Source: Adobe / greenbelka
In the never-ending battle between Bitcoin (BTC) and Ethereum (ETH), one of the biggest talking points is which consensus mechanism is the best: proof of work (PoW) or proof of stake (PoS). This particular fight has emerged amid the planned transition from Ethereum to PoS, and has gained new momentum in light of recent efforts to accelerate the move.
While the Ethereum developers have decided that PoS is the best way forward for Ethereum, the question remains whether it could offer advantages to Bitcoin, which, as a store of value, has different goals.
Opinion is highly divided on this within the broader crypto community, with some believing that proof of work is ideal for Bitcoin, helping it achieve greater stability and security. On the other hand, others argue that proof of stake offers similar levels of security while providing more simplicity and scalability, not to mention less environmental impact.
– Pierre Rochard (@pierre_rochard)
For some staunch Bitcoiners, the PoW vs PoS debate isn’t even worth tackling. A BTC developer told Cryptonews.com that he is not the right person to comment for the purposes of this article, adding, “I don’t use shitcoins.”
However, less supportive commentators are willing to acknowledge that proof-of-work and proof-of-stake have their own strengths and weaknesses, although many add that PoW is generally better for Bitcoin than PoS.
“While PoW is certainly a more time-tested model for securing and minting new currencies on blockchains like Bitcoin, it requires enormous amounts of power, which some would even consider a feature. PoS, on the other hand, is not “as energy intensive and better for scaling blockchains,” said Mike Colyer, CEO of the finance company of crypto mining Foundry .
On the other hand, Colyer added that PoS is “theoretically more prone to centralization and has the inherent security problem of using the native tokens of a blockchain to decide the future of those tokens or the blockchain.”
Even people on the Ethereum side of the debate acknowledge that proof of work has its strengths and has undoubtedly provided the crypto industry with a solid foundation.
“One of the biggest advantages of proof of work is that it has served as a chassis for cryptographic security for more than 10 years and is now worth a trillion dollars. It is technically and economically complex, which plays a role in attracting specialized mining companies to network maintenance work, ”said Lex Sokolin, the Fintech global co-director at Ethereum-focused major. ConsenSys blockchain company.
This diplomacy aside, Sokolin also claims that PoS offers several advantages, while also providing many of PoW’s key properties.
“The proof of stake is an easier to understand system that allows easier participation through equity participation. It is also capable of achieving similar security results without the electricity consumption of the proof-of-work mechanism, and has been shown to work across a number of smaller but functional crypto networks, ”he told Cryptonews.com.
Sokolin went on to explain that PoS is ideal for a network like Ethereum, which aims to provide the digital infrastructure for a future decentralized / crypto-based financial system.
“The blockchain-based economic activity that we see now is far beyond moving one type of value in a single protocol. Rather, we see software run by a global network through payments, loans, banking, investments, and insurance substitutes, ”he said.
According to Sokolin, this is the main reason why Ethereum needs PoS.
“As decentralized applications become more complex, efficient and key to people’s lives, the underlying network similarly requires a more modern architecture,” he added.
PoW + Bitcoin = A match made in heaven?
However, even with the assumption that proof of stake may be superior in balance to proof of work, this does not necessarily mean that Bitcoin needs or would benefit from a transition to PoS.
“For Bitcoin, which is intended to be a long-term and reliable store of value, PoW provides a unique model in which miners are incentivized to compete with each other to secure the network. Consequently, miners place an irrevocable stake in bitcoin through the construction of specialized mining infrastructure and the constant purchase of energy, ”said Mike Colyer.
He added that he personally “doesn’t think there can be a better model for Bitcoin” than proof of work, an opinion shared by other members of the industry.
“Once these two raw materials [energía y capital / hardware especializado] they are staked, there is no way to un-bet that energy or use the mining equipment for something else. This is in stark contrast to PoS networks, where participation itself is the currency of the network; As a result, it can be devalued if the value of its underlying currency falls, ”said Nishant Sharma, founder of the consulting firm of BlocksBridge crypto mining. .
It is also likely that even with its reported high power consumption, Bitcoin is unlikely to move out of PoW.
“Bitcoin miners have financial incentives to mine in regions with the cheapest electricity. Typically those are regions with excess electricity generating capacity or abundance of renewable energy, ”Colyer said, adding that Bitcoin could have“ almost zero environmental impact ”even without exiting PoW.
As reported, the major Norwegian industrial investment firm Aker ASA aims to establish mining operations that transfer stranded or intermittent electricity without stable demand at the local level – wind, solar, hydroelectric – “to economic assets that can be used anywhere.”
Either way, Lex Sokolin said that Bitcoin is currently too attached to PoW to quit, particularly given its priority is security over high scalability.
“Oil and gas continue to power much of the world’s electricity consumption, including the human and mechanical operations of the traditional financial industry. It’s hard to imagine the Bitcoin community choosing to change something so fundamental on their network as proof of work, and I think this is largely due to the design of what Bitcoin should do, which is to be digital money which is very difficult. break up, ”he said.
Other recent PoW vs PoS discussions:
What kind of silly Bitcoin maximalist mental gymnastics this is. PoW is cool and all, but some of these folks clarify… https://t.co/D5YHvojUvv
– cyber_hokie (@cyber_hokie)
1 / @nic__carter has a great article on PoW Power Consumption, explaining in detail where critics are wrong.… Https://t.co/4xgJ0i8Pnd
– Brendan from Dharma (@brendan_dharma)
In which I reproach @Noahpinion for his opinions on Bitcoin mining
– niclovin (@nic__carter)
@Noahpinion The block subsidy decreases exponentially over time, therefore eventually energy use will be tied to transaction demand.
– BitMEX Research (@BitMEXResearch)
– The fight between Bitcoin and Ethereum intensifies amid the entry of fresh capital into the space
– Ripple bosses break up legal battle to crush Bitcoin
– This is how Satoshi Nakamoto defended Bitcoin mining and became a skeptic
– Ethereum moves forward with plans for a pre-proof-of-stake transition
– Bitcoin Mining in 2021: growth, consolidation, renewable energy and regulation
– Bitcoin miners buy oversupplied power and turn to renewables – Nic Carter
– Bitcoiners May Change Their Mind About PoS, ‘Who Knows’, says Buterin
– Bitcoin is better than Ethereum in these four things