Thanks for your contribution :)
It is also important to know that PoS networks are not only less secure than PoW networks, but also tend to be systematically centralized.
In PoS, the probability of validating blocks and receiving rewards depends directly on the amount of coins staked. This means that rich participants become richer and richer, which leads to a concentration of power in the long term. You can think of it like a company in which someone owns 60% of the voting rights, for example, and automatically gains even more voting rights through this position alone.
If you delegate your coins to a staking service provider, you not only hand over your voting rights, but also support further centralization. These service providers can gain immense power in the network and make decisions that harm the network in the long term - be it through censorship, protocol changes or other measures.
Once a participant or a network of service providers has the majority of coins, they can no longer be taken away. In contrast to PoW networks, this participant has no ongoing costs or competition and could permanently compromise the network.
In principle, if you are investing in these cryptocurrencies anyway, there is no reason not to take the additional staking return with you. But you should be aware of the general risk associated with PoS. It is not simply the "sustainable alternative to PoW" as is often assumed.
It is also important to know that PoS networks are not only less secure than PoW networks, but also tend to be systematically centralized.
In PoS, the probability of validating blocks and receiving rewards depends directly on the amount of coins staked. This means that rich participants become richer and richer, which leads to a concentration of power in the long term. You can think of it like a company in which someone owns 60% of the voting rights, for example, and automatically gains even more voting rights through this position alone.
If you delegate your coins to a staking service provider, you not only hand over your voting rights, but also support further centralization. These service providers can gain immense power in the network and make decisions that harm the network in the long term - be it through censorship, protocol changes or other measures.
Once a participant or a network of service providers has the majority of coins, they can no longer be taken away. In contrast to PoW networks, this participant has no ongoing costs or competition and could permanently compromise the network.
In principle, if you are investing in these cryptocurrencies anyway, there is no reason not to take the additional staking return with you. But you should be aware of the general risk associated with PoS. It is not simply the "sustainable alternative to PoW" as is often assumed.
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@stefan_21 Hey, thanks for the comment! You definitely brought up an important point. It's true that PoS can tend towards centralization in certain networks, especially when a few players control most of the staking. Concerns about concentration of power are real and often underestimated. You definitely have to keep in mind the balance between the attractiveness of the rewards and the long-term risks. 👍
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