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There are many defenses for Bitcoin, but I don’t have a good one yet for PoW.
I read that PoS is a system that serves elites disproportionately because the rewards are wealth-based and not work-based, but isn’t PoW also wealth-based?
Why is it important that humans build Asics, extend power-grids and build warehouses, if at the end of the day it’s the wealthy that can invest the most?
There are mining pools for the less wealthy, but there also staking pools.
Thanks!
You just haven’t thought this through at all
“The root problem with conventional currency is all the trust that’s required to make it work.The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.
Proof-of-work has the nice property that it can be relayed through untrusted middlemen.We don’t have to worry about a chain of custody of communication.It doesn’t matter who tells you a longest chain, the proof-of-work speaks for itself.”
― Satoshi Nakamoto
Satoshi created an internal perpetual clock (difficulty adjustment) based on energy, math, time all of which cannot be forged, controlled or manipulated by anyone or any authority.It’s designed to adapt itself and run forever without any intervention at all.The unforgeable cost of work is what links bitcoin the digital money to the physical world.
Without that you go back to human trust based political system.Corporate governance is based on stake.Fiat is based on stake.Trust based stakeholder controlled systems is literally what Satoshi fixed using proof of work.
The person who proposed proof of stake in 2011 on bitcointalk specifically said that it’s not something for bitcoin but maybe for companies issuing shares on a closed, permissioned blockchain to prevent any outside influence.Proof of stake has two kinds of political systems exactly like fiat.Either you have a government behind the project controlling it, like a premine company or foundation, or you have governance based on stakes, just like corporate governance.
Proof of stake has no link or value interface with real world.
It’s a difference of entrepreneurial venture and
innovations in energy systems vs rent seeking.Everyone has proportional cost at every scale in PoW.When you use bitcoin and pay a fee, the miner has a proportional cost of work and nothing can ever dilute your coins/total coins.
PoS has no cost just like people printing money in fiat have no cost.
You’re back to fiat political pyramid system with preminers, freeloaders rent seeking from poors who pay fee and burn their coins while the inflation (new issuance from the money printer) accrues to the top for free.
Cantillon Effect.
Let’s also get this straight.There’s also a lot more to shitcoins than whether they use PoW or not.PoW alone does not enforce decentralization and network incentives when there’s a premine company with executive board of directors, licenses and trademarks and central AWS servers operated by that company.There’s no point of anyone even running nodes and that is why no one does.The central authority hard forks every 6 months and enforces consensus moving to a new chain.You either follow the central authority’s chain or you leave.
You have no other option.
Also from a security perspective, all these premine, ICO shitcoin chains are hacked to the tune of
tens of billions of dollar value to exploits every year, not to mention millions of failed transactions every month users lose fees on.
So what’s even the point of any of them?
There’s never been a better industry vertical for scammers as long as the window is open
Did you know there were no altcoins for 2.5 years until April 2011? What happened in April 2011? Bitcoin reached dollar parity and reached a price of $5.Kerpeles just bought Mt Gox and it became easy to exchange bitcoin for dollars.The first altcoin was born that month.
PoW bridges bitcoin to the physical world, binding its operation by the laws of mathematics and physics.
Vitalik Buterin has openly admitted this, saying that PoW restricts developers to the laws of physics.
It actually makes bitcoin hard money.
You need to push around electrons in the physical world in order to create bitcoins.
That is also a double edged sword.
Every mined BTC has an equivalent in physical world goods that are used up during mining – and that is where all the energy usage concerns come from.Everyone won’t get tired telling you that this isn’t a problem, but in fact this is the very essence of proof of work: you MUST spend real world dollars (proportional to the mined value!) on the generation of hashrate (and as things stand, that means mostly on energy).
The same thing can be said for the smallest staker.A small miner connects to a mining pool, a small staker connects to a stake pool.Both vote who gets their support and can change that support on a dime if they believe the pool to be malicious or extortionate with their fees.
The main issue with PoS is not who can profit from securing the network.I think you can actually make an argument for that being more distributed than mining rewards.
The real issue is that the people with massive stake hold the most power over both security and value in the network.
So during a fork a wealthy participant can reduce both the security and value of the chain they don’t like making it near impossible to go against the outcome they support.
Then, when you switch from the “theoretical PoS” to looking at actual chains in the ecosystem you find tons of other issues:
No fair launch, founders have massive stakes (giving them massive governance power due to the core problem above).
Smart contracts create a ton of applications which often tie into centralized entities which can choose not to respect one side of a governance fork (for example stablecoins can capture the forking process of a chain by saying they will only respect redemptions of their tokenized asset on one side of a forked chain, totally fucking DeFi and any other dApp on the other side of the fork which integrates the stablecoin).
The list goes on.At the end of the day PoS might be great for an open centralized network of financial tools.But it can never do global trustless money.
You are then left with a PoW argument that essentially amounts to “it actually works towards accomplishing global trustless money and that’s important enough to warrant energy consumption.” You can go further and talk about all the interesting ways Bitcoin can help energy grids, incentivizing clean energy, monetizing stranded energy, etc.but that’s all gravy on top of the core utility that gives Bitcoin the right to energy.
PoS only requires you to make a one-time purchase for a % share in control over the network, whereas PoW requires you to constantly keep investing into it to maintain your share.
If I have 51% of all available of some PoS coin and I stake it, I run the network and you can’t do anything about it as long as I don’t sell you any.
If I have 51% of the BTC hash power you can build more miners, pushing my % share down.Then I’d have to buy more miners to keep maintaining that 51%, all while I’m being sucked dry from the electricity and overhead costs.
TLDR: It’s feasible that an entity like Blackrock could permanently capture a PoS chain, but extremely unlikely that they could do so with a PoW chain.
PoW is energy intensive BY DESIGN.
It is a feature, not a bug.
That energy is exactly what secures the network and it is exactly that which eliminates the need for a trusted 3rd party.You may not think that’s worthwhile, but there’s billions of unbanked people in the world who would beg to differ with you.There’s billions who live under authoritarian autocratic regimes who are forced to watch their life savings erode in front of they eyes as their unelected governments and their corrupt central bankers steal their work and time and inflate the value of that away entirely.And there’s billions more who are waking up to the corruption of the traditional finance system which is aided and abetted BY those trusted 3rd parties which Bitcoin could make completely redundant.
If you don’t see the value in a trustless, permissionless, peer to peer monetary network with Final settlement in 10 minutes and a layer 2 built upon that which can do instantaneous transactions riding on the bitcoin rails – a new monetary system that could completely replace the existing financial system (and do so at a FAR lower net consumption of energy btw)…
If you don’t recognize the value in that, then there IS NO defense of Bitcoin that will satisfy you and it’s pointless to even have the conversation.
But just be aware that there are literally Billions of people out there who DO see the value in this.
Trustless, permissionless…Which also truly denotes being “governance-less”.PoS projects are full of incessant changes, constant discussion, and neverending governance.PoW removes all that friction and ultimately ends up to people utilizing and being rewarded for using energy that is otherwise wasted…
as is the case with those expanding renewable energy grids, or the oil & gas producers that now have the ability to monetize methane offgases that they cannot otherwise capture, so they used to be venting directly into the atmosphere.And as we know from cow farts, methane is the greatest short term risk to our ozone than any single thing…Making Bitcoin the savior from greenhouse gasses!!
There’s so much amazing truth, freedom that comes from PoW and its solution to keep the inflation rate stable in the face of changing energy input is simply and literally golden.Satoshi clearly understood what money was and managed to merge prior crypto projects to what actually makes gold valuable
The best argument I’ve heard for PoW has been put forth by Jason Lowery.
If you watch his series on the What is Money podcast you’ll understand why PoW is essential and PoS is doomed to fail.
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