Opinion: PoW Will Always Be Criticized for Inefficiency

[-Multivitamina-]

The war of consensus algorithms is still raging on. While some believe that only Proof-of-Work can underpin a real cryptocurrency, others think that its time passed long ago, and now it’s time for other algorithms like Proof-of-Stake.

Whichever side you are on, it would seem obvious that no consensus algorithm is perfect in its own right. Any of them has its shortcomings that its competitors lack.

To better understand PoW and criticism directed at it, we’ve had a short conversation with Roman Oleynikov, Doctor of Engineering Sciences and research fellow at Input Output HK. Below is the transcript of what Dr. Oleynikov said.

https://forklog.media/opinion-pow-will-always-be-criticized-for-inefficiency/

[odolvlobo]

I agree. PoW will always naively be considered inefficient and wasteful. However, efficiency is relative and "wasteful" is subjective, so simply claiming that PoW is inefficient and wasteful without providing analysis is not enough.

In PoW, calculations by design take a certain period of time and that is necessary so that the numerous network nodes are synchronized with each other. This artificial slowdown obviously affects the network’s bandwidth.

The network's bandwidth is unrelated to PoW.

A tremendous amount of electricity is consumed just to build a chain of blocks and ensure its safety. Surely there have to be more efficient solutions to this problem.

Currently, most of the energy is spent ensuring an equitable distribution of new coins -- something that PoS does not have.

Another problem associated with Nakamoto’s consensus is the so-called orphan blocks. A certain chunk of the resources that honest network members spend on finding blocks is simply lost. ... This leads to the fact that some honest miners will simply waste their time and resources.

That is irrelevant. Miners are already "wasting" time and resources. The additional time and resources "wasted" due to orphan blocks has no effect on the total time and resources "wasted" due to the design of PoW.

And from here stems the problem of centralization. There are very few large mining pools and they are very large.

The danger of centralization due to pools is low. If a member of a pool doesn't like or doesn't trust its pool, then it can quickly and easily switch to another. A mining pool is only as powerful as its most apathetic members. The story of ghash.io provides an important lesson to pools that flirt with controversy. It will be interesting to see what happens to the cartel of BCH pools that are planning to take control of the BCH blockchain in May.

[blckhawk]

Aside from its high energy consumption due to racing rigs, a lot is lost in these orphan blocks. The whole article is a good read, and well made to be understood even by beginners.

PoS seems to be a good contender, and would be faster than the slow PoW. You may say it is criticizing, but it's also aimed to improve our current consensus algorithms.

[sovie]

Yes. It will be since it consumes too much electricity and is slow the alternate pow is also there. The reason why it's still used despite so many odds is the level of security it provides.

[davis196]

Bug energy consumption is not the problem.Producing electricity using resources that damage the environment,like coal is the problem here.Nobody would care about energy "inefficiency" or huge energy consumption,if the electricity was produced with green technologies,by using solar and wind.
PoW will always dominate the crypto world,so this discussion is kinda pointless.

[Coin_trader]

PoW will always dominate the crypto world

Agreed. Even on printing fiat money. They are using electricity and at same time use wood for the paper that destroy the environment. I'm a believer too of PoW since it shows how precious the coin they are mining.

this discussion is kinda pointless.

Any discussion is never be a pointless. We are discussing so that we settle issue or topic.

[NeuroticFish]

While some believe that only Proof-of-Work can underpin a real cryptocurrency, others think that its time passed long ago, and now it’s time for other algorithms like Proof-of-Stake.

This is wrong and anybody with a tiny sense of reality knows that.
PoW is the proper way. Satoshi has thought on it well. PoS is a system to make the rich richer with low/no effort.
The electricity is always in the top of discussion. The "haters" consider it a waste. But is it? Are you sure? I don't agree. And there's always a comparison. There's always some waste and I believe that people should start identifying the places there's electricity (and coal, and oil, ...) wasted for real. I'm sure they can find plenty of them.

[avikz]

The war of consensus algorithms is still raging on. While some believe that only Proof-of-Work can underpin a real cryptocurrency, others think that its time passed long ago, and now it’s time for other algorithms like Proof-of-Stake.

Whichever side you are on, it would seem obvious that no consensus algorithm is perfect in its own right. Any of them has its shortcomings that its competitors lack.

To better understand PoW and criticism directed at it, we’ve had a short conversation with Roman Oleynikov, Doctor of Engineering Sciences and research fellow at Input Output HK. Below is the transcript of what Dr. Oleynikov said.

https://forklog.media/opinion-pow-will-always-be-criticized-for-inefficiency/

Nothing is perfect in a near perfect world! So we will always have to look for options which has a better balance between good and bad. That's how everything functions! But in a decentralized monetary system, PoS is always better than PoW.

Bitcoin mining has reached to a stage long ago where small miners are not profitable at all. Only people with huge cash investment, can set up a mining operation that is profitable! So such kind of mining algorithm isn't really helping the common people like you and me!

If we really want to empower the common people, PoS algorithm is the best bet. It will actually give a chance to the common people to mine through staking and have a fair chance among other miners of the network. This way, PoS is always preferred!

[FanatMonet]

People criticize PoW because of the rather greater energy consumption, but in response to this argument it is worth saying that some people use ASIC to heat houses / farms / greenhouses and stuff, which is very cool because it is a double benefit from the use of electricity. You could even say that this is a mini-model of green economy.

[Lance203sin]

PoW is requiring a lot of energy unfortunately. Due to this it cant be the perfect consensus way

[BeManga]

PoS is a system to make the rich richer with low/no effort.

i agree this is the one thing that is not good about POS
only those with large amount of coin will get a good amount of rewards with low or no effort
and its almost impossible for those with small amount of coin to get rewards even they will get rewards it will be so small that almost nothing

[Lizzylove1]

No doubt, there is a whole lot of criticism about POW, citing enormous energy required for mining. But POS always favors the rich as the more rich you are, the higher your reward. POW is unique and does not give the most reward to the highest holders of coin because of its algorithm.

[Artemis3]

The war of consensus algorithms is still raging on. While some believe that only Proof-of-Work can underpin a real cryptocurrency, others think that its time passed long ago, and now it’s time for other algorithms like Proof-of-Stake.

Whichever side you are on, it would seem obvious that no consensus algorithm is perfect in its own right. Any of them has its shortcomings that its competitors lack.

To better understand PoW and criticism directed at it, we’ve had a short conversation with Roman Oleynikov, Doctor of Engineering Sciences and research fellow at Input Output HK. Below is the transcript of what Dr. Oleynikov said.

There is no war, the market has already spoken. PoW is fine and Bitcoin remains the leader. PoS is not the answer and it has been tried for years still failing to get attention (it won't).

PoW is quite efficient, so efficient that its self regulating itself thanks to the market. It also ensures attacks are too costly to even try.

[dothebeats]

It will always be the case unfortunately, though as for inefficiency I don't quite agree with that. Just look at how the network process transactions and compare it with the orphaned blocks vs the valid blocks on a day-to-day basis and see that the number of the former doesn't even compete with the latter. Perhaps you can say that it's not really energy-efficient or eco-friendly, but with the way things are going as of late, with more and more miners switching from coal-based power sources, energy inefficiency should not even be considered as bad as it used to be on bitcoin.

There are tons of industries out there that are just as bad, or is even worse than the state of bitcoin. We never heard any of it, nor any article was made singling those things out (I'm looking at you, banking industry.)

[Hydrogen]

Proof of Work consumes electricity as everyone knows.

What everyone doesn't consider is the majority of that power comes from untapped sources, due to surplus electricity generally being cheaper and more affordable than electricity currently under high demand. The high mobility of bitcoin mining makes it easier to setup operations in areas where cheap surplus electricity is on tap.

In addition to this, the lowest cost sources of electricity come from renewable sources. Dams providing cheap hydroelectric energy are far more affordable in contrast to coal or fossil fuel based sources of energy which are more damaging to the environment.

PoW based miners throwing money at untapped hydroelectric and environmentally friendly electricity sectors, gives them more money to expand and develop clean electricity projects across the world. Which in turn, helps the environment.

On the surface,  PoW appears to have negatives. But when one considers the details, those can be mitigated to some degree.

with more and more miners switching from coal-based power sources

The only coal based mining ops I've heard of are ones that were subsidized and funded by governments to create jobs and generate revenue in certain regions. There's no legit reason to adopt coal as its more expensive in terms of dollar per watt in contrast to cleaner sources of energy. The united states closed 50 coal power plants over the last 4 years in favor of cheaper and cleaner wind/solar.

[Dabs]

Even ETH that has long promised to switch to PoS has not done so yet. They're trying to figure out a smooth transition, but every time there is some sort of delay and it doesn't get implemented. It's much easier to just get everyone to agree on some sort of hard fork "upgrade" than it is to switch consensus from PoW to PoS unless it has been designed from the start.

If we're talking about all other altcoins, they could do that. If we're talking about bitcoin, it's never going to happen. The Proof of Work system in place now is not going to change the longer it stays, if it hasn't changed now, it's not going to change in the future.