Opinion on proof of stake in future

Summary:

The use of proof-of-stake (PoS) as an alternative to proof-of-work (PoW) for a base-layer system like Bitcoin faces several problems. PoS is vulnerable to denial-of-service attacks, stakers colluding to drive out others, and a single CVE that can tear down the network. In contrast, "pulling the plug" is sufficient to stop a hacked mining rig in PoW. The value of a base layer is tied to its "risk of default"; thus, PoW will always be superior, harder money. Bitcoin's low risk of default is due to its proof model, core developers' risk aversion, decentralization, and security prioritization.PoS has no sunk-investment, requires stake to be online (and attackable), and cannot defend the network from an attack if the plug cannot be pulled. PoS is not a suitable alternative to PoW for a base-layer system like Bitcoin. While some may argue that PoS has benefits, such as collaborative randomness and rewards for honest behavior, these are outweighed by its vulnerabilities. In discussions about PoS, nothing-at-stake and selfish minting attacks have been mentioned. While nothing-at-stake is a solved problem, selfish minting attacks violate the linearity of power of stakers in non-quorum systems. To solve this, only the owner of coins themselves should know whether they can mint a block. While introducing punishment does not necessarily create another problem elsewhere, it is essential to compare the levels of advantage that can be obtained in each system and how this affects the cost of attacking the system.The debate revolves around the security issues of Proof of Stake (PoS) as a reasonable alternative to Proof of Work (PoW) in Bitcoin. The argument highlights the problem of "nothing at stake" and its potential to be exploited in PoS systems. It is argued that the attacker's position will improve over time, leading to a system controlled by powerful entities. Quorum-based PoS is discussed, and it is claimed that the introduction of punishments does not solve the problem and instead introduces additional complexity, which may lead to other problems. Additionally, the network graph analysis technique can allow an attacker to target pre-selected minters with powerful DDOS attacks, making it insecure.Proof of Burn (PoB) is presented as a better alternative to PoS since the proof is on-chain rather than sitting on a node waiting to be stolen. However, there are concerns regarding its exploitable nature, where an attacker could focus all their burns on a particular set of blocks to double-spend. The debate concludes by rejecting PoS as being critically insecure until someone invents and demonstrates an actual way of solving these issues.Proof of Burn (PoB) is a secure alternative to Proof of Stake (PoS) and Proof of Work (PoW) for maintaining cryptocurrency consensus. PoB solves the "nothing at stake" problem because miners have no incentive to mine on multiple chains, making it more secure than PoS and PoW. Additionally, PoB eliminates the need for large amounts of coins to be kept online for security, making it more appealing for unsophisticated coin holders who prefer to keep their coins in cold storage. Unlike PoS, PoB does not require delegation, which can lead to social attack surfaces and degenerate into Proof-of-SquareSpace. Furthermore, simpler systems like PoB are typically more secure and eliminate the energy dependence that could lead to state monopolies on mining. Eliminating this weakness seems to be in the best interests of existing stakeholders.Bitcoin developers are discussing the possibility of using Proof-of-Stake (PoS) as an alternative to Proof-of-Work (PoW). Billy Tetrud argues that there is a lot of misinformation and bias against PoS, but there is a difference between "proved to be impossible" and "have not achieved recognized success yet." He believes that there is a PoS consensus protocol that could have substantially higher security while costing far less resources than PoW without compromising any of the critical security properties bitcoin relies on. However, he doesn't think they should experiment with bitcoin by switching to PoS.The arguments levied against PoS are often out of date or rely on unproven assumptions or extrapolation from the analysis of a particular PoS system. Tetrud suggests that the critical piece of this is the disagreements around 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. Another criticism of PoS is that it requires permission to gain tokens. Tetrud argues that this is not a practical constraint and that some nodes may reject you, but there will likely be more that will accept you. He doesn't think requiring the "permission" of one of millions of people in the market can be reasonably considered a "permissioned currency.

Updated on: 2023-06-14T21:13:05.680304+00:00