The PoW vs PoS Debate - Lyn Alden & Justin Drake
Speaker(s):
Ryan Sean Adams,
David Hoffman,
Lyn Alden,
Justin Drake
Held on:
28-03-2022
Written on:
30-03-2022
URL1: https://open.spotify.com/episode/0ME0lB9L7JSwcNTjT3DGlF
URL2: https://www.youtube.com/watch?v=1m12zgJ42dI
Introduction of Guests
- Helping Ethereum transit to Proof of Stake
- Macro expert
- Proponent of Proof of Work
- Critical of Proof of Stake
Which Consensus Mechanism has better Accrual of Monetary Premium
- Proof of Work have to be constantly online, while Proof of Stake as
- Proof of Work harder to attack - needs the physical hardware
- Money should be the simplest, leanest, no bloat. something that’s tries to be everything is not good money
Equities vs Commodities
- Should also apply the same (equity) analogy to Proof of Work
- Proof of Stake has a social layer, stakers are beholden to community members
- Argues that we should make an apples to apples comparison. ie compare Bitcoin Proof of Work vs Proof of Stake / Ethereum Proof of Work vs Proof of Stake
- Proof of Stake can simply remove a malicious validator from the validator set in the case of any attack (forced exit)
- Proof of Stake similar to shareholders of a company (bound by law)
- Agrees there’s granularity to it - but stresses it’s easier to become equity, harder to become commodities (because immutable)
- Proof of Stake situation can become centralized when a majority capital holder can lockdown/censor the network
- If
Proof of Work gets banned, they can just migrate the hash power somewhere else. But for
Proof of Stake, whales, custodians can determine the fate of the network
- Justin Drake argues that it is fundamentally still a function of capital - ie if u have enough capital, u can take control of the network (
51% attack).
Genesis Mining are also custodians of the hash rate, they rent hash rate out.
- Lyn Alden argues that smaller entities actually have the advantage
- Justin Drake argues that it is fundamentally still a function of capital - ie if u have enough capital, u can take control of the network (
51% attack).
Genesis Mining are also custodians of the hash rate, they rent hash rate out.
- Federal Reserve is an example of Proof of Stake system not on a blockchain. Proof of Work brought back digital commodities
Complexity and bugs
- Ethereum is admittedly 10x or even 100x more complex than Bitcoin
- Humanity is great at abstracting away complexity
- Client diversity to mitigate the risks of bugs and complexity of
Ethereum
- Lyn Alden agrees, but reiterates that having the leanest code is still the best way to prevent bugs
- Argues that Bitcoin Core relies on the security of many external factors - operating system, supply chain to provide the correct code/data
Being a last mover in Bitcoin
- Last mover/miner in Bitcoin is a lot more advantaged Justin Drake
- Argues its actually a huge disadvantage
- Hardware for mining would be extremely expensive
- Moore’s Law also makes it easier for would be attackers. Cost of making the attack is the hardware, not the actual operating costs
Centralization and Participation
- After a decade in the space, does not know any individual who operates Proof of Work, it’s all industrial.
- Proof of Stake has contributions from everyone and much more accessible to everyone Lyn Alden
- There are tiny private firms mining Bitcoin, but still bigger than individual, but still tiny in the global scale
- There is not one model for Bitcoin miners
Jack of all trades, master of none
- The more a system tries to do many things, the worse it performs at these things
- When Ethereum tried to harden its monetary policy, it started losing market share in Decentralized Finance to other ecosystems
Subjective vs Objective reasons for Bitcoin
The question posed: How much do people of the world like the
Proof of Work system more because it feels more fair (subjective) and how much like the technical workings of
Proof of Work (objective)
Lyn Alden
- Depends who u talk to
- personally approaches it more from a technical risk perspective
- The closer an entity is to the money printer, the easier it is to get financed
Aspects of Governance?
- Being able to have a say in which transaction passes/which doesn’t
- Counter question by
David Hoffman: Aren’t the mining rigs/hardware the governance model for
Bitcoin, just like how
$ETH is the governance asset for
Ethereum?
- Lyn Alden: Proof of Stake system can lead to wealth concentration, early holders effectively have a permanent stake in the system. Whereas for Proof of Work it depends on the miners having to continuously ensure their hardware is competitive
- Counter question by
David Hoffman: Aren’t the mining rigs/hardware the governance model for
Bitcoin, just like how
$ETH is the governance asset for
Ethereum?
- Also being to influence the protocol itself
- Proof of Work comparison to gold producers - gold producers have no control over the price of gold
Closing Argument: What is the best way to create crypto money?
- Asset needs a Schelling point for it to have monetary premium
- There is much more money to maintain economic security for Ethereum compared to Bitcoin
- Proof of Stake stands out in both quantitative and qualitative standpoint
- We want things that are the hardest, most immutable to be money
- We want things that are held for monetary premium (like gold), not for utility (compared to oil which is used for utility)
- We want things that are the simplest, so it minimizes bugs
- us nuclear code in floppy disks
- security systems are usually slow to update to the latest tech
- we want it to work when we want it to work, not work when we dont want it to work