The attraction of Proof-of-Stake (PoS) cryptocurrency of earning annual rewards may be a fallacy and a tax burden, concludes BitGo’s Ben Davenport.
The Attraction Of Proof-Of-Stake Is A Fallacy
BitGo and Beluga co-founder, Ben Davenport, has just published a report examining the effect of taxes on PoS tokens. He makes stark conclusions regarding the taxman’s impact on potential returns from the coins.
One of the key attractions to PoS coins is the opportunity to stake your holdings and earn an annual reward of between 4 and 15%. But as Davenport writes, there is only one place that this money can come from: people who don’t stake their coins.
So if you hold one of these coins, it is in your best interests to stake. Otherwise, your share will get constantly diluted. Of course, if all holders stake all the coins, then everyone maintains the same overall share. Therefore, with PoS, you have to work/stake your coins, just to break even.
But The Taxman Makes It Even Worse
Despite needing to get the staking rewards simply to…