The CEO of crypto analytics firm Messari is predicting that the Proof of Stake (PoS) transition for Ethereum will be later than what the current time table for the currency is indicating.
While Ethereum devs in February announced the intention to transition away from a Proof of Work (PoW) blockchain to Proof of Stake within the next eighteen months, occurring before the end of 2020, Messari’s CEO Ryan Selkis thinks ETH users will have to wait another calendar year.
Selkis made his prediction during a panel hosted by ConsenSys’ Ethereal Summit on May 10. The panel, which was titled “The Smart Contract War is Coming”–in reference the growing competition between Ethereum and other network-based cryptocurrencies–Selkis explained that Ethereum is likely to face major risks in transitioning away from PoW to a PoS algorithm. While Selkis does not believe the task to be insurmountable, he does find the original eighteenth-month time table to be unrealistic, giving his prediction that the transition would not occur until 2021 at the earliest.
Selkis also claimed that Proof of Stake systems are “not proven to work,” at least in their current iteration. Compared to the glut of cryptocurrencies operating under Proof of Work, which has provided a tried and tested method for blockchain algorithm, Proof of Stake is relatively undemonstrated.
Messari’s CEO went on to given his opinion of Ethereum’s current algorithm, claiming that the existing Proof of Work System is, “probably pretty good and maybe even good enough,” and that PoW will continue to be an acceptable market standard for the next several years. Proof of Stake, on the other hand, will likely take more time and resources to develop than what the market is currently anticipating.
“I don’t expect Proof of Stake and Ethereum 2.0 to happen before the end of 2021 at the earliest.”
While Ethereum is planning major updates over the coming month as apart of the development into what is being called Ethereum 2.0, the Proof of Stake transition is shaping up to be one of the largest endeavors in all of cryptocurrency. If properly implemented, Ethereum will represent the largest currency to operate under a PoS algorithm, and provide greater separation between itself and industry-leading PoW currency Bitcoin.
With Proof of Stake, Ethereum looks to improve upon the efficiency of transactions and network operations, in addition to integrating a system of staking that will be novel to most cryptocurrency users. Similar to receiving interest on bank account, Ethereum coins kept in a wallet and ‘staked’ will allow users to earn a dividend. Investors may benefit from a small amount of interest through staking, but the overall network is the real benefactor of staking, which functions to improve the efficiency of transactions and other features.
Compared to Proof of Work, PoS will ultimately allow Ethereum to function in a more energy efficient manner, in addition to expanding the capability for network scalability–an issue that the majority of coins on the market are facing as a limitation to wide-scale adoption.