I love the idea of Cardano and every single speech given by Charles Hoskinson speaks to my heart. So, why am I not willing to invest in Cardano? Well, for one, it is going POS. What’s that and why is it a problem? Recently, POS has been a buzz... word in the blockchain community and is declared to be a good thing because it doesn’t suck energy like Bitcoin and all the other POW systems do. So, again, what is it? POS stands for Proof Of Stake, and essentially it means that you agree to lock up some of your Cardano coins, vesting them in the network until the ledger has been updated and verified. This is a way of securing the network in contrast to the original method called POW or Proof Of Work. POW on the other hand means you have to have some fancy hardware that costs a pretty penny or two in order for you to secure the network via hashing power, plus electricity costs.
POW is expensive and demands a lot of electricity, less than mining actual gold, but expensive nonetheless. For this reason many people are claiming that it is bad for the environment, thus selfish, thus evil, thus bad and so they want to switch to POS. Yay! We found a solution to the problem of being evil and bad and selfish. Sure, but we also just defeated the whole point of blockchain technology.
Why does POS ruin everything? Intrinsic value is a concept some say doesn’t really exist and others roll their eyes at them. Sure, we can all agree that value is in the eye of the beholder, but what we can also agree is that humans are a real thing that does stuff and wants stuff, and we can also all agree that more often than not humans want much of the same stuff for usually the same reasons. Due to this aspect of life, it is truly logical to state that intrinsic value does exist.
POW adds much more intrinsic value to a blockchain than POS. In a world where all the cool kids have made their own blockchain, creating digits is simple and easy. We can put any number on a computer screen we want, 90823048230897209… See, I just did it! But POW takes much more than that in order to get a coin, there is hardware, electricity costs and maintenance. POS is merely someone saying, hey, here’s 100,000,000 ADA to stake, now make me more money. Does that sound like a good idea to you? It doesn’t to me. Why not? Because banks and governments are much more capable of staking than we are! POS plays into their hands and they get to do what they have been doing all along, creating money out of thin air.
Intermission: Relax and take a Shill Pill:
Don’t get me wrong, I bet Cardano is going to moon. There is probably a lambo coming to ADA hodlers, no doubt about that. I expect universities to adopt Cardano for their educational purposes, which will teach a world of students to be Cardano fans, and I bet the banks and governments will hop in too. It just makes sense, they get to do what they love doing, creating digits out of thin air that they can shove down our throats. Darn! That makes me want to buy some ADA… I want a lambo too!
Bad Hobo Joe, no no! Stick to your principles!
Okay, back to being principled. So, POS blockchains open themselves up to funding and support from powerful institutions, and that can lead to great money, but in the end its not sound money, and that’s what matters. Additionally, Cardano is democratic, which sounds nice, but its based off of how much ADA you have. Okay, I kind of understand why that’s good, but in reality, you’re destroying the actual popular vote and replacing it with the aristocrat vote. Who wants that? I’m sure I know some people, but I don’t.
So should we all stick with Ethereum then? Well, they’re going POS too. I’m not saying they won’t lambo-up again when they do go POS, but Ethereum has no cap on coin supply, which means its inflationary . Add an inflationary system with POS and we might as well go back to the US dollar because its essentially the same thing.
So, then what should we do? Ethereum Classic (ETC) seems to be the answer. It seems like a small player, but earlier this year it has become known that major investment is entering ETC. In fact, it is one of a very small list of coins listed on Coinbase, the #1 exchange in the US and Digital Currency Group informed CNN news that they hold a small list of cryptocurrency and that ETC made up 25% of their holdings.
Why is there two Ethereums? Because Ethereum had an issue and some of the community wanted to “rewind” the blockchain while others did not. What’s a rewind? Its when you set the blockchain back to a certain time, sort of like a system restore point on a computer. What’s the problem with a rewind? Imagine if you had done something of great significance in your life on the blockchain (maybe a huge business deal) just a few hours before some developer group decides to rewind the system, well the other guy might have received the service, but you’re out of luck on your ether. That very possibly happened to someone. But more importantly, if you rewind once, you might do it again and this means there is a method of censorship in the blockchain. ETC refused to rewind for this reason, it was ethically contradictory to the whole point of a blockchain: immutability.
Ethereum Classic exists with the firm ideology that a rewind is unacceptable. This culture provides the safest environment for sound money. More than that, it has the making to be the infrastructure to begin the incoming future.
I’m bullish on ETC!
(Not financial advice yo!)
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