Author: Billy Tetrud 2021-05-24 20:43:53
Published on: 2021-05-24T20:43:53+00:00
The discussion revolves around the advantages and disadvantages of Proof of Work (PoW) and Proof of Stake (PoS) consensus mechanisms in Bitcoin. PoS is more energy-efficient, but it has certain trade-offs that are incompatible with Bitcoin's objective to be a trustless digital cash. PoS requires trusted means of timestamping to regulate overproduction of blocks whereas PoW is resilient up to a 1/2 threshold. However, PoW has centralization pressures and barriers to entry making it oligopolistic.The discussion also highlights the shortcomings of PoS protocols such as Cardano and Algorand and how they do not fit for purpose for a global settlement layer in a pure digital asset like Bitcoin. In contrast, Bitcoin optimizes for simplicity and avoids extraneous responsibilities for the holder of the coin.Regarding the failure threshold of PoS systems, staking systems like Casper require 1/3 of the network to demonstrate a Byzantine Fault, but there are PoS designs that exceed that up to nearly 50%. On the other hand, PoW's security is reduced by a factor of about 83% due to the selfish mining attack. Proof of burn helps solve the "nothing at stake" problem by making the burn investment always "at stake". If any redaction happens, it can result in a loss-of-burn tied precisely to block-heights. This makes miners not have an incentive to mine all chains, thereby making proof of burn more secure than proof-of-stake and even more secure than proof of work.As for gaining tokens, it is not a practical constraint as some nodes may reject you, but there will likely be more that will accept you. Finally, VDFs are not suggested as a means to save energy, but solely as a means to make the time between blocks more constant.Despite the criticisms against PoS, there is a likelihood that we could build a PoS consensus protocol that has substantially higher security while at the same time costing far fewer resources without compromising any of the critical security properties that Bitcoin relies on.
Updated on: 2023-06-14T21:08:57.280918+00:00