The state of cryptocurrency decentralization feels exceedingly fragile at the moment.
The United States has had no shortage of drama, with S-“is a Vegan”- BF showing off the power of a billion dollars in campaign contributions in terms of regulating cryptocurrency.
Although America's tyrannical jihad against cryptocurrency is concerning, it’s not the focus of today’s article. We’re not qualified to talk America out of its national suicide. We view the United States adopting sensible cryptocurrency policy as more of a national security issue — (i.e. necessary to maintaining America’s hegemony) — than we view it as an existential threat to cryptocurrency itself.
That is, if our elected representatives opt to burn down the country, that’s the will of the people expressing itself. America and our people will get hurt bad, but crypto will continue unaffected.
Therefore, if you’re here for a careful analysis of the SBF saga that’s slaughtering people’s idols and igniting flame wars, we’ll point you to DeFi Education Substack’s great write-up on the subject.
Today we’re looking into the more existential threat against cryptocurrency, which is the pernicious problem of base layer censorship.
This chart has been making the rounds lately among concerned Ethereans and Bitcoin maxis looking to dunk on Proof of Stake. What is actual risk that censorship infiltrates the base layer of Ethereum?
The answer is complex and nuanced, so everybody will be mad:
“Weak censorship” and “strong censorship” are different. Ethereum is currently facing “weak censorship”, but thankfully some distance from “strong censorship.”
The prevailing belief is that the devs will solve the problem of “strong censorship” before it asserted itself.
The current situation is distasteful, but not unique to Proof of Stake — the attack is possible against both PoW and PoS systems so Bitcoin is also at risk.
Full analysis for newsletter subscribers, to non-subscribers we’ll point you to this great overview of the gory details in this Bankless podcast with Justin Drake: