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Considering transition! Zcash founder enumerates advantages of equity proof, will mining "big coins" become history?

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Considering transition! Zcash founder enumerates advantages of equity proof, will mining "big coins" become history?

Considering ESG sustainability and a more decentralized, cost-effective, and secure consensus mechanism, Zooko Wilcox, the founder of privacy coin Zcash, has revealed intentions to transition to a proof-of-stake model. He highlighted numerous advantages and emphasized that the ultimate decision lies with the community.

Launched in 2016, Zcash is a privacy-focused cryptocurrency project derived from modifying Bitcoin's code, thus retaining some Bitcoin features such as the same total supply and roughly halving mining rewards every four years.

In a recent article, Zooko Wilcox pointed out that Zcash's developer, Electric Coin Co. (ECC), has been considering a transition from proof-of-work (PoW) to proof-of-stake (PoS).

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He emphasized that the decision ultimately rests on whether the community chooses PoS and if global users accept ZEC tokens operating on PoS. He personally believes that PoS will bring more value to users, with benefits far outweighing drawbacks, and detailed the reasons he is optimistic about it.

Unleashing ZEC Selling Pressure

If using Proof of Work (PoW), miners may need to sell the mined tokens to balance monthly electricity costs and recoup the initial cost of purchasing mining machines. Wilcox believes this represents a long-term selling pressure on ZEC:

Zcash miners mine tokens worth around $300,000 per day, and they must almost immediately sell them to break even, with an annual selling total of about $100 million. However, Proof of Stake (PoS) can transform stakers into long-term holders, working together for the long-term goals of ZEC.

Disagreement with PoW Exacerbating Global Warming

Wilcox disagrees that PoW exacerbates global warming, but when more energy-efficient alternatives exist, he believes many users will shun PoW tokens.

Therefore, to maximize adoption, he chooses to shift to PoS, believing it to be a win-win decision.

PoS: Lower Costs, Higher Security

In PoW, if there are malicious miners, the community can only endure or change the mining algorithm, which also affects well-functioning miners.

PoS does not require expensive mining machines; only staking the held assets. Malicious node's staked assets face the risk of confiscation, while other nodes can operate normally.

In short, similar to Ethereum founder Vitalik Buterin's argument, PoS has lower costs, is more secure than PoW, and eliminates the risk of frequent PoW forks.

PoS: Bringing More Users, Stakeholders

Wilcox mentioned that in May 2018, Bitmain launched the first Zcash ASIC miner, making GPU mining uncompetitive and causing Zcash to lose 90% of its users.

Transitioning to PoS allows ZEC holders to interact with and profit from the token, increasing token holders tenfold. He believes this is the correct economic model that will drive additional demand for ZEC in the market.

More Decentralized, Fairer

In the PoW mechanism, only well-funded large miners can sustain profits. However, after transitioning to PoS, even holders of small amounts of tokens can participate in staking and profit. In this scenario, the number of users participating in community governance will also increase, indicating that PoS will provide more users with a voice.

Although there is no formal proposal yet, Wilcox mentioned at the end of the article that in the coming weeks, there will be an AMA and the release of transitional PoS development matters.