Montane (OP)
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October 23, 2021, 01:51:38 AM |
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I know Bitcoin is running on a proof of work consensus algorithm. Recently I discovered proof of stake by reading up a bit on Cardano and Ethereum's 2.0 plans.
What is the difference between these two, how does POS reduce the energy required to mine a block transaction and are either of these more secure than the other? Basically what are the pros and cons of each.
Also if POS consumes less energy, then wouldn't it be a good idea for Bitcoin to transition to a POS algorithm?
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franky1
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PoS works by people staking their coin. . no intense computation needing superior hardware it creates no value. there is no 'cost' in mining. people can put their stake in. and later take it out. no loss
this makes altcoins with PoS have no underlying value in its coin creation. thus reliant on value from the features of what that coin can do/be used for after the creation to keep the coin active/alive.
bitcoin has a real cost of creation via the mining hardware. much like golds underlying cost is in gold mining costs.
because it costs $10's of thousands in electric/hardware to make just one bitcoin. (more precisely hundreds of thousands per 6.25 reward) that gives bitcoin a baseline value. which no one wants to sell below. thus giving bitcoin a good actual store of value. yes there is the vapour/speculative/bubble premium ontop thats volatile. but thats the same with gold
golds underlying cost value is like $1k and the rest of the 'premium' that makes up the combined 'spot' price is the speculative supply/demand, hype
the only reason people want PoS is because the fantasy of profit for nothing. or no-loss profit. but the thing about PoS is if a coin was successful and everyone was using it. eventually the slicing up of the reward being split between everyone involved would leave everyone with nothing. thus majority lose interest
PoS is just a fantasy of getting rich for free. whereby it only really works by pump and dumping the coin to keep it viable and entertaining enough to avoid just turning into a zero utility coin.
because the amount of blocks are limited a viable coin would end up with people having to syndicate their stake into a group of people. much like how bitcoin mines in groups. thus again making it no different and having the same competition. but with an PoS altcoin its a fight to the bottom rather than with bitcoin which is a fight to the top
bitcoins mining method is more secure then PoS and the more hardware competition to mine = stronger hashing which cant be undone as cheap. bitcoins security grows. cost grow. meaning base value grows.
altcoin PoS security does not grow. no matter how much is staked. and if it got popular. there would end up being more people wishing to break an altcoin for quick riches rather than stick to the rule. PoS only survives by having a small userbase of stakers and just enough enticement and fantasy to keep it active.
basically the more that use bitcoin the stronger it gets.. the more that use PoS altcoins the weaker it gets. but it requires enough peters to pay pauls so that the early stakers can leave, but have enough later stakers to keep the fantasy alive.
PoS is not a thing you want to use for something as big as bitcoin.
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I DO NOT TRADE OR ACT AS ESCROW ON THIS FORUM EVER. Please do your own research & respect what is written here as both opinion & information gleaned from experience. many people replying with insults but no on-topic content substance, automatically are 'facepalmed' and yawned at
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Dave1
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Welcome to the community, I suggest you read the following threads below regarding the PoW vs PoS arguments it's pros and cons:
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Poker Player
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October 23, 2021, 03:16:42 AM |
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bitcoin has a real cost of creation via the mining hardware. much like golds underlying cost is in gold mining costs.
because it costs $10's of thousands in electric/hardware to make just one bitcoin. (more precisely hundreds of thousands per 6.25 reward) that gives bitcoin a baseline value. which no one wants to sell below. thus giving bitcoin a good actual store of value. yes there is the vapour/speculative/bubble premium ontop thats volatile. but thats the same with gold
What you have just explained has made me wonder about something. Do you think that the rise in electricity prices that is happening in many parts of the world, especially where it is being mined the most now like the US, is going to affect the price of Bitcoin? It should, I'd say, even though we are in a bull market I guess it is another factor that will push the price up.
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DapanasFruit
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October 23, 2021, 03:45:31 AM |
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bitcoin has a real cost of creation via the mining hardware. much like golds underlying cost is in gold mining costs.
because it costs $10's of thousands in electric/hardware to make just one bitcoin. (more precisely hundreds of thousands per 6.25 reward) that gives bitcoin a baseline value. which no one wants to sell below. thus giving bitcoin a good actual store of value. yes there is the vapour/speculative/bubble premium ontop thats volatile. but thats the same with gold
What you have just explained has made me wonder about something. Do you think that the rise in electricity prices that is happening in many parts of the world, especially where it is being mined the most now like the US, is going to affect the price of Bitcoin? It should, I'd say, even though we are in a bull market I guess it is another factor that will push the price up. In my own humble view, I think that the rise of electricity prices will not have considerable push-up effect on the price of BTC...the price is always determined by the market forces so it can go up and go down anytime and sometimes for no reason at all. Now, having said that, the electricity prices can affect mainly the profits that can be gained from Bitcoin mining just like any other business as this is a major expense. Right now, the USA has gained the top hand in BTC mining and not anymore China...this can certainly be exerting more demand for power and there is that talk to exploit wasted energy so they can be converted to cash rather than just have them released to the environment.
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franky1
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What you have just explained has made me wonder about something. Do you think that the rise in electricity prices that is happening in many parts of the world, especially where it is being mined the most now like the US, is going to affect the price of Bitcoin? It should, I'd say, even though we are in a bull market I guess it is another factor that will push the price up.
put it this way. chinese mining at say 140exa hash had a $20k underlying value.. meaning no one dares sell below $20k unless foolishly making a bug in their trade bot. now majority of mining maybe outside of china. the lowest cost value is already higher. so say america is majority the average underlying value is about $37k meaning thats the new 'bottom' and toughest resistance to break that no one will dare sell below so its not just hash power but also yes electrical price. slowly making the min price ever to be seen again be on a rise. supporting the price from ever going below a certain value. the only time this bottom value support can decline is if hashrate declines
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I DO NOT TRADE OR ACT AS ESCROW ON THIS FORUM EVER. Please do your own research & respect what is written here as both opinion & information gleaned from experience. many people replying with insults but no on-topic content substance, automatically are 'facepalmed' and yawned at
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franky1
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October 23, 2021, 03:57:56 AM |
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In my own humble view, I think that the rise of electricity prices will not have considerable push-up effect on the price of BTC...the price is always determined by the market forces
my and pokers conversations about VALUE. is not about PRICE again gold VALUE is ~$1k whilst the SPOT PRICE is like $1.8k market forces (speculation hype, pump and dump bubble) is the PRICE determiner.. but the underlying VALUE is the determiner of the LOW where people stop selling down. you know the ultimate bottom. electric and hash power does not determine the mid(active/spot) or any ATH(all time high) as again for emphasis thats the market speculation premium layer of volatility. but the underlying value is the low imagine it like farming fruit. it costs a farmer 20cents to grow an apple but the retail price for a customer is 60cents. the price can swing up and down from the 60cents but will never go below 20 cents because thats the price the farmer costs it at to sell to supermarkets.. and supermarkets are not stupid enough to sell at a loss. so whilst retail PRICE is market determined. value COST is cost determined. have a nice day
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I DO NOT TRADE OR ACT AS ESCROW ON THIS FORUM EVER. Please do your own research & respect what is written here as both opinion & information gleaned from experience. many people replying with insults but no on-topic content substance, automatically are 'facepalmed' and yawned at
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Montane (OP)
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October 23, 2021, 04:47:13 AM |
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PoS works by people staking their coin. . no intense computation needing superior hardware it creates no value. there is no 'cost' in mining. people can put their stake in. and later take it out. no loss
I see. Wow this makes a lot of sense. POS doesn't provide the inherent value that POW does. So coins like Cardano are solely regulated by supply and demand. But how does POS actually validate a transaction? Bitcoin miners have to solve the puzzle, but POS miners just have lots of the coin?? but the thing about PoS is if a coin was successful and everyone was using it. eventually the slicing up of the reward being split between everyone involved would leave everyone with nothing. thus majority lose interest
And this won't happen to bitcoin because the miners are controlling the value of the coin. makes sense. Welcome to the community, I suggest you read the following threads below regarding the PoW vs PoS arguments it's pros and cons: Thanks for the links. Helped a lot
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mindrust
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October 23, 2021, 05:01:49 AM |
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I know Bitcoin is running on a proof of work consensus algorithm. Recently I discovered proof of stake by reading up a bit on Cardano and Ethereum's 2.0 plans.
What is the difference between these two, how does POS reduce the energy required to mine a block transaction and are either of these more secure than the other? Basically what are the pros and cons of each.
Also if POS consumes less energy, then wouldn't it be a good idea for Bitcoin to transition to a POS algorithm?
Bitcoin is PoW, it is in the whitepaper. However, if everybody agrees, yes bitcoin may switch to PoS as well but I don't think it is going to happen. Some people say PoS is not as safe as PoW and we still don't know if this is right. Eth and cardano doing well so far. So maybe, the hesitations might be baseless.
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pooya87
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October 23, 2021, 05:53:36 AM |
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The truth is that shitcoins such as ETH have massive premines (72 million Ether to be exact) and are centralized. The centralized authority wants to take advantage of the "get paid just because you own something" feature of PoS and switch to it. They are also aware that their shitcoin is losing its hype and slowly miners are leaving it behind specially as it dumps and mining becomes less and less profitable and in PoW when you lose miners you lose security and soon enough these shitcoins will be filled with 51% attacks every day. So they sell PoS as a "solution" to their naive users by using fake arguments such as "low electricity cost" while ignoring all the serious flaws in PoS. Do you think that the rise in electricity prices that is happening in many parts of the world, especially where it is being mined the most now like the US, is going to affect the price of Bitcoin?
You already answered your own question, the keyword was "many" (although it is only some countries) not all. Miners will migrate to places where they can freely and cheaply mine and there are many countries with very low electricity cost, low tax, cheap labor, better climate and are friendly to bitcoin.
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Pmalek
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October 23, 2021, 06:36:33 AM |
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But how does POS actually validate a transaction? Bitcoin miners have to solve the puzzle, but POS miners just have lots of the coin?? The more coins you have staked, the greater your chances to mine the next block. Your mining power or potential to validate blocks is determined on how much of the native token you already own and have put up for staking. You can find plenty of articles on the subject if you google " how are transactions confirmed in POS coins" or some combination like that.
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Bitcoin_Arena
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October 23, 2021, 07:54:26 AM |
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Bitcoin is PoW, it is in the whitepaper. However, if everybody agrees, yes bitcoin may switch to PoS as well but I don't think it is going to happen. It is certainly never going to happen, maybe in another lifetime or metaverse, not this one Some people say PoS is not as safe as PoW and we still don't know if this is right. Eth and cardano doing well so far. So maybe, the hesitations might be baseless.
Time will tell, PoS hasn't been fully implemented on ETH network. As for Cardano, no one is sure how things would be if the network had huge transaction volumes. The rest of the other PoS experiments dubbed Ethereum killers in the previous bull run like EOS, TRON are already leaving below expectations in terms of market value
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mindrust
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October 23, 2021, 08:00:03 AM |
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Bitcoin is PoW, it is in the whitepaper. However, if everybody agrees, yes bitcoin may switch to PoS as well but I don't think it is going to happen. It is certainly never going to happen, maybe in another lifetime or metaverse, not this one Some people say PoS is not as safe as PoW and we still don't know if this is right. Eth and cardano doing well so far. So maybe, the hesitations might be baseless.
Time will tell, PoS hasn't been fully implemented on ETH network. As for Cardano, no one is sure how things would be if the network had huge transaction volumes. The rest of the other PoS experiments dubbed Ethereum killers in the previous bull run like EOS, TRON are already leaving below expectations in terms of market value Why wouldn't it happen? If enough consensus raises, anything can happen. Most of the major updates weren't in the whitepaper and they happened anyway. You know what they say, never say never. If PoW becomes unsustainable, I am pretty sure PoS will be the next step but that's one big if.
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October 23, 2021, 09:13:55 AM |
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Do you think that the rise in electricity prices that is happening in many parts of the world, especially where it is being mined the most now like the US, is going to affect the price of Bitcoin?
You already answered your own question, the keyword was "many" (although it is only some countries) not all. Miners will migrate to places where they can freely and cheaply mine and there are many countries with very low electricity cost, low tax, cheap labor, better climate and are friendly to bitcoin. It's not just some countries, there are miners spread practically all over the world, if you mean that only in some countries there is a significant percentage of miners, I would agree. And I would qualify the second part of what you say as well. The migration of miners from China mainly to the US was not because in the US electricity was cheaper than in China, it was because of a political issue. Since then, the price of energy there has been rising in the US. I suppose some will be considering going elsewhere if it continues to rise, but there are many factors to take into account: 1) Moving mining has a monetary and time cost, as well as an effect on the market. When the miners left China many had to sell Bitcoins they had been holding and there was a downturn in the market. 2) They cannot move to a place where the energy is cheaper but there is legal insecurity that makes it possible for the government of the day to prohibit mining in a few months, in addition to confiscating equipment and other measures. 3) The remaining countries with relatively cheap energy are either because they have a lot of nuclear power plants or because they do not comply with the CO2 emission agreements, and there are fewer and fewer of these available, especially if we take into account that they have to meet other requirements, such as legal certainty, etc. I say this because with your sentence it seems that it is an easy thing, that if energy becomes expensive they leave and that's it, and first it is not so easy, and second it also has a cost, for themselves and for the market.
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romero121
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October 23, 2021, 09:25:23 AM Last edit: October 23, 2021, 09:40:23 AM by romero121 |
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Proof of Work Proof of StakeProof of Work secures the Proof of Stake is a network and generates new consensus mechanism coins as rewards. that locks up crypto to secure the network. It ensure only legitimate transactions are added the block. It is powered by peer operated Validators lockup the nodes around the world with no crypto. They're then central authority. chosen at random to verify transactions and receive associated fees POW requires miners to use In POS miners dedicate hardware resources to secure their crypto to secure the network. the network. POW is high energy consuming. More projects are now Bitcoin blockchain is upon POW. following POS. Source : Google Search
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dothebeats
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October 23, 2021, 09:39:16 AM |
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The thing with PoS is, it promotes hoarding and lets the few people with huge number of coins control the blockchain. It requires little to no electricity in generating a block, yes, but the security of the network lies on the hands of the few people having tons of coins on their disposal. For PoW, complicated mathematical algorithms ensure that the network's security is always at its prime, and in order to beat the algorithms in place and rewrite even a small portion of the blockchain, one must have spent an immense amount of resources (electricity, time, and money) before they can achieve it.
Bitcoin IMO will not switch to such an algorithm any time soon. It will still keep PoW as it remains to be the most ideal algorithm in terms of security for bitcoin.
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blatchcorn
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October 23, 2021, 10:02:58 AM |
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Bitcoin is PoW, it is in the whitepaper. However, if everybody agrees, yes bitcoin may switch to PoS as well but I don't think it is going to happen. Some people say PoS is not as safe as PoW and we still don't know if this is right. Eth and cardano doing well so far. So maybe, the hesitations might be baseless.
Bitcoin too is doing fine with PoW, it ensures security and robustness of BTC blockchain. The issue of too much power consumption by bitcoin is as old as hills and IMO its just over hyped. Eth has not switched over to PoS yet as, Altair, Ethereum 2.0’s first hard fork, is expected to come into effect by the end of the month — the point where the original proof-of-work Ethereum blockchain will transition to Ethereum 2.0’s proof-of-stake consensus mechanism. SourceWhether its PoW or PoS, they both are same way of climbing the same mountain. As PoW is centralized along miners that can afford expensive mining equipment and electricity bills, in PoS those who can stake huge amount of coins will grab the major share of mining.
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mindrust
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October 23, 2021, 10:15:43 AM |
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Whether its PoW or PoS, they both are same way of climbing the same mountain. As PoW is centralized along miners that can afford expensive mining equipment and electricity bills, in PoS those who can stake huge amount of coins will grab the major share of mining.
That's also what I am starting to think lately. Why waste so much electricity when you can just have the same security with PoS? If the issue is centralization, there it is already here with the miners. One way or another there will always somebody/some entity will control the majority of the chain. You can't really prevent this.
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Wind_FURY
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October 23, 2021, 10:26:51 AM |
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Also if POS consumes less energy, then wouldn't it be a good idea for Bitcoin to transition to a POS algorithm?
Research what a Perpetual Motion Machine is, that’s what Proof of Stake truly is. Plus the mere possibility of considering that Proof of Stake could replace Proof of Work, is someone who has not truly taken the time to understand how Bitcoin’s incentive structure works, and WHY it works.
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Tash
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October 23, 2021, 10:38:53 AM Last edit: October 23, 2021, 11:18:52 AM by Tash |
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PoW vs PoS thread number 5234, same arguments Peercoin the oldest PoS coin is a dead fish in the water Blackcoin the oldest PoW->PoS is even worse currently trading at $0.06 with an all time high of over $1 If someone wants to prove his stake he was able to do so for the last few hundred years, just needs to buy some shares and he is proving his stake Peercoin has been staking since 2012 at a 1% reward. What does it mean in real life, well it inflated at over 3% (average 3.11% past 7 years, from 2014) that is even worse than fiat. Year | Total Supply | New Coins | Inflation | new % per year | 2012 | 15094912 | 15094912 | | 100% | 2013 | 20982872 | 5887960 | 22,77% | 39,01% | 2014 | 21971814 | 988942 | 3,82% | 6,55% | 2015 | 22867470 | 895656 | 3,46% | 5,93% | 2016 | 23738826 | 871356 | 3,37% | 5,77% | 2017 | 24544131 | 805305 | 3,11% | 5,33% | 2018 | 25116222 | 572091 | 2,21% | 3,79% | 2019 | 25854837 | 738615 | 2,86% | 4,89% | 2020 | 26634490 | 779653 | 2.93% | 5,17% |
Bitcoin halves supply every 4 years so energie consumption halves with it as unprofitable miners are forced to shut down. Bitcoin now at about 1,6% coin emission rate, 0,8% next halving......
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