Proof-of-Stake (vs proof-of-work)



Cryptocurrencies use a ton of electricity because of mining. In recent years people started working on a different technique called Proof-of-Stake. Not only does it use less energy, it can also be more secure.

(This video is a re-upload to fix a mistake I made in the previous one. Sorry about that!)

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19 thoughts on “Proof-of-Stake (vs proof-of-work)”

  1. 5:53 The use of “whopping” to describe the $79B needed to control the PoS “market” doesn’t sound very precise. 🙂 For me, it raises two (connected) questions. (And this is all modulo Aleksandr Vasilenko’s comment below about control requiring not >50% of the market cap, but rather >50% of the stakes. I don’t think that makes a difference to what I’m wondering). So:

    1) *Does the amount needed for control of validation increase as the market cap increases? In other words, even if some group did get together to assemble the, say, $80B needed at the time of this video, does that lock in their control forever, or would they have to continue upping their stake as the market cap grew? I’ll assume it’s the latter as I move to my second question.

    2) Isn’t it case that what makes the need for $80B (in this case) a deterrent is that it is “whopping” not in any absolute sense — after all, it’s not, in global finance terms, a lot of money — but relative to the amount over which it might give control. That is, if I understand right, even if some cabal could come up with the $80B, it would give some kind of control over only a mere 1x that. And when you factor in that, presumably, legislation will begin to emerge in order to classify as fraud the use of a dominant PoS position to screw with a blockchain, it would seem that the resulting risk of discovery means that a mere 100% ROI would simply not be enough to make it worthwhile. Is that correct?

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  2. Proof of stake will:
    1. Encourage hoarding (and hinder spending).
    2. Monopolistic behavior.

    Not sure I trust the masses anymore than I trust govt to limit monopolies and greed, which means, I see no answers to Bitcoin's "problems."

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  3. As an ETH miner I'm stoked about it. This could bring in a lot of diversity into crypto and subsequent liquidity. PoW will have a place because gigahashes of computational power doesn't just disappear. The PoW miners will help close the gap that currently exists between ETH and other cryptos. Fee payouts then can be moved into stakes, offering something other than price action volatility, which exacerbates that problem, for further investment. When ETH goes to PoS we can hedge on the liquidity of that network.

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  4. I have been searching up and down for a realistic answer regarding these consensus protocols. What makes proof of stake financial structures significantly different than digitized fiat currency? Influence over governance is achieved in the same way for both (if you have more money, you have more lobbying power). And in this case, what incentive does a state actor have to allow something like AVAX (or XRP, ETH, or ADA) to exist as free enterprise? It just creates competition for a CBDC.

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