Opinion on proof of stake in future

Summary:

Proof of burn (PoB) is a secure and simpler alternative to proof of stake (PoS). In PoB, coins are burned for use at a future block height, so miners have a strong investment in the stability of the chain, eliminating the "nothing at stake" problem that exists in PoS. The system is deterministic and simpler, which typically makes it more secure. Additionally, PoB solves problems caused by energy dependence that can lead to state monopolies on mining. Since PoB doesn't require a live, well-connected node, it's harder to censor and trace. On the other hand, PoS is not fit for purpose for a global settlement layer in a pure digital asset such as Bitcoin. PoS gives responsibilities to the holders of coins that they do not want and cannot handle, violating clean separation of responsibilities. While rigorously studied PoS protocols will work, the implications of using the leading PoS protocols would have on Bitcoin are concerning. The discussion around PoS versus proof of work (PoW) continues within the Bitcoin-dev community. Some argue that PoS tends towards oligopolistic control, but others disagree and claim there is no centralization pressure in any PoS mechanism they are aware of. While PoW has clear centralization pressure and more barriers to entry than any PoS system does, it is not as resilient as PoS to a 51% attack because an attacker does not need to obtain 100% of miners' hashpower, only 50%, which drives honest miners out of the market. Additionally, the best PoW can do is require an attacker to obtain 33% of the hashpower. Regarding PoS's resilience, some designs should exceed the 1/3 requirement up to nearly 50%. However, PoS must have a trusted means of timestamping to regulate overproduction of blocks. In terms of energy usage, while Bitcoin's energy usage is currently warranted, the question is whether we can do substantially better eventually. There are trade-offs with PoS that may be incompatible with Bitcoin's objective of being a trustless digital cash, specifically the famous "security vs. liveness" guarantee. However, others don't believe this is true and see no practical constraint in gaining tokens without someone choosing to give up those coins, just like in mining. The discussion also touched on hardcoded checkpoints, which is a critical piece solving attacks that could be levied on a PoS chain, and how that does (or doesn't) affect the security model. There was also a suggestion about using VDFs as a means to make the time between blocks more constant, but some pointed out that VDFs are not inherently progress-free and could lead to even worse competition and even more energy consumption.

Updated on: 2023-06-14T21:30:35.091611+00:00