The reason why 70% of all mining power is concentrated in China is downstream of economic policy that provides very cheap electricity costs. The incentives lead to China being the place for mining proof of work.
This applies though to any PoS algorithm in which the token owners are most of them in China, right?
Only if those token owners tell the Chinese government about the fact that they are token holders. Buying crypto-currency is generally illegal in China.
The economic incentives with PoS is to either not tell your government about the fact that you own the currency or hold them in a jurisdiction with the least amount of legal issues that come from holding the crypto-currency such as a tax haven.
If you are a Chinese billionaire (or similar person with access to a lot of capital) and want to get into earning from PoS you can create a company in a tax haven and let them hold the stake for you in a legal structure that’s optimized for not being able to be confiscated by the Chinese state and ideally outside of their sight.
That way if the tides turn within China you can easily leave China and still have your wealth.
Datacenters are location bound and under the control of their host country in a way that digital crypto ownership isn’t.
Furthermore, even if the Chinese government would be able to secure control over the proof of stake currency all you need to do to solve the problem is a hard fork that burns all the tokens that the Chinese government holds. Doing the DAO fork in Ethereum was controversial but Vitalik could still do it. If Vitalik says that Ethereum has to do a hard fork to get rid of the Chinese government interference it’s easy to get the important players to join in. This means that the Chinese government would burn hundreds of billion of capital under Chinese control for freezing accounts for a few days or 1-2 weeks which seems like a stupid move. Crypto is all about game theory ;)
There’s no way easy way to get rid of the data-centers that effectively mine in PoW. You can start by switching your PoW algorithm to invalidate their ASICs in a hard fork but that doesn’t change the fact that the Chinese data centers still have cheap electricity. Finding consensus on a change of the Bitcoin proof of work algorithm is also very hard.
massive blow to the credibility of cryptocurrencies
It would likely lead to currency besides bitcoin also be sold off and people focus more on the actual value provided by crypto. Proof of stake currencies that actually provide economic value via smart contract based applications and whose value isn’t entirely based on speculation will have less of an issue and regain value.
The reason why 70% of all mining power is concentrated in China is downstream of economic policy that provides very cheap electricity costs. The incentives lead to China being the place for mining proof of work.
Only if those token owners tell the Chinese government about the fact that they are token holders. Buying crypto-currency is generally illegal in China.
The economic incentives with PoS is to either not tell your government about the fact that you own the currency or hold them in a jurisdiction with the least amount of legal issues that come from holding the crypto-currency such as a tax haven.
If you are a Chinese billionaire (or similar person with access to a lot of capital) and want to get into earning from PoS you can create a company in a tax haven and let them hold the stake for you in a legal structure that’s optimized for not being able to be confiscated by the Chinese state and ideally outside of their sight.
That way if the tides turn within China you can easily leave China and still have your wealth.
Datacenters are location bound and under the control of their host country in a way that digital crypto ownership isn’t.
Furthermore, even if the Chinese government would be able to secure control over the proof of stake currency all you need to do to solve the problem is a hard fork that burns all the tokens that the Chinese government holds. Doing the DAO fork in Ethereum was controversial but Vitalik could still do it. If Vitalik says that Ethereum has to do a hard fork to get rid of the Chinese government interference it’s easy to get the important players to join in. This means that the Chinese government would burn hundreds of billion of capital under Chinese control for freezing accounts for a few days or 1-2 weeks which seems like a stupid move. Crypto is all about game theory ;)
There’s no way easy way to get rid of the data-centers that effectively mine in PoW. You can start by switching your PoW algorithm to invalidate their ASICs in a hard fork but that doesn’t change the fact that the Chinese data centers still have cheap electricity. Finding consensus on a change of the Bitcoin proof of work algorithm is also very hard.
It would likely lead to currency besides bitcoin also be sold off and people focus more on the actual value provided by crypto. Proof of stake currencies that actually provide economic value via smart contract based applications and whose value isn’t entirely based on speculation will have less of an issue and regain value.