Opinion Proof-of-Stake is coming to the Crypto Ecosystem

Proof-of-Stake is coming to the Crypto Ecosystem

September 14, 2019

The debate between proof-of-work and proof-of-stake concept of blockchain networks has been going on for some time. In many ways, the debate seems similar to the early clashes in the bitcoin community related to the then-upcoming hard fork. This time, however, the discussion is not taking place in a single network but across the crypto domain.

It is also split between the main cryptocurrency lines. Ethereum is the network expected and aiming to move to the proof-of-stake principle at some future point. Bitcoin, at the same time, remains unphased by this possibility and there are many who believe that proof-of-work as Satoshi Nakamoto originally defined it is still the best ticket forward.

However, as the recent news from a famous dapp developer shows, the process of exploration of the proof-of-stake network is not hypothetical but very much practical. Because of it, there is a chance that the same principle will see the light of day in the hands of the ordinary users much sooner than ethereum would be able to implement it.

Dapper Labs and the Flow Platform

Dapper Labs are a household name not just in the crypto circles, but also among esports players, tech enthusiasts and many others who are interested in novel and unusual tech solutions. As the company behind the insanely popular CryptoKitties, Dapper Labs is also a very serious developer entity working with the blockchain tech. Now, their new project is slowly taking shape and it stands a chance to be a very important addition to the same field.

The platform Dapper Labs is developing is called Flow and it should be a tokenization blockchain that can be used in a range of different scenarios. These include artists using Flow to give out fan tokens, similar to the way sports team have begun giving out their own crypto tokens using their specialized platforms. However, what makes Flow stand apart is its use of the proof-of-stake principle. This means that the mining operation behind the Flow venture would be minuscule when compared to something like ethereum and bitcoin.

With the stake mechanism, the owners of the tokes would see them actually settle the distributed ledger and keep the network running. Now, it appears that the company stands a good chance to launch the same solution well before ethereum can even begin seriously testing it. What is even stranger is that ethereum would be very lucky to see the same thing happen in the near future.

Ethereum woes

There is no need to underline that ethereum, as well as ETH, have not been doing great in the last couple of months. Since the moment when its ETH token climbed to the price of about $340, the massive correction that ensued brought down the value of the token drastically. At first, it seemed that ethereum is doing what ethereum and other big cryptocurrencies are doing best – mirroring bitcoin price movements.

However, BTC managed to rebound and return to the above $10,000 mark. Ethereum did not follow this pattern and instead, it remained down. Currently, the ETH token is priced at $180 and the token struggled intensely to climb back up to the $200 range. This is showcasing an overall drop in the perceived potential of ETH both in the short and medium-term. In that setup, the network is in the need to showcase its biggest selling point: the ability to innovate the blockchain domain as it once did with its adaptable ETH protocols that allowed for the first ICO boom.

Now, the network managed to do some very stable and harmonious hard forks, but these only slightly improved the actual state of the ethereum as it is seen from the outside. Besides that, there is a strong need for the next big tech thing in blockchain and almost certainly, ethereum needs to make proof-of-stake that thing.

Flow Backing

Dapper Labs attained $11 million in the latest funding cycle for their Flow platform. The investors include companies like Ubisoft and Warner Music Group, showing that many serious business entities are taking this very seriously as well. On one hand, music companies see the potential of the fan token for music artists and other celebrities to establish further their personal brand.

On the other hand, companies like Ubisoft recognize that tokenization can be a huge thing in the already tech-open gaming community. The money they invest showcases a similar mindset. This means that Flow is closer to its launch than to the official start of its development cycle. If it manages to beat ethereum to the launching of the real fully-functional proof-of-stake network, this would actually be a good thing for the ETH evolution.

Power and Marketing

Right now, ethereum cannot allow itself to have any problem on the technical aspects of its functions. Getting into those problems would bring the ETH token price crashing for sure. That is why the ability to examine the working Flow platform can be a precious learning experience that is also risk-free for ethereum. Yes, the marketing and promotional potential would go to Dapper Labs, but for the ethereum network, it is all about showing the power to innovate in a stable manner.

Right now, the combined power consumption of the bitcoin network overcame the entire consumption of the Czech Republic. That is a country of over 10 million inhabitants and the power demand keeps rising. The visibility of this problem is elevated each year on account of climate change and the dangers it brings. If the bitcoin network is spending as much power as France in 20 years from now, it will have a serious adoption problem with the generations of more environmentally-conscious users.

If the current issues with climate change continue, everyone will be such a user in the 2040s. In this setup, the ethereum leadership is not chasing headlines but the ability to really set itself apart from the bitcoin network. If it manages to do that, the benefits will come and the price will go upwards. If it does not, being first or second in implementing some innovation pays little difference.