The upcoming consensus change that Ethereum, the second largest cryptocurrency by market cap, is planning to execute in September has worried many users about the possibility of censorship happening at a protocol level. This means that, even by interacting directly with smart contracts, blacklisted addresses would not be able to transact or operate in the base layer.
The upcoming merge event is causing concern in crypto circles.
SicknessEthereum’s migration from a proof-of-work (PoW) to a proof-of-stake (PoS) consensus algorithm has raised concerns about the future of the chain when it comes to censorship. Ethereum’s privacy and censorship-resistant character has been in the limelight after the addresses of Tornado Cash’s smart contracts, a privacy-focused mixing protocol, were approved and blacklisted by the US Treasury’s Office of Foreign Asset Control.
Gabriel Shapiro, the general counselor at Delphi Digital, believes that big validators of Ethereum will try to push for a measure that brings censorship to a protocol level. This would allow them to operate in compliance with rules, and also avoid being penalized for not including illegal transactions. About this issue, he stated these entities “can’t self-help by merely avoiding facilitation of blocks containing U.S.-sanctioned transactions, because under certain conditions they might be dramatically slashed from doing so.”
On the other hand, Discusfish, co-founder of Ethereum and bitcoin mining pool operation, F2pool, said that Proof-of-Work (PoW) consensus assets were more able to deal with regulatory pressure than their proof-of-stake-based. equivalent. He Explained,
In the discussion about PoS and PoW under regulatory pressure these days, there is one key point to pay attention to: Whether the block producer can remain anonymous and package some transactions that conform to the consensus on the chain (which may contain some sensitive transactions). PoW can currently do it, PoS currently has certain difficulties because of the need to stake the assets on the chain.
different points of view
However, not everyone shares this train of thought. In fact, there are some who think that proof-of-stake consensus-based assets, such as Ethereum after the merger, are better prepared to face the impending censorship attack from government regulators. Cyber Capital founder and CIO Justin Bones 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 the physical presence that PoW-based chains need to operate would make them easier to target than proof-of-stake assets. That’s because PoS can be operated with low-power equipment from any place in the world.
Finally, Bonso believe that That regulators are not out yet to harm cryptocurrencies and that “a sensible middle ground must be found that maintains the credible neutrality of blockchains, ensures privacy for individuals and compliance for companies.”
