POS vs POW revisited

How the Tides have Turned

A few weeks ago I published https://medium.com/@lyaffe/nxt-proof-of-stake-theory-vs-practice-e895ac8cb5bf where I explained why the simple proof of stake algorithm used by NXT is practically secure. Still, I didn’t claim it is more secure than Bitcoin’s and Ethereum’s proof of work. Now I do.

Reflecting on my visit to China a couple of weeks ago just in time for the ICO ban and the Chinese exchange closure, one has to ask, what’s next? What if the Chinese government also performs the next natural step and closes all of China’s Bitcoin and Ether mining factories?

This would surely have a long-lasting effect on the mining industry with untold consequences. But try to close a proof of stake network like NXT. You close it in China, it will take users an hour to setup all nodes again in Hong Kong. There is no centralized lucrative target you can attack.

To strengthen my point, Vitalik Buterin (whom I deeply respect) also understands this risk very well and is pushing the Ethereum version of POS named Casper. The Ethereum marketing machine wants you to believe that they are about to switch to POS any second now, but in fact they are still making large changes to the design. I claim that Ethereum won’t switch to POS soon and perhaps never will.

It’s funny how the tides have turned, the POW chains are struggling with practical security issues while the simplest POS approach prevails.