This post was originally posted on r/ethtrader DAO on October 20, 2021. Link to original post.

The Beacon chain is already live and Proof of Stake is the next upgrade ethereum developers are working on. This post will try to explain you the impacts Proof of Stake is going to have on you as a user, the miner(validators) and the network as a whole!

Impact on you as a user:

The biggest impact proof of stake is going to make is on the user. Remember how you had to buy costly hardware and ASIC machines to become a miner? The gaming community is experiencing GPU shortage because of miners rushing to buy those GPUs.

What Changes: So with proof of stake, the entry barrier is lowered! You can start staking with normal hardware. To make things even easier, you can stake at Staking Pools. So no hardware, you just need some ETH to secure the network!

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Impact on miners:

With the current Proof of Work, individual miners have very less chance of mining a block. The Economy of scale favours large mining pools and reward them better.

Basically, large mining pool owners can purchase electricity at lower costs and even sometimes get past local governments and get a lower rate. While you as an individual will pay the domestic prices for single equipment at your home.

What Changes: Technically, people securing the network on proof of stake are called Validators. There's no economy of scale here. Every person needs to bring in 32 ETH to become a validator. So you and a large pools like Ethermine will need to bring in 32 ETH to start a validator node!

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Impact on the network:

Currently almost 50% of mining power comes from Ethermine and F2Pool. This is really a concern for decentralisation of the network.

And regarding security..in a theoretical perspective, entities with 50% mining power and cheap electricity can launch an attack against the network. The success or failure of the attack is debatable but it is a possibility.

What Changes: With Proof of Stake, the network becomes more decentralised. Every person can stake their ETH and become a validator. Even we all at r/ethtrader can become a stake pool and become validators. From a security perspective, proof of stake has a mechanism called Slasher which reduces/takes away deposit of a validator if they acts maliciously. So while in PoW a miner can get away with just cheap electricity cost, in PoS their ETH value would be cut! So if a Big stake pool attempted a 51% attack, their ETH would be taken away!

To paraphrase Vlad Zamfir, "it's as though your ASIC farm burned down if you participated in a 51% attack".