POS VS POW effect on valuation of bitcoin

[tadamichi]

How does the shift from proof of work to proof of stake consensus will affect bitcoin?
Proof of work is a proven consensus mechanism, while proof of stake based blockchains are yet to be validated. How will success of proof of stake based blockchains will effect bitcoin
Will this  havr any real effect on future valuation of bitcoin?

If there’s only one sane coin left, it will make choices even easier. Bitcoin will benefit from it, it’s that simple. Each time some project or politicians goes rogue, Bitcoin stands there as a sane choice. And the amount of quality choices is getting smaller and smaller currently.

People aren’t blind. They already come into Bitcoin because of this. It won’t bend to bad decisions and virtue signaling, just like now. When the competition is crippling themselves it just makes things easier.

Fiat being ridiculous is a strong reason to go into Bitcoin. And PoS projects being ridiculous is even a stronger reason to do it. So in my opinion it will reach a higher market value, if there’s any effect at all.

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[franky1]

If ETH switches to PoS and operates for a few years without any attacks on the consensus, then the voices that call for Bitcoin to switch to PoS for environmental reasons will become louder, but I doubt that they will be loud enough to actually stir Bitcoin in that direction. Only if PoS will be proven 100% safe will there be serious discussions if Bitcoin should swap to it, but that's a hella big IF. So don't worry about it too much, let ETH do it first and see how it goes.

when eth merges to PoS where the cost conditions kicks in causing a redraw of the value down to single digits.. thus create a market crash... those holding coins they bought for thousands that will become only a few $'s.. they will get peed off. they will drop ETH as a pegging chain. as all those pegged sidenets and altnets would drop in price/value too.

they would prefer to seek a chain that has good value that wont just do a PoS detonation
they will wake up to the value lack of PoS

once people with under 32eth realise they cant "solo" stake or get passive income independently and instead stake into pools(exchanges)... again they will see the centralisation of ETH increase where exchanges start being the decision makers/controllers (follow my rules or be forked.. where you cant see my transactions and cant get your coins back..  also lose your locked funds if you punish me via punishments, thus lose your own value by not following me)

when people lock up their stake with an exchange.. they are giving the exchange the control. but none of the costs. its not an exchanges own earnings being staked its their customers.. so customer are unlikely to punish an exchange if the customers own funds are locked in..
meaning customers become sheep following the exchanges plans

again they will want a currency thats more decentralised without those games too, thus PoW would look more appealing

[buwaytress]

Proof of Stake has solved how to keep pools from becoming centralized   :Cardano
Proof of Stake has solved the energy efficiency issue.                             :All PoS coins.
Proof of Stake has solved transaction finality.                                         :Algorand

Seems like there's at least one problem you forgot... to me at least. BlackHatCoiner details it and I simply sum it up as objective security. PoS is... subjective incentive. You can call it whatever you want. PoS certainly knows how to churn out the labels... delegated voting, block producers, federations, rotating validators, quadratic votes, treasuries, slashing, epochs, etc. They're still figuring themselves out like a kid who discovered Sartre after a break up (not me, friend of mine, of course).

Oh and what, Cardano solving centralised pools? You referring to the big Press Release they took out in 2021 to announce they've become 100% decentralised? How... decentralised of Cardano to get the community to collectively pay for sponsored press releases.

Energy efficiency has to take into account cost-benefit. I'm struggling to find the benefit of most PoS coins in terms of utility. If it's just cost and no benefit (other than speculation), that's not a matter of efficiency but a waste.

As franky1 points out (damn franky now I have to reference you), shitcoins have no utility. It's a bad word I hate to use but yeah, show me a pizza place taking ADA. In fact, show me a transaction you've made to pay for something someone sold you. I'm curious.

[LegendaryK]

That's how those with more resources will always dominate the ones that have not much to spend.

"the rich will always have more power than the poor"

Proof-of-Work:

• You can't forbid or affect the entrance of new voters.

 

The cost of the mining equipment and the cost of energy , and the warehouse rental forbid anyone but the rich from PoW mining.
Entry by the poor has been banned for years due to lack of profitability of PoW mining.

Proof of Stake has solved how to keep pools from becoming centralized   :Cardano
Proof of Stake has solved the energy efficiency issue.                             :All PoS coins.
Proof of Stake has solved transaction finality.                                         :Algorand

Seems like there's at least one problem you forgot... to me at least. BlackHatCoiner details it and I simply sum it up as objective security. PoS is... subjective incentive. You can call it whatever you want. PoS certainly knows how to churn out the labels... delegated voting, block producers, federations, rotating validators, quadratic votes, treasuries, slashing, epochs, etc. They're still figuring themselves out like a kid who discovered Sartre after a break up (not me, friend of mine, of course).

Oh and what, Cardano solving centralised pools?

Energy efficiency has to take into account cost-benefit. I'm struggling to find the benefit of most PoS coins in terms of utility. If it's just cost and no benefit (other than speculation), that's not a matter of efficiency but a waste.

show me a pizza place taking ADA.

Cardano has over 3000 staking pools, while BTC less than 20 mining pools,
cardano is coded to prevent large pools from becoming a majority, bitcoin has no code to safeguard the 51% danger.
If you can't understand how 3000 is more decentralized than 20, you might want to study harder for your GED.  

If you fail to understand how wasting energy becomes an attack vector, then go play with your crayons.
PoS easily outperform btc in security, onchain transaction capacity , speed of transaction , and transaction finality like in Algorand,
something bitcoin will never achieve.

How lame are the btc cultist that pizza is what they thinks makes a coin network.
https://www.investing.com/news/cryptocurrency-news/papa-murphys-now-accepts-cardano-ada-as-pizza-payment-2487720

Pizza brand, Papa Murphy’s, has added Cardano (ADA) to its payment options.

https://www.acceptedhere.io/catalog/currency/cardano/

Personally prefer Japanese Food.
https://emurgo.io/cardano-ada-payment-tamuken/

EMURGO Brings Crypto Payments Using Cardano ADA to Famous Japanese Comedian Kenji Tamura’s Restaurant, “Charcoal Grill BBQ Tamura”

Compare transaction fees of Proof of Waste verses Proof of Stake , so you can see how stupid it is to use btc for payments.
In addition , btc superslow blockspeed makes it unsuitable for use in a payment service at a Restaurant,
Cardano on the otherhand superfast blockspeed is more than suitable for transaction completion as fast as a visa card.

Sad thing, about btc cultist, try reading something other than the BTC circlejerk that goes on in these forums daily,
you might learn why PoS has left PoW in the dirt and that PoS won the supposed war years ago.

There is a reason their are no new PoW coins, PoW tech is a dead man walking, and everyone knows it except the bitcoin cultist.

[Pmalek]

You can cheat the system with no punishment. See "Nothing-at-stake problem"

I am sure that's true for some POS coins, but not all of them. I know that some have different slashing mechanisms where stakers and validators will lose part of their stake if they act maliciously. Since it's not in their interest to lose money, the slashing feature forces them to do the right thing.

It's incredibly easy for, say an exchange's hacker, to steal the system's units and stake them for their benefit.

Are you talking about a validator (exchange or private entity) stealing the tokens from the pool and staking them in their own name? That's always a possibility when the coins are not under your control, sure.

[tadamichi]

Entry by the poor has been banned for years due to lack of profitability of PoW mining.

Love the hypocrisy and virtue signaling, the poor for sure have enough capital to risk in some highly speculative, low utility, unregulated, snake oil shitcoin that forces them to luck up their capital to have any consensus power. It’s way cheaper to run a node on Bitcoin and actually being able to enforce rules or refusing/ accepting protocol changes.

Cardano has over 3000 staking pools, while BTC less than 20 mining pools,

Does the absolute amount of pools matter, when most capital will be controlled by just a few hands and locking up capital is also a privilege that mostly wealthy people have?

cardano is coded to prevent large pools from becoming a majority,

What prevents the majority of capital holders to just use many pools for attacks?

bitcoin has no code to safeguard the 51% danger.

You still forget that there is a separation of powers, nodes matter.

[BlackHatCoiner]

Entry by the poor has been banned for years due to lack of profitability of PoW mining.

Yes, it's the lack of profitability. Not the difficulty to understanding mining bitcoin and acquiring the required knowledge. Sure.

bitcoin has no code to safeguard the 51% danger.

None does. That's where the game theory relies upon. You're just too brainless to acknowledge that checkpoints don't protect you against such attack, for if they did, no energy would be required.

I am sure that's true for some POS coins, but not all of them. I know that some have different slashing mechanisms where stakers and validators will lose part of their stake if they act maliciously.

That's why they'll withdraw their security deposits before their cheating attempt. There's no punishment to double-signing a past block. Nothing-at-stake is a fundamental problem that comes from lack of objectivity, and it's potential for every Proof-of-Stake cryptocurrency.

Are you talking about a validator (exchange or private entity) stealing the tokens from the pool and staking them in their own name?

Exactly, but not necessarily pool. If a centralized exchange gets hacked, and the hacker gets all the PoS units, besides financial power, he also gains voting power.

[Flyingjack123]

its simple

a shift from the cost of 1.5million miners hardware and electric cost to mine a block for only 6.25coin
(hundreds of thousands of $ per block: dozens of thousands of $ per coin)

to a few dollars to sign a block..

result: massive cost reduction to make a block means those making blocks sell the cheaper, way cheaper and still profit. = value crash = price crash

..
lets use ethereum.. great example
currently over $1k hash cost to mine a eth

currently ~400k potential block signers of eth PoS
ethereum releases 2eth per block and does about 6k blocks a day. meaning each potential signer might get a chance once every 2-3 months

at a PC rating of 100w (2.4kwh a day) = $180kwh in ~75 days. means
at $0.04/kwh thats a $7.20 cost for waiting 2-3 months to get 2ethereum on PoS or $3.60 per eth

yep
when they say that eth2(pos) is 99.9X% less energy intensive than PoW.. what they are hinting at is the cost of creation is X000x less costly. so expect a X000x factor decrease in value and thus an effect of a X000x factor of price speculation crash too

Thanks for your explanation..What i understood is that when energy consumption will decrease..  will this lead to a real shift to  POS  based consensus?
But POS based solana is a POS based blockchain still it's not doing really great

[franky1]

yes.
not everyones private wallet of just a couple PoS coin could be staked. so they wont get passive income. so they are incentivised to pool it up into exchanges to have custody of it so that the customer can get a share of the combined stake in exchange custody rewards,

with exchanges holding custody of millions of coins. users wont want their coins vanishing so wont want to punish an exchange if an exchange does something odd.. punishing an exchange becomes punishing its customer(the users themselves)

they wont want to fork away from an exchange because then they cant see their own coin withdrawals/stakes. so they end up blindly following whatever whims an exchange wants just to stay in contact with the exchange and still have funds..

by exchanges having the pools stake of its customers.. its not actually exchanges personal value to lose. its their customers funds. so an exchange has nothing to lose. but knows its customer does.. so the exchange knows the customers are not going to go against the exchange.
people jsut end up blindly trusting an exchange wont do anything bad/accidental

this makes the exchanges become the decision makers and the users/customers the blind followers fearful that if they go against the exchange the customer loses its value.

[DaveF]

The other thing not being discussed is are PoS coins REALLY greener if they are not using centralized pools?

Oh, running a PC is WAY less power then running a miner. But how many PCs that are running a PoS node are now going to be running 24/7 vs a few hours a day when someone is home and taking care of things? How many more older more power hungry devices will be turned into staking machines? There are huge mining farms in upstate NY that are almost 100% hydro power.

How many old PCs burning 'only 150 watts or so' for people in an area that uses old coal plants to generate power will cause it to be less green then a 10 PH/s hydro powered facility?

-Dave

[franky1]

Oh, running a PC is WAY less power then running a miner. But how many PCs that are running a PoS node are now going to be running 24/7

using loose numbers from memory (you can do exact math if you wish)

currently there are ~10m GPU's PoW ethereum
as oppose to the ~1.5m asics PoW bitcoin
enjoy doing the maths if you want to work it out yourself

ethereum is not greener than bitcoin while at PoW stage

as for when Ethereum does PoS it will be ~400,000 pc's staking because the min threshold just to be a low laying voter is like 32eth.. (13m staked /32eth=~400k stakers (if all were unique individual rather then combined/custodianized))

but yes. if they all pooled stake. then it would be just a hand full of exchange

as for the topic of valuation.
the 10m GPU (1 peta network /100mhash GPU) which use about 300watt each.
vs post PoS estimates by some of 400k using about 100watts each

is a 75x decrease in cost.. but thats on the scenario of unique stakers for all 400k stakes..
better estimates done and even agreed with by those in ethereum is that its not going to be 400k unique pc's staking.
they assume the xfaxtor to be more like 2000x less
(the ~15,000 full archival nodes bitcoin is undercounted as using by bitnodes)


other food for thought about other altcoins and the environment stuff of "greener"

take elons bitcoin vs doge environment speaches

Doge is not some ASIC farm system where farmers choose area's of reliable renewable energy contracts..
its home hobby miners not in control of the energy source.
DOGE is dirtier % of renewable because those mining doge are stuck with what is available where they live.
DOGE people do not relocate to green regions specifically to mine.
so on a % of dirty vs clean. bitcoin is cleaner then DOGE

but % is always subjective.
..
if ethereum was to be individual stakers of individual people in residential area's where relocating is not an option.. the % of clean energy vs dirty will make ethereum look dirty on a % bases. even if the AMOUNT number seems lower on a KWH bases..

but % is always subjective.
.. in a number amount. to be fair.. yea bitcoin is dirtier. but thats because its more widely used and secured and protected where that energy is actually used for security, protection and utility

[DaveF]

.....

Was not just talking about ETH but PoS coins in general. Think of the dozens and dozens out there.

How many more machines are going to be running?
How many older less efficient machines are going to kept on 24/7?
How many new PCs will be bought because someone is keeping their old one instead of donating it to a charity.
How many hours will people loose out of their lives setting up what is needed to get PoS running on that machine and verify it's all working properly.
And so on.....
And then you also have the flip side. I use older miners that have hash boards removed and slower more quiet fans as space heaters for parts of the condo during the winter.
Can't really do that with a PC running a PoS coin.....

I need to have my work PC running 24/7 so I use 1 core (of of the CPU to work with Folding@home to mine some curecoin which is also PoS since what the hell it's up and running anyway. But that's an edge case. For most people running a PC 24/7 is a waste of power.

-Dave

[franky1]

im sure there are many coins where people can pull numbers and build charts for and combine numbers and such. i just gave one example for "simples" sake as it was an example that was close to the topic of a PoW to PoS switchover scenario. that being ethereum.. i personally dont care or use it myself but for topic sake of a scenario ethereum seemed closest to use as a reference for, for demo sake of a PoW to PoS value comparison of change

as for math of other/all PoS altcoins usage of PC's .. well yes it all adds up.

the comedy moments i seen in the past was the elon speeches of him preferring DOGE because he thought the % of green vs dirty energy was greener in DOGE.. he was wrong
(though on a non % bases but a KWH bases. small useless, less popular altnets/coins use less power)

[cryptosize]

PoS is (Techno)Feudalism 2.0

I guess the Dark/Medieval Ages have taught us nothing... that's why WEF's Great Reset agenda (abolition of ownership/freedom) has been very successful so far.

PoW will lead us to energy innovation (think of Dyson Sphere) long-term wise.

Bitcoin (thanks to PoW's increasing energy demands) will lead us to the next-next level of civilization (Type II). Silicon is abundant on Earth, so we could manufacture an unlimited amount of chips for ASICs and whatnot.

Humanity will be immensely grateful to Bitcoin, even though currently they wish it should die/go to zero. Historians of the future might even quote this post (assuming this forum exists somehow by then ).

There's no scarcity of energy, unless you only think in coal/oil terms (narrow-minded mindset).

The only reason globalists are so keen to reduce energy consumption, is because they want to reduce the population (because there's not enough food/land for everyone, electricity could have already been abundant thanks to nuclear energy). There's no other logical/mathematical explanation (as the graph indicates).

[cr1776]

That's how those with more resources will always dominate the ones that have not much to spend.

"the rich will always have more power than the poor"

Proof-of-Work:

• You can't forbid or affect the entrance of new voters.

 

The cost of the mining equipment and the cost of energy , and the warehouse rental forbid anyone but the rich from PoW mining.
Entry by the poor has been banned for years due to lack of profitability of PoW mining.

There is a huge difference between being "banned" from doing something and being unable to do it.  

It is the difference between locked in a country and prohibited from leaving - e.g. China for some people, eastern Europe under the USSR etc - and being unable to afford a plane ticket to fly somewhere else.  You can alway do something to earn the money to buy one.

[dansus021]

Proof of stake is also proven dude  you can see that altcoin nowadays using proof of stake although there is some model like masternode, Delegeate POs and so much more. i think if bitcoin gonna move from the PoW to PoS is still fine nothing gonna take effect. the miner in the other hand will take a deep efect

[pooya87]

If ETH switches to PoS and operates for a few years without any attacks on the consensus, then the voices that call for Bitcoin to switch to PoS for environmental reasons will become louder, but I doubt that they will be loud enough to actually stir Bitcoin in that direction. Only if PoS will be proven 100% safe will there be serious discussions if Bitcoin should swap to it, but that's a hella big IF. So don't worry about it too much, let ETH do it first and see how it goes.

It has nothing to do with safety, it is all about centralization. For example PayPal is considered safe too but it is 100% centralized. ETH is already pretty centralized and when it moves to PoS, that is another step in the direction of more centralization of it. I double there would be any traditional kind of attacks on ETH PoS considering they hold 72 million of its supply so they practically would have complete control over the network. The only attacks are going to continue to be exploiting the existing flaws in the protocol like DAO and dozen other projects have been doing.

[ImThour]

Let alone the advantage or disadvantage, I will not support Bitcoin if it ever goes into Proof of Stake.
Proof of work is a working mechanism and is far way better than just staking your asset to gain more power.
It requires you to run a mining machine or machines if you really want to support the network, instead of just keep buying it.

In the end, it's just going to be PoW forever, so no need for this discussion.

[Lucius]

~snip~
If Proof of Stake EVER proves to be just as fair as Proof of Work and just as secure or more secure, then why not transition to it.  But until then, let other coins self destroy by being the testing ground for it and let Bitcoin be the strong beast it currently is.

There was enough time for POS to prove itself as something better, but I don't see any cryptocurrency using it that is better in any way, especially if we take into account the security provided by POW. People who advocate this transformation are mostly those who believe that Bitcoin consumes too much energy with an emphasis on dirty energy, and actually do not want Bitcoin to become greener, but to gradually destroy it.

I hope that reason will prevail and that this will never happen, because there would be no end to radical changes - I'm sure that after that the max supply change would follow, because there are a lot of people who think that 21 million Bitcoin is not enough for Bitcoin to be successful...

[franky1]

there are hundreds of altcoins that are forks of bitcoin due to changing the hashing algo.. many of them changed to PoS.

so go check them out and go see how great they are.. hint. if you didnt realise bitcoin already forked to many PoS altcoins a few times, it just shows that it didnt take off