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Vitalik Buterin was recently quoted on Reddit as saying he saw four major hurdles ahead of implementing Proof of Stake on the Ethereum Network…

  1. Having lower than expected participation rates
  2. Stake pooling becoming too popular
  3. Sharding turning out more technically complicated than expected
  4. Running nodes turning out more expensive than expected (leading to 1 and 2 anyway)

From an economics perspective: Staking coins involves holding them as opposed to minting new ones. So this means, in theory, there would be more ETHER bought up in order to create a Validator Node whereby one can “stake”.

Obviously, the new coins minted as staking rewards would get sold on the market (in order to cover the staker’s costs), but those original ETHER coins bought being held creates a nice lock up of coins in the ecosystem.

So, potentially, there could be a spike in price, and then a stability as those coins don’t get reflooded back into the market.

But! What we need to consider is: How many ICOs are still holding an immense amount of ETHER, and are those tokens yet to be flooded onto the market? Which affects price anyway.

But besides all this!

Vitalik’s points are intriguing and significant. The complications of moving to Proof of Stake are still immense, and the Ethereum Foundation haven’t fully got their heads around how to implement it adequately as yet. And for me, unless they solve those problems, we won’t properly see POS rolled out (and a full crossover from POW) anyway for at least the next year or two.

When we eventually do, I personally think the price will be much higher than it is now anyway. Depending on how many ICOs selloff their ETHER between now and then that is.

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Image by WorldSpectrum from Pixabay

James Preston
James Preston is the Managing Editor of South Africa's first and largest news website for the blockchain industry: SA Crypto. He is a writer and media commentator who has been reporting on how the Tech industry will make the world a better place for 14 years, with a large following on South African radio. He is an early adopter of Bitcoin, and began reporting on its revolutionary capabilities in late 2014. Philosophical by nature, he is intrigued by how the world works, and in turn, how it can be bettered. James believes wholeheartedly that the world can become as close to perfect as we humans can imagine, but it will take a lot of effort (and time) to get there. He believes his life purpose is to inspire people to believe this, and find their place in helping humanity achieve it. James regularly does talks on emerging technology and its impact on society at Universities, global conferences, and events. To invite him to speak at your event, or comment for your media outlet, email info@sacrypto.co.za