What you described doesn't even address the reason PoW exists. So, I’m sorry but it sounds like you are repeating something you heard without understanding the issues at hand. I suggest you read “There’s nothing cheaper than proof of work” by Paul Storzc
This is why I think Proof of Stake is destined to outcompete Proof of Work. The costs are drastically lower in both electricity and hardware; and in practice, PoW is basically PoS with extra steps.
Yes I know why PoW has to work that way. I explained that in my first sentence. The fact that a PoW system requires honest participants to waste more energy than attackers could in order to function doesn’t make it any less wasteful.
PoW is a service to the network, to create an immutable ledger. It comes with a very real nuclear option that will bankrupt miners if you misbehave and get fired by hashing algo change.
It's just a boring industrial business, like smelting aluminum or iron.
For a while I’ve had a sense that “useful PoW” simply doesn’t make sense, but I was unable to explain why. This article perfectly explains why it doesn’t make sense, albeit using very econ-specific terms. I think it may be possible to explain it in simpler terms, without needing to introduce marginal revenue and cost, but I’m not sure exactly how just yet.
Most proponents of Proof of Work don't celebrate the use of energy. They celebrate the use cases that PoW enables. I don't know of any other way to trustlessly establish a consensus ordering, and I believe that being able to trustlessly establish a consensus ordering is very valuable, therefore I believe PoW is worth the expense.
These decisions get made on an open market, it's not like anybody is forced to put money into a wasteful system if they aren't getting value out of that system.
Sure, but PoW is (by design) computationally expensive, so any blockchain solution has the burden of showing why it's sufficiently better than the alternative to merit the extra cost.
You seem to be convinced there are better ways to implement a distributed consensus mechanism that doesn’t depend on proof of work. Feel free to present it to the world and become the next satoshi. Meanwhile - face the reality. PoW will consume as much energy as is profitable and only market decides that.
It's not ideology. There are pros and cons to both proof and stake and proof of work.
The idea behind PoW was to decentralize proofs by allowing anyone to participate. This is a valuable property in a cryptocurrency. Bitcoin's implementation utterly failed in that regard. There are better projects out there, like Monero, but Bitcoin just refuses to die.
I agree PoW is bad, and I'm hopeful for the future of Proof of Stake. Just like using coal and oil to fuel our industries is bad, and we are moving more and more towards renewable energy it is a path of progression. You have to start somewhere and grow, but I think it is somewhat disingenuous to discuss them as if they are static states which are not seeking and progressing to more ethical models.
The article simply points out PoW imposes a huge cost on the system, and that such a cost is assumed by the token holders whether they like it or not. This has been known for a long time.
anything based on PoW has to fail long term. PoW benefits from economy of scale, which leads to centralization, which defeats the purpose of the thing being PoW'd
PoW keeps things fair, you have to spend money on hardware and energy or become irrelevant.
In other consensus systems like PoS, whoever has the most capital controls pretty much everything and has 0 incentive to sell what they get since they aren't really spending any energy for their cryptographic signature.
It literally says "rich gets richer" in the protocol which is fundamentally broken in my humble opinion.
I think what @decentralised is arguing isn't that PoW is wasteful, but that there are certain by-design inefficiencies that outsiders consider a waste from an economics standpoint. (A high economic cost to perform PoW)
Certainly you could argue that this economic cost is necessary and therefor not wasteful. Indeed I agree that it is central to the idea.
I would love to see the same content / angle of this article re-written. I think it could be condensed to a few paragraphs perhaps, for those who already understand Proof of Work. I found myself getting stuck in the analogies (infinite lottery tickets) and not being able to make progress. But I'm interested in the pros/cons of PoW vs PoS if you have recommendations.
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