PoW was an amazing evolution, but will a successor, “Proof-of-Stake” (PoS), benefit society immensely?
When bitcoin does 100x in price it’ll use over ~10% of the world’s current electricity consumption, even if only 1 transaction per block (although usage might likely be high if we reach 100x). But that’s not the only problem.
Today, PoW employs algorithms that do nothing useful except prove that they’ve done more useless work than the next bitcoin miner. It’s reminiscent of an AI dystopian example where an AI to make paperclips takes over the universe and turns every planet into paperclips. Why? Because that’s what it was programmed to do.
Proof of Work is likely not even close to as secure as Proof of Stake (PoS). With PoW, a govt or big bank can buy $4b in processors and 51% bitcoin. Even if it forks the algorithm didn’t change, so the attacker keeps attacking everywhere it forks.
With PoS if an attacker buy 51%, he’ll shoot the price to the moon in doing that, and spend loads more to get 51% attack. And then, if the network forks away, with PoS, the attacker is left only with useless or depreciated bags from the original chain. The attacker can’t attack the new fork, he don’t have stake there.
It’s be nice to at improve PoW to at least does something more useful than dig holes in the ground and fill them back up. Some examples might be protein folding, or the SETI mission. Perhaps bandwidth or other network self help work.
Ethereum is working on a PoS system called Casper, but will transition to PoS only slowly, perhaps over years. However, someone might just the gun when Casper is out, create a fork that’s only PoS, without the transition time, and let the miners hold onto the old PoW chain, which, presumably would be less valuable as it’s be much less useful due to it’s abysmally slower performance (perhaps 100 times slower).
Some suggest PoS can be bribed, but so can miners. PoS allows you to gain finality. Also, a PoW bribing attack would cost more, and Casper is resistant
against cartel censoring attack.
History: If PoS is so good, then why isn’t it big yet?
To answer this, consider the history of how blockchain got big with bitcoin.
PoS was not often done in the primordial years of blockchain because the economics to *begin* with PoS seem tricker.
In PoW, coin distribution is easy. New miners come in. Solved.
In PoS, how do you start getting new people forging blocks if they have none?
Today, airdrops might solve the problem, especially given existing PoW infrastructure on which to perform the airdrop. Granted, PoW has it’s place now, and perhaps, always.
But many are looking forward to see Ethereum move to PoS eventually.
That’s when dApps might start to be really useful, when smart contract execution is cheap and fast.
Plasma + Sharding + Casper PoS = FTW