As an engineer with twenty years experience in this space and nearly as long studying the economics of it, I have yet to see a replacement for PoW that solves the problem that PoW solves.
Proof of Work is trustless decentralization.
Proof of stake is trusting the dudes who premined the coin and sold you a “fix for bitcoins inherent problem” to hype their ICO.
If you were right, after 10 years one of those PoS currencies would be winning. Can you even remember the proof of stake currencies from 2011?
Why did they fail? After all they had a huge economic advantage over bitcoin mining as they cost effectively zero electricity.
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.
Proof of stake chains are virtually immune to collusion and majority attacks. A single actor would need to own huge amount of resources and then essentially burn the coins. To purchase such a dominant stake the price would rise very quickly... making it very unlikely to be feasible. In comparison, attacking the larger Proof of work chains only requires a few $100M in hardware (the harder ones) and a MW-scale power source used sparingly. I don't see why PoW is still used...
"Nothing is Cheaper than proof of work"[1]. The best that can be said about Proof of Stake is that you get marginally better security while sacrificing liveliness / allowing the consensus layer to be captured by regulators [2]. PoW forces the machine to advance, if you refuse (or are forced to ignore) a block, the business dies but the network moves forward. If PoS was new and research was underfunded, you might have a plausible claim that it might turn into a workable solution.
The fact of the matter is, it's been 6 years since PoS' proposal and millions of dollars in R&D funds have been pumped into trying to unsuccessfully obviate PoW.
Proof of Stake implementation has been as never-ending as COVID restrictions.
Besides, it's not clear whether PoS won't create governance problems. PoW is a pretty smart solution of proving you spent some money and pays the miners so that people who have computing power won't attack the system.
PoS is trusting rich people, hoping they won't bring down everything for who knows what profit - a government printing money to delay a market crisis, is not that far.
I'm not convinced proof-of-stake means less equity. PoW is very capex intensive between hardware and energy. Especially during a time when energy prices are soaring, the big players have access to extremely cheap electricity that keeps them profitable, while the small players shut down.
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.
A lot of research was done by heavyweights for PoS in 2012 and 2013. The consensus was that it was a fruitless pursuit and that PoS could not match PoW in terms of security and decentralization.
PoW and PoS tie wealth too directly to the "legislature" membership
There is that. But nobody seems to be able to make an alternative work. Etherium postponed proof of stake yet again. What was the excuse this time?
Amusing potential alternatives:
- Proof of Space. Nodes have to be some minimum physical distance apart, like a few kilometers, so you can't have "mines". This might be feasible via some low-orbit satellite network you can use to establish approximate location.
- Proof of Hate. Nodes are run by organizations that hate each other, so they won't collude.
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
PoW doesn't even lead to good distribution as we can see since a few years and more importantly its not needed. We have Federated Byzantine Agreement (FBA) "blockchians" since like 8 years and it beats PoW by any metric.
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.
PoW already brought us to huge wealth concentration so it is not the solution either. This is one of the hard-not-so-talked problems of cryptos at the moment, and I can't see how to solve it.
sorry, i wasn’t clear there - for reference, i don’t believe PoW as a concept is a failure. only this current implementation focused on SHA256.
the reason for this is because, unlike bitcoin’s beginning, one bitcoin network participant is no longer comparable to an equal share of the resources required to reach consensus on the network.
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