Proof of Work vs Proof of Stake and the Tornado Cash Sanctions

This week’s highlights from our YouTube channel look at two hot topics within the crypto community. So, get ready for the lowdown on proof of work vs proof of stake and what went down when the US Treasury decided to sanction a popular privacy tool.

 

First up, you’ll hear our take on a recent report from the Kraken cryptocurrency exchange, which looks at the two most well-known consensus mechanisms in crypto: proof of work and proof of stake. Both have their detractors and their champions and both have been in the spotlight in recent months. 

 

Proof of work is the consensus mechanism used by Bitcoin and is much discussed because of its high energy usage. It is also currently used by Ethereum, though not for long because Ethereum’s transition to proof of stake is fast approaching. This will be a seismic moment in the history of cryptocurrency and offers the perfect opportunity to examine the two systems in depth. Kraken’s excellent report is full of useful information and should be required reading for anyone interested in crypto. In this video, we give you our take on what it all says.

 

In the second part of this episode, we look at the sanctioning of the Tornado Cash mixing protocol by the US Treasury Department. For those unfamiliar, a mixing protocol provides crypto users with a way to obscure the origin of a crypto transaction. It also acts as a vital tool for preserving privacy in a world where almost every transaction is viewable on-chain. Unfortunately, Tornado Cash has also been used by hackers and money-launderers in the past, hence the Treasury’s decision to sanction it.

 

What may on the surface appear to be merely the shuttering of a tool used by criminals is in fact a major blow to law-abiding users of cryptocurrency and one which is unlikely to affect the bad actors it purports to target. It also has enormous and far-reaching implications for the wider crypto industry and the fallout from it will be felt by all of us. So, for the background to the whole unfolding story, what has happened already and what could happen in the future, keep listening. 

 

You can find the full text of the Kraken report here: https://blog.kraken.com/post/14885/pow-vs-pos-securing-the-chain/ 

 

We hope you enjoy the show.

 

Producer for iHeartMedia: Noel Brown

Editor: Semir Mutapcic

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