• Vitalik Buterin, the creator of Ethereum, has released a post explaining the benefits of PoS.
  • Buterin states that there are three key reasons why PoS is superior to PoW.

Satoshi Nakamoto, alias of Bitcoin's creator or creators, utilized a Proof of Work (PoW) consensus mechanism to build Bitcoin's blockchain. Many other cryptocurrencies have used the same algorithm to develop their own blockchains, including Ethereum. However, recently, Vitalik Buterin, the creator of Ethereum, and other developers have shifted their views in favor of a Proof of Stake (PoS) algorithm. There are several benefits that PoS offers show in the latest post by Buterin.

The argument in favor of Proof of Stake

Ethereum 2.0 (Eth2) is the most significant upgrade to the Ethereum network, which was planned to be launched in early 2020 but was postponed several times, currently set to happen in December. The upgrade is set to replace the network's mechanism of consensus PoW with PoS.

One of the main advantages of the PoS mechanism is security. According to the calculations done by Vitalik Buterin, the total cost of an attack on a GPU-based PoW is around $0.26 (6-hour attack). An ASIC-based PoW would need $486.75 for the same attack, while PoS would require at least $2,189. 

In the long run, this cost is expected to go even higher, as staking becomes more efficient, and people become comfortable with lower rates of return. I personally expect this number to eventually rise to something like $10000.

Additionally, Buterin also discusses the fact that if an attacker can perform a 51% attack successfully in a PoW system, there is not much one can do to stop it. The only response in practice has been 'wait it out until the attacker gets bored.'

In a PoS system, however, there is a built-in mechanism capable of destroying a large portion of the attacker's stake as the community can coordinate a 'user-activated soft fork' (UASF). Buterin also states that attacking the chain would be extremely expensive, while the community can quickly recover within days. Buterin also said:

Additionally, proof of stake is more censorship resistant. GPU mining and ASIC mining are both very easy to detect: they require huge amounts of electricity consumption, expensive hardware purchases and large warehouses. PoS staking, on the other hand, can be done on an unassuming laptop and even over a VPN.

Ethereum explodes to $446 and aims for the 2020-high at $488

After a significant breakout from an ascending triangle on October 21, the price of Ethereum pulled back to re-test the lower boundary of the pattern, successfully defending it from October 30 until November 4.

eth price

ETH/USD daily chart

The 50-SMA and the 100-SMA acted as healthy support levels, and ETH's price had a notable jump on November 4 from a low of $376 to a high of $408. The current price of Ethereum is $437, as bulls are targeting $488 as the next stop.  

eth price


The In/Out of the Money Around Price (IOMAP) tool shows practically no resistance until $503 in contrast to support levels that could be seen more clearly. The area between $384 and $397, where 2.03 million addresses purchased 13.32 million ETH, represents a robust support zone. The newest announcement from Vitalik Buterin states that eth2 initial deployment will be ready by December 2020, which is adding a lot of buying pressure to Ethereum. 

On the other hand, the daily RSI is on the verge of overextension, indicating that ETH's price is looking for a correction in the short-term like it happened on September 1 when the digital asset dropped from $488 to $308 in just four days. The next bearish price target would be the horizontal support level at $390, which coincides with support provided by the IOMAP model. 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Cryptos feed Join Telegram

Recommended content

Recommended Content

Editors’ Picks

Why LUNA traders do not have to be in the market all the time

Why LUNA traders do not have to be in the market all the time

Terra (LUNA) price action has slipped below a critical level outlined a few days ago. As price action moves start to get smaller, a big move is set to happen, but it is very cloudy to see where that move will be going.

More Terra News

SEC vs. Ripple case, two key decisions awaited by XRP holders

SEC vs. Ripple case, two key decisions awaited by XRP holders

XRP holders are awaiting key decisions in the SEC vs. Ripple case. Experts believe judge Sarah Netburn could rule on the two key decisions in the lawsuit against payment giant Ripple. 

More Ripple News

MATIC price explodes as Polygon achieves Carbon neutrality

MATIC price explodes as Polygon achieves Carbon neutrality

MATIC’s purchase of carbon credits through KlimaDAO partnership represented 104,794 tonnes of greenhouse gasses, equivalent to the Ethereum scaling solution’s debt since 2019. Carbon neutrality has fueled a bullish sentiment among traders and 

More Polygon News

Things have suddenly changed for the Shiba Inu price, is the bottom in?

Things have suddenly changed for the Shiba Inu price, is the bottom in?

Shiba Inu price may have bottomed but this can only be confirmed if the current rally persists. Traders should be aware of several factors. Shiba Inu price has suddenly changed as the bulls have printed a significantly large bullish engulfing candle on the daily chart. 

More Shiba Inu news

Bitcoin: Everything you need to know about BTC 200-week MA

Bitcoin: Everything you need to know about BTC 200-week MA

Bitcoin price has gone through turbulent times over the last few months. From reaching a new all-time high to hitting yearly lows and revisiting levels since 2020, the crypto markets have been extremely volatile.

Read full analysis