Author: befreeandopen 2021-05-28 14:40:45
Published on: 2021-05-28T14:40:45+00:00
The conversation revolves around the security issues of Proof of Stake (PoS) and its comparison with Proof of Burn (PoB). The debate highlights the vulnerability of PoS to attacks such as the "nothing at stake" problem, which could lead to a takeover by a powerful entity controlling the system. The introduction of punishment in PoS does not completely solve the issue and adds more complexity, allowing for new problems to arise.Additionally, the optimal conditions for staking are rare, which means that over time, the significance of a powerful attacker in the system increases, leading to a more centralized control. PoB solves the nothing at stake problem by time-locking burns, which incentivizes miners to invest long-term in the stability of the chain. PoB also eliminates energy dependence, which could lead to state monopolies on mining, thus making it harder to censor and trace.The discussion also revolves around the use of Proof-of-Stake (PoS) as a consensus protocol for a "digital gold" like system such as Bitcoin. The conflicting requirement is that keys for large amounts of coins should be kept offline, but those are exactly the coins needed online to make the scheme secure. PoS solves this problem since nothing is held online, and burns can be tied precisely to block-heights. This eliminates the "nothing at stake" problem and creates more security than PoW or PoS.However, PoS protocols have disadvantages for a global settlement layer in a pure digital asset, such as PoS giving responsibilities to coin holders they cannot handle and cannot keep their coin holding keys online. Cardano, a UTXO-based PoS coin based on Ouroboros Praos3, has an inbuilt on-chain delegation system where coin holders delegate their node with hot keys in it to a "Stake Pool." This results in a system called Proof-of-SquareSpace, which has crucial differences from mining pools, including being forced into making decisions because they own the currency and having every UTXO indicating which staking account it belongs to, ruining one of the main privacy advantages of the UTXO model. Moreover, if a Sybil attack gains a dishonest majority and starts censoring transactions, users cannot redelegate their stake to honest pools. Algorand's approach to PoS is to allow only online stake to participate in the protocol, requiring keys holding funds to be online to author blocks when chosen. Participation keys are authorized to create blocks on coin holding key's behalf, but this system still degenerates to Proof-of-SquareSpace, and the participation keys can be sent to any malicious party with a nice website.In conclusion, PoS is inappropriate for a Bitcoin-like system, optimizing for simplicity and avoiding extraneous responsibilities for the holder of the coin. Bad technical decisions to appease the current political climate are an anathema to Bitcoin. While there is a proof of stake consensus protocol that could be built with substantially higher security and cost less resources without compromising any critical security properties bitcoin relies on, PoS tends towards oligopolistic control and has disadvantages for a global settlement layer in a pure digital asset such as Bitcoin.The conversation also includes the comparison of Proof of Work (PoW) and Proof of Stake (PoS) mechanisms. The author argues that PoS is not subject to centralization pressure, unlike PoW. PoS also has fewer barriers to entry, making it less prone to oligopolistic control. However, PoS faces the issue of "security vs. liveness" guarantee, which makes it incompatible with Bitcoin's objective of being a trustless digital cash. In contrast, PoW has a higher threshold for resilience against Byzantine Faults but is still vulnerable to selfish mining attacks. Energy usage is not a concern in itself, but if there is potential for substantial improvement, it should be considered.The conversation also explores the possibility of using VDFs (Verifiable Delay Functions) to make block times more constant and reduce the variation in block times. However, VDFs have their weaknesses and could potentially lead to even worse competition and energy consumption. Another suggestion involves using burned coins and VDFs as a replacement for PoW, but this would require consensus within the space and cannot be considered an alternative coin.Michael Dubrovsky, founder of PoWx, a nonprofit working to upgrade the proof-of-work algorithm used by Bitcoin, has proposed a new mining process called "optical proof of work" (oPoW). This process uses light waves instead of electricity to mine Bitcoin, resulting in a potentially more energy-efficient and cost-effective way of mining. Dubrovsky claims that oPoW would give miners an advantage as it can only be carried out in a specific location where they have exclusive access. The proposal was shared on the bitcoin-dev mailing list.
Updated on: 2023-06-14T21:06:20.965296+00:00