoW can currently do this, PoS currently has some difficulty due to the need to stake assets on-chain.

Different points of view

However, not everyone shares this line of thought. In fact, some believe that proof-of-stake consensus-based assets such as post-merger Ethereum are better prepared to withstand a censorship attack from government regulators. Justin Bons, founder and CIO of Cybercapital, is one of them.

Bons argues that while an attack of this nature would be very difficult to pull off against Bitcoin and Ethereum, the complexity and physical presence that PoW-based chains need to operate would make them easier to target than proof-of-stake assets. . Indeed, the points of sale can be operated with low energy consumption equipment from any location in the world.

finally good believes that regulators are not yet ready to harm cryptocurrencies and that “a middle ground must be struck that preserves the credible neutrality of blockchains, ensuring privacy for individuals and compliance for businesses.”

Keywords in this story

censored, censors, Censorship, Cybercapital, discusfish, Ethereum, F2Pool, gabriel shapiro, Justin Bons, OFAC, Privacy, proof of stake. cryptocurrency, Proof of Work, protocol, Tornado cash

What do you think about the possibility of censorship in Ethereum at the protocol level? Tell us in the comments section below.

Sergio Goschenko

Sergio is a cryptocurrency journalist based in Venezuela. He describes himself as late in the game, entering the cryptosphere when the price surge happened in December 2017. Having a background in computer engineering, living in Venezuela and impacted by the cryptocurrency boom at social, it offers a different point of view. on the success of crypto and how it helps the unbanked and underserved.

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