Decentralized cryptocurrency NeuCoin thinks the Bitcoin network will soon face issues due to its Proof-of-Work (PoW) protocol.
In a web-post published recently, the Proof-of-Stake (PoS) supporting cryptocurrency feared that making Bitcoin transactions will be costlier once it reaches its next halving. In its opinion, the security of the Bitcoin network is directly determined by the payments and rewards to miners. Today, miners are being paid high, and are thereby providing a tremendous amount of computing power. But with halving, their rewards are likely to be reduced by half.
“To maintain security, transaction fees must increase to make up the difference,” NeuCoin stated. “Over time, increasing transaction fees could remove one of the key potential benefits – lower costs – that cryptocurrencies could have over traditional payment methods.”
The cryptocurrency further expressed concerns with the PoW model’s tendency towards centralizing mining operations. In its opinion, bigger companies are now putting enormous capital into the Bitcoin mining industry, which is somewhat pushing small-scale miners down the cliff. Not only it represents severe security risks (51% attack), it can turn Bitcoin away from being its true self, i.e. a decentralized cryptocurrency.
NeuCoin instead proposed PoS as the first and the best alternative to Bitcoin’s PoW protocol. stating that it eliminates the operating costs (computing and electricity) and replaces it with capital costs. It said:
“In PoS, an attacker would have to acquire a high percentage of the total coin supply, versus a high percentage of total computing power in a PoW design. Hence, security levels are dependent on the market value of the coin. Once a PoS coin achieves a material value, it would be extremely expensive for an attacker to buy up a large percentage of all coins, as the attacker’s massive purchases would cause the price to rise and rise.”
NeuCoin itself relies on PoS, for it believes its tendency to support decentralization and grow value and utility indefinitely. To know more about the cryptocurrency, visit here.