Proof of labor makes use of bodily prohibitive prices to safe the blockchain and preserve a reliable ledger.
Proof of stake makes use of an summary energy hierarchy to aim to safe the blockchain and preserve a reliable ledger.
Proof of labor is the one idea that permits digital monetary transactions to be certain to actual world assets / vitality. This may fully disrupt the present day monetary world that’s tied to summary energy.
Proof of stake will enable these with summary energy to stay in energy.
If you need change, proof of labor is the one possibility.
Agree, PoW is the future, moon bois won’t agree as they only understand staking rewards
Yes, and the challenge is the last part, “If you want change…”
Most people still either understand and don’t care, are ignorant to these truths, or are incentivized to perpetuate existing abstract monetary power models.
Hi All
I just watched Trader University’s latest Youtube video on BTC decentralization and I have a few questions.
It always surprises me to see how small a number of nodes there are worldwide. Currently around 15,000. Wouldn’t that mean a bad entity would only need to spend a couple million to get more than 50% of nodes, thus being able to change the consensus rules?
Trader University sort of answers my first question by saying the other nodes would reject these bad nodes. But couldn’t POS nodes do the same thing. Couldn’t ETH nodes reject the large censorship nodes? Or is that not possible because in POS, the nodes and miners are the same entity? To do the same with BTC, a bad actor would need to focus on getting more than 50% of mining power to change the rules?
If someone could send me an easily digestible video on this subject of how the separation of nodes and miners help keep BTC decentralized would be appreciated!
PoW with ASIC miners is the absolute unique winning combo
Agreed.
Proof of work is the most important innovation in Bitcoin and the real reason why blocks , in a blockchain, exist.
The key aspects as to why Proof of work is so important and cannot be replaced by PoS are:
1) **Fair Coin Distribution** No scammy ICO , premine or instamine is created and miners are forced to sell most of their coins to cover the expense (mainly ASICs + electricity) which allows a fair distribution and competition in the minting process.
2) **long term incentives** With coins that have premines/instamines/ICOs the incentives are such that the creators benefit from pumping and dumping and creating more altcoins/ICOs to “fundraise” more rather than miners who have sunk infrastructure costs on mining a particular algo(The more we approach Moore’s cliff the longer these time preferences become as we have been seeing)
3) **Decentralization of Minting** Since mining BTC is so competitive, profit margins are typically thin and thus new entrants that either use a better tool to mine (ASIC) or find cheaper sources of power(typically green due to the economics) can quickly gain market share making lasting monopolies difficult. Even if a main ASIC manufacturer appears to have a large market share we can see this quickly change due to a single malinvestment or a mistake when developing the newest ASIC. Power is a resource that comes from many sources and allows many locations around the world to remain competitive for unique reasons.
4) **Sybil resistant** Proof of work allows miners to order transactions where there are real tangible costs to transaction selection and fake nodes cannot simply flood the ecosystem in order to attack the network
5) **Game Theory** The game theory of Bitcoin is such that it is more profitable to mine bitcoin and secure the network than attack it because any attempt at a 51% attack or reorg the chain would quickly be caught once the attack was executed and the loss in resources would be profound.
6) **Objective Security** – Proof of work gives us an objective and measurable degree of security where risk assessments can be made with greater precision that isn’t afforded with more subjective forms of security.
6) **Less Regulatory Scrutiny** – One critical aspect to how securities are defined and regulated by governments(for the USA research into “Howey Test” but other countries have similar regulations) deals with who controls the money/investment and a common enterprise profiting from it. Because Proof of work allows anyone to become a bank that mints and secures the network that no-one can control courts have already determined that Bitcoin cannot be considered a “security” and thus would not fall under those regulations like other coins/ICOs that lack Proof of Work. PoW alone is not the only determining factor on defining what is and isn’t a security but an important one.
7) **Incentives to resist centralization** The game theory and incentives of Proof of stake all lead to centralization because there is no external need to compete for energy and efficiencies. The creators or large whales who buy into the coin will all form a controlling oligopoly who can simply collect taxes (fees) for no effort and censor with no effort unlike with proof of work
What about PPOS?
“Proof of work” is the easiest and most decentralised exchange in existence.