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Decoding Bitcoin Mining
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Decoding Bitcoin Mining: Oligopoly Concerns & Limitations of Proof-of-Stake

CryptoExpert July 30, 2023 No Comments

Decoding Bitcoin Mining: Oligopoly Concerns & Limitations of Proof-of-Stake Bitcoin mining, the process that validates transactions and adds them to the blockchain, has raised concerns about the emergence of an oligopoly within the industry. As a decentralized currency, Bitcoin’s original vision of democratized mining is being challenged by the concentration of mining power in the hands of a few major players. With the Proof-of-Work (PoW) consensus algorithm currently in use, the mining process requires substantial computational power and energy consumption. This has led to the consolidation of mining operations in regions with access to cheap electricity and specialized hardware. As a result, a handful of mining pools now hold a significant share of the network’s hash rate, raising concerns about centralization and potential manipulation. To address these concerns, alternative consensus algorithms like Proof-of-Stake (PoS) have gained attention. Unlike PoW, PoS assigns mining power based on the number of coins held by a miner, eliminating the need for energy-intensive computations. However, PoS has its own limitations, including the potential for wealth concentration and stakeholder inequality. While PoS may offer a more energy-efficient and environmentally friendly approach, it introduces a new set of concerns. Critics argue that the rich can become richer as

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