Advantages And Disadvantages Of Proof Of Value (PoV)

What is Proof of Value?

Advantages
Saves energy compared to PoW
Cheaper to run as compared to PoW due to no specialized equipment costs
More decentralized and secure than most other consensus mechanisms as any token holders can be a ‘miner’
More secure for token holders compared to PoS as users do not need to worry about hacking on staking platforms

Disadvantages
Encourages token holders to hoard tokens as it gives them higher returns and hence decreases the circulating supply
Wealthy individuals and institutions are able to hoard more tokens than the general retail investor, and hence there might be a disparity in rewards across the network

In PoW mining pools are organized to increase their block rewards collectively. Today, the mining of BTC is controlled mainly by these mining pools, causing a certain degree of centralization. Should three or more of this big mining pools decide to merge, they will be able to control the majority of the network and will be able to pass fraudulent transactions.
It is cheaper to establish a blockchain node based on the Proof-of-Value (PoV) mechanism as one does not need to invest in expensive mining equipment. As such, PoV incentivizes more people to establish nodes, thereby decentralizing the validators and makes the entire network more secure.

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