Bitcoin Forum

If bitcoin mining is based on POS, we may not have hard volatility in bitcoin markets like how we are experiencing now.

 - We do not need to make ASIC manufactures billionaires.
 - We never need to sell mining rewards to recover setup costs.
 - When miners are not dumping, I could not imagine where bitcoin prices would have been trading right now.
 - Imagine when 40% to 60% of so-far mined bitcoins are locked for staking, where will be bitcoin flying ? Beyond moon ?

 - Now a days ASIC based mining is not feasible to every common people. We need industry scale of investments  to start. At the same time, if bitcoin mining is based on POS, I guess we may not afford to buy one FULL BITCOIN as only financial institutions or corporate may afford to buy that.

If bitcoin was based on POS, bitcoin might be having value by this time around $1M too but I am sure the basic infrastructure needed for a payment system would not have been developed as only very few people might have been involved into bitcoin related activities including adopting bitcoins just for store of value (the least application of bitcoins which is possible even for haters of bitcoins). This might be a reason why Mr.Satoshi have chosen POW. But, POW has its own cons like described above.

Basically, I mean POW encourages money to flow out of bitcoin ecosystem but it has brought some balances to bitcoin ecosystems in terms of price levels as well as it has helped for spreading bitcoins into rest of people. It means people will believe that bitcoin will go to value up to $100k or $1M but it must be available right now for $3k so that they will risk their $100 or daily one hour of time to accumulate some bitcoins. If bitcoins is valuing for $10M right away, then most people will decide bitcoin is not for them like it is meant only for early adopters or for millionaires.

So, what is my point ?
POW will be a all perfect thing for all the future ? It may not be. Changes are inevitable everywhere. If POS was perfect in last 10 years of bitcoin's life cycle, now we may need POW+POS based hybrid mining algorithms as we may not leave off POW completely but we need to fix the drawbacks of POW too.

With POS, we may reduce volatility of bitcoin markets as it will encourage people to continue holding for staking.

When bitcoin market is having less volatility yet providing promises of reaching million dollar values, I guess bitcoin may hit main stream adoption more easily. I believe POW+POS based mining may help for hitting main stream adoptions at significant levels.

Bitcoin was not invented to make people rich fast. Bitcoin was made to give us secure payment platform. So far networks secured with Proof of Work proved to be way more secure.   I also dont understand why you posted this technical question suggesting to move to PoS in Economic/Speculations part of forum.

Doesn't this create questionable incentives? In either POW or POS, there is always incentive for miners or validators to steal money. With POW that incentive is thwarted by the immense cost of producing blocks. How is this problem solved in POS? What is the cost? Why won't validators band together to attack the network?


I think you've stumbled onto the main reason why POS coins were invented! ;)

Anyway it definitely won't be integrated into Bitcoin. You can't just rip out the consensus system and drop in another one. Thousands or even millions of users will disagree when the fork happens, especially because of how weak the theoretical security is.

I won't be running your client. :P

yeah Bitcoin will always be POW. Switching the type of consensus it does would be far too big a change for the user base to agree to. It would split Bitcoin and nobody wants that. Let stuff like Ethereum that is tightly controlled by its dev team with a hard forking update path do stuff like switch consensus algos. Bitcoin will stay Bitcoin. No reason for it to change. It is secure basically against any attack that could possibly happen, no reason to endanger that.

I never mentioned about any scheme or programs which is about making you rich FASTER. But, if bitcoin is trading stable, you may not be writing here. Moreover, bitcoin was designed to have huge value over time so that it will be adopted widely. Limited supply and halving are included to implement this.

So far, none of POS systems are proved weak too. I read there is no vulnerability of 51% attack in POS. Moreover, I am speculating about hybrid hence there will be no compromise on security features.

Posted here to have views on volatility of bitcoin markets. If this sounds too technical, I guess mods will move.

Why the incentive should be thwarted ? What problem you are exactly referring ? I believe the miners and holders should be encouraged by incentives and this is what POW and POS are doing.

No one will oppose when both backward and forward comparability will be assured. Remember all the forks are not leading to split. Even "upgrading" is also termed as fork.

I remember I had said the same in 2010 :o.

you are wrong.

first of all price is not determined based on miners, price is determined in the market (mainly on exchanges) and with people buying and selling. miners aren't even selling on exchanges, they mostly do OTC trades which won't affect the price on exchanges. as a result price will continue being volatile as long as market is small and order books on exchanges are small.

secondly if anything PoS is going to harm the price even more because whales would be making more if we switch to PoS and we all know whales manipulate the price not miners. so imagine a whale having a lot of bitcoin that would be receiving a lot more free reward for just owning bitcoin and doing nothing else!!! now he  can have extra bitcoin to dump on the market and he does whenever he wants to short bitcoin.

yes, there is no 51% attack in PoS but there are lots of other weaknesses in it.
your argument in here is like saying iron corrodes in acid so since there is no corrosion in plastic it must be better than iron so we should use it in our constructs (imagine a plastic ship, or a bridge,... with your logic :D)

I agree here. Changes/enhancements are always avoidable. I am always worrying on "green-house" impacts due to bitcoin mining. It was not covered by you still this may become one of the reason if bitcoin will adopting POS. We have passed 10 years with POW among many fluctuations and it may continue for another 10 years also before peoples will be realizing about the importance of encouraging people to store bitcoins to have huge/stable markets.

If you are such a big PoS supporter,why don't you just create your version of bitcoin with a PoS blockchain and hard fork it from Bitcoin Core.I'm not a huge fan of hard forks,but it's proven that they pump the price of bitcoin core,because of the "free altcoins named after bitcoin" that the noob will get for nothing. ;D
It's a win-win.BTC price goes up,and you get your own PoS pseudo-bitcoin. ;D

You got any solid proof for those OTC trades will always end up into cold storage and never hit the exchange by any means ?
It is too easy to call anyone wrong ;).

Owning bitcoins in big number itself a big task to deserve huge rewards. The real world banking system too is working this way. DO NOT call they are doing nothing, they have done enough to deserve something.

Dumps are REAL opportunity for others to enter into. It will always happen until bitcoin gets widely spread out to world population.

I am here because POW is also having lots of weakness. Maybe POW+POS will be a solution. Like 70% of mining rewards to POW and 30% to POS.

Indeed. Bitcoin will go to nearly 0 value and the volatility will become very low. Great plan!
Let me elaborate a little: all the coins I got to know and were/are using PoS or PoW/PoS are economically doomed to fall. People buy coins at start then just leaving them in the wallets and sell the free coins they get from PoS.

Bitcoin has a very good balance. I don't like the fact ASICs took over Bitcoin mining, but hey, it works out good.
So no. But you can do something else. Make your own coin (or fork, since they are so popular), test your idea and if it's proven to work better than what Bitcoin has currently, you have better chance to convince people adopt it into Bitcoin too.


And something else:

Banks invest that money and that's why they reward people for that money. Banks depositing gold into other banks' vault are paying a depositing (and guarding) fee. How about that?

If bitcoin was based on POS, it would be zero already at 2013, and this forum wont exist.

Not just due to POS or POW, all the coins which are not having/developing real world usage may get into zero value one day or another. Please note, I am talking about 10 years old coin which has proven real world applications and having well developing infrastructures to be used as payment processor but you are surprising me by comparing a 10 years old coin with all other shitcoins. Bitcoin with hybrid mining must be all new different case.

No one could do anything about when people will be selling of their POS rewards. It is just an opportunity for a new people to get into bitcoin adoptions and POS.

I do not have any second opinion on this. But, adding some 30% POS may bring new magics in bitcoin markets.

POS based miners are getting their reward as they are also contributing in securing network and relaying tx.

That's unlikely, but the way things work, exchanges holding the far majority of the coins would dictate Bitcoin's roadmap then.

Coinbase owns 5% of the total number of coins ever to be in circulation as we speak. It would make them one of the most important entities/contributors, and we all know what happens when you allow Coinbase to do its thing.

People don't understand how hostile everything around Bitcoin is. Ethereum doesn't have to deal with that, and I'm sure that whatever they end up doing, it will be a smooth transition. In Bitcoin's case, everyone wants a piece of it, and we have seen several attempts already of how ugly things can be in here.

It may very well be that PoS, or some form of it, or some other algo or hybrid may have to be considered, but not at this point. For all the dastardly negatives of PoW, POS implementations haven't exactly won people over. I know as well as I have had my share of staking experiments. Fun and satisfying but none a shade of Bitcoin's use so never really able to test its limits.

As 1Ref points out, and as the layperson like me would think, why would be take away Bitmain's dominance only to hand it over to Binance?

Why would anyone want to sell to small fish like me when they can just hanker down and wait til demand far outstrips supply?

Bitcoin had a trouble sustaining the fee's during the 20 thousand dollar times even with a POW system, making it POS would make it even slower and in return means we couldn't really afford the increases anymore. If you could find a way for lightning network and at the same time POS and combine them to work together than we could have a chance but technologically (which I am not really wise enough to talk about) it appears PoW is the only way we can afford right now until a better technology comes.

Hopefully one day we can make bitcoin PoS because miners right now cornering the bitcoin market more than the whales with billions in their pockets, people who mine are controlling the price whenever and however they want and that goes against the decentralized idea of bitcoin, it is just about time we figure out a way to get rid of them.

There is no guarantee that if bitcoin was using PoS algorithm, the price would be morning constantly.
PoS favours scalability and ease of transactions, at the expense of security, while, PoW prioritizes security at the expense of scalability.
If POS was a quick route to high prices, all projects would be opting for it.

I don't think anyone would propose to make that upgrade in the bitcoin ecosystem because POS is still relatively new and still undergoing a test process, I don't know if it would be possible to make such a major upgrade without creating an hard fork because as a developer, I can tell you that it will cost a lot of time and also resources to begin to change the mining algorithm of bitcoin to POS instead of POW.

The problem of double spending, which is theft. The reason Bitcoin was invented in the first place was to fix the double spending problem through economic incentives. Bitcoin wasn't the first peer-to-peer currency, it was just the first one that worked.

How do you stop validators from double spending in POS? In Bitcoin, you have to mine a longer chain to defeat honest miners and succeed in attacking the network. That costs lots of money so it deters miners from trying.

How do you fix this problem in POS?

of course not, because i am not running a blockchain analysis service :P
but logically someone who is buying OTC is not doing it to go ahead and dump it on exchanges! there is no point in that. they do it because they don't want to buy on exchanges (wanting more privacy,...)

that is why we created bitcoin, because banking system is flawed. the bitcoin design is that you should get paid for your "work" not for "being rich".
and i still emphasis the same thing: they are doing nothing and you should never be paid for just having a lot of money!

you can never find a perfect solution, there will always be flaws. thinking other algorithms are safe just because they are different is a bad way of thinking. so unless we can find and actually better solution the damage of changing the algorithm is far more than the possible benefits of it.

Exactly. In fact, if we look at every POS coin, they have tanked well under their previous all time highs well before we actually went through 2018s correction. In other words, there is more proof of failure than success.

It's easy for people to demand a coin to do this or that. People sit at home and wait for an opportunity to present itself and then buy in. Once they sold they don't even care anymore about POS or POW. They'll move to the next coin.

If people here we're even remotely interested in the underlying tech, they wouldn't see POS as a solution. Everything comes at a risk and has a lot of negative side effects. There is no magical solution to make coin x perfect.

With your statement, it seems that you only care about the price of Bitcoin and you don't care about the ecosystem. POW gives a more decentralized feature to the bitcoin's chain rather than POS which is a more centralized consensus as only the "rich" will be able to proceed with the validation of blocks.

Your argument that ASIC based mining is not feasible to everyone is true and valid, but the same thing happens in a Proof-of-Stake consensus as the people who don't own a big stake, they can't perform mining activities.

You dont. POS is like fiat money, but in a digital format. The DAO would be able to print it at any time, causing inflation.

Removing POW from bitcoin would have the same effect as when silver and gold were removed from the fiat system.

you are fighting a losing battle when you try to replace something that is working fine and is very secure and decentralized ,.... with something else that is not tested, is more centralized and is inferior technology to POW.

as for the price, you are ignoring all the damage that your supposed change is going to inflict on bitcoin. basically you are burning bitcoin to the ground so that MAYBE price rises after it. so first you will drop it down to $0.01 and possibly even kill bitcoin so that maybe it goes up to $0.02

That only applies to unscrupulous developers who are willing to trade off security for personal profits. Plenty of projects have implemented POS (especially hybrid POS). It invariably increases demand and decreases circulating supply when you have people accumulating coins to run masternodes.


Isn't that just because the altcoin bubble happened in early 2017 and the Bitcoin bubble happened in late 2017?

Of course everything crashes when the bubble pops. Of course altcoins crash harder than Bitcoin. This has nothing to do with POS.

All the contrary. ;) All PoS coins I know are very volatile. And in my opinion there is a reason for it, so the same effect would also appear if Bitcoin changed to PoS or PoW+PoS. I'll try to explain it:

You (and other posters in this thread) did already find out that PoS encourages people to "lock" their coins. This means that there are significantly less "free" coins available that theoretically could flood the market. That means that in a bullish scenario, price could go up faster.

However, that doesn't mean that prices will always go up. All coins see supply and demand fluctuations. For example, profit taking will cause drops in price every now and then, and this could cause panics.

Now the problem is: a panic could be stronger in a PoS coin (compared to PoW coins) as there are more hodlers that "locked" their coins to get PoS rewards. In a scenario where the price has fallen a bit, more of these hodlers could be incentived to sell - to take profits or to cut losses. In such a crash the price could fall much faster than it does in a PoW coin where hoarding isn't so much of a problem and many coins change hands faster (e.g. because of short-term trading).

I have called this problem in the past "hoard and sell" (it could also be called "hodl and sell" ;) ). It is and was a problem in all major PoS coins. There may be ways to solve it partially (e.g. security deposits that are locked for a pre-defined time, e.g. some weeks or even months, so people cannot sell them in a panic), but these solutions may bring other problems.

A PoS Bitcoin would only completely be "freed" of this "PoS volatility trap" if it finds a real usage as a currency. In this case, the number of hoarded coins would sink, and thus the hoard-and-sell problem would have a much smaller effect.

Did Ethereum finally do that big switch to PoS? I reckon it was really close. From what I've googled it isn't still active?

https://www.newsbtc.com/2019/03/08/crypto-research-claims-ethereum-pos-unsustainable-vitalik-hits-back/

I would be surprised if the fork happened in a clean fashion. I don't believe for a second that we wouldn't end up with ETH-PoW were miners keep mining, and ETH-PoS were Vitalik followers go.

In any case when ETH goes PoS we will finally see a project of relevant magnitude operating under PoS. I wouldn't like to be holding ETH by then. I seriously doubt it's safe when there's enough money in the table for the brightest hackers on earth to try to exploit it.

This issue has been discussed to death already.

In my opinion POS will make any coin more centralized that POW. POW has its faults however. One of the faults for POW is the fact that Satoshi stated "One CPU One Vote" however since the invention of ASICs it quickly invalided that. POS on the other hand issue is that it can become more centralized because it will be like most of the rich in the world, where 1% control 99% of the wealth and this is what POS might lead to.

it's a ways off. i don't think the security of casper has even been figured out yet on a theoretical level. ethereum will just be implementing a hybrid POS/POW system in the next year or so, which isn't nearly as risky as full POS.


i'm sure there will be a chain split but i also expect it to end like the ethereum classic split. the vast majority of users and developers will likely follow the core developers, not the miners.

actually ETH dev is quite wise, he clearly knows that nobody is going for this bullshit fork to PoS and he is completely sure that everyone will reject it. so he has come up with a workaround to force the fork on them. right now they are slowly injecting different forks on the network slowly pushing towards that target to force them to have no other option but to accept PoS!!!
if you remember they started with a "difficulty bomb" which they had to remove and all their plans went down the toilet with it so now they have come up with a new plan

it actually reminds on the frog that is being boiled alive in a pot while you increase the temprature slowly so he doesn't realize it :D

Your analysis is quite right and I see lots of sense in what you have written but I want to pick on the third paragraph where you mentioned that “profit taking will cause price drop here and there which will in turn create panic sell” but to me, I believe it will not be that obvious, yes I understand that already existing investors when profit goes high tends to take profit.

But, don’t forget the fact that when the prices drops, more new investors will also tend to buy more too at the deep including the already existing ones who will still pump whatever profit they get into same market back, isn’t that what the big whales are playing and yet, the market has not crashed to zero and still doing well.

Both POS and POW are  good but I feel if satoshi had chosen the part of POS, transaction would have been more faster and efficient than it is now, though I understand your claim that POS might force the value of bitcoin to 1 million usd this time making it difficult for common people to afford and also use for payment system but have you ever wondered how they will also cope when the price eventually hit the target of 1m usd even with the POW system put in place, people will still adjust and learn to operate on satoshi rather than full bitcoin, don’t forget we also have a part of BTC that is satoshi that will be adopted then.

But isn't the ETH POW/POS hybrid thing just a transition phase until they enable a final difficulty bomb that kills the PoW chain? (thus forcing a fork  before the event for those that want to keep things within the PoW realm)

In general I just think PoS is repeating once again the banking monopoly problem. It incentivizes sitting on your ass and collecting unlimited interest because as far as im concerned true POS is impossible without a perpetual level of inflation.

I don't see it ever replacing PoW. PoS has some positives, like it doesn't force a constant sell off to pay electricity bills, but has negatives, like nothing-at-stake problem.

sure but wasn't the difficulty bomb also supposed to force a transition to POS a couple years ago? history shows that it's easy to keep kicking the can down the road. it's the ethereum way!


why do you say that? how is this problem fundamentally different for POW? i think some people are rightly worried about how sustainable bitcoin's deflation model is too. we'll never know until we see how it performs a few decades out from now.


in its current forms, POS absolutely can't replace POW. it doesn't even work on a theoretical level. no one has solved it yet.

but maybe someone will, someday......

Well it doesn't matter if the PoW/PoS fork survived, or the strictly PoW fork (so I see 3 Ethereums after that...)  because the striclty PoS fork which would be the one that Vitalik supports, would be the one that keeps getting listed as "Ethereum" in exchanges, because that's basically what Vitalik says it is.

The PoS problem is that people make money sitting on their money. That is not gold works, that is how fiat works, so PoS can never be a store of value. The year 2140 problem for Bitcoin is theoretical, but with PoS you already know you need the inflation from scratch.

i really think it's more nuanced than that. exchanges might have some influence, but on a fundamental level we all know the community will follow vitalik and the core developers, not miners. very few people will give a shit about miners---certainly not ETH investors who have been sold on the POS roadmap since years ago.

it'll be another situation like ethereum classic---the first "hard fork dividend". there will be some hype around a "civil war" just like the classic split or the bcash split in bitcoin, but that's all just meaningless drama. after it dies down, it'll just be like ETH and ETC are today. nobody takes ETC seriously. it ended up being a cash grab based on hype more than anything.


i still don't get it. why is POS different in this respect? why could fees (in a deflationary scenario) sustain POW but not POS?

let's not forget that we in bitcoin have bitmain which has turned into the evil entity more than they really are which is part of the reason why people are (foolishly) hating miners. they don't have such thing in Ethereum which is additionally because ether miners are GPU miners not ASIC farms.
i honestly don't know what kind of crap they are pulling with this slow multi step fork thing but unless they have a way of killing the PoW mining, it will exist. obviously its price will fall dramatically but not because "people" dump it, not at all. it will be because the ethereum foundation will use their premine coins to dump the PoW coin just like they did with ETC. (just search about times poloniex caught them red handed manipulating ETC price when the fork initially happened and closed some of their accounts).

Yes, obviously there could be phases where the market is still bullish, so a little dip gets bought up (like the mini-crashes in the Bitcoin bullrun of 2016-17).

The problem is that there will be phases where the sentiment changes to negative, even without a clear "reason". For example, in 2019 we have a growing LN and many advances, but the price still doesn't want to recover. The only reason sentiment is negative is because the price went down! These are the phases which go normally a lot deeper in PoS coins because there are so many people that have hoarded their coins to get PoS rewards and want to take profits - and if the bear market becomes longer than expected, like with Bitcoin in 2018, then many of them will sell even if they declare to be "long term bulls".

Generally speaking (from my observations) volatility is higher (and thus, crashes are also deeper) if there is more speculative capital invested (that means: capital that is meant to be sold for a profit in the future) and less currency usage. PoS itself encourages speculation more than PoW because it offers an "internal" profit mechanism via PoS rewards. So there is more effort needed to encourage currency usage/economic interchange/trade, which lower volatility.

However, if Bitcoin was already used massively as a payment means, then a change to PoS would have, probably, little to no effect to volatility. But I consider a change to PoS currently extremely unlikely - also because mining with solar/wind power provide a way to secure the blockchain in an environmentally-friendly way.

And the fact that Bitmain is struggling and facing potentially bankruptcy shows how Bitcoin's incentive system works, so when miners become too big for their own good and attempt to hardfork they end up holding massive forkcoin bags. Jihan Wu has already left the building, I think Bitmain will not be around during the next decade somewhere in mid 2020's I would say, unless they change their business plan and stop threatening with forks it's just going to end up bad for them.

With PoS, vitalik's friends that got all of his coins from the ICO just have to sit on the coins and keep staking. You can google many articles about the problems of PoS security.

GPU mining, im not sure what it does solve compared to ASICs. Sure you are using GPU cards which are common devices everyone has, but so what? you still need farms of GPUs to compete, otherwise you are at a loss.

there is no difference, GPU mining is the last step BEFORE it turns into ASIC mining. Bitmain has already released (if i am not mistaken) ETH ASIC machines.
the only difference (if we can call it that) is that GPUs are easier to come by and can be used for other stuff (like gaming!) compared to ASICs so when a PoW coin is still in its GPU mining stage, there are more average Joes mining it than when it switches to ASIC. which is what i meant by my Bitmain remark, here there is no entity to demonize, (you have to demonize big corporations like Gigabyte, MSI,... for that to work :D)

OP, you wasted 15 minutes writing a pointless topic. I believe you thought you did the research to arrive to the correct conclusion. But you didn't.

Do more research, and good luck on your journey.