Proof of Work is the right consensus mechanism for exchanging value trustlessly

[Ucy]

Proof of Work is the only proper/true Consensus Mechanism for approving and exchanging value for a work done in a Trustless Network


Proof of Work is simply about requiring proof that a work has been properly done (or a problem has been solved) before the worker who solves the problem receives reward. That is the right thing to do when dealing with workers in work environments that require little to no trust to participate. It's about requiring everyone to freely solve available problem in a competitive way, but the one with the proven/right solution get rewarded. That is how it should be in a Network that wants to be truely decentralized rather than placing hugh barriers to entry on people who are interested in solving available problems. The barriers to entry could be inform of requiring certain amount of money/stake that is unaffordable to majority of interested people as it is with typical Proof of Stake (PoS) .  
With the right PoW anyone can aswell be a verifier in the consensus mechanism without high barrier to entry problem. Verifiers could also earn some reward in a more advanced PoW when they achieve high degree of accuracy in a certain period of time. The reward does not necessarily have to be financial, it could be inform of good/positive Reputation, Merit etc

In conclusion, a proper Consensus Mechanism for a truly Decentralized Network needs to have low barrier to entry for interested participants. Anyone should be able to easily participate fully in network consensus as long as they have full access to network database by running full nodes and making sure that works are done right. PoW keeps the network more decentralized and secure... and most importantly it doesn't violate other important principles of Blockchain or Decentralized Network.
 The Right or Proper Consensus Mechanism is PoW as it achieves Network Consensus for a decentralized and trustless system without creating more problems like PoS does.

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[DooMAD]

A low barrier to entry is considered optimal, but not a necessity.  The way in which Bitcoin has evolved since the early days would appear to suggest that PoW is still viable even when the barriers to entry become greater.  Mining is a highly competitive environment.  As the "arms race" escalated from single to multiple CPUs, and then to GPUs and on to ASICs, it becomes more and more costly for the average network participant to get involved with mining.  Many would now consider it an unaffordable endeavour.  But it clearly still works, providing the correct alignment of incentives is in place.

It's also worth stating that Proof of Work is only one element of the equation.  By itself, it doesn't guarantee a viable chain. 

[bitmover]

Many would now consider it an unaffordable endeavour.  But it clearly still works, providing the correct alignment of incentives is in place.

It does work, and now with the launch of Ethereum 2.0 with Proof of Stake we will see if is there any alternative that will really work.

With the right PoW anyone can aswell be a verifier in the consensus mechanism without high barrier to entry problem. Verifiers could also earn some reward in a more advanced PoW when they achieve high degree of accuracy in a certain period of time. The reward does not necessarily have to be financial, it could be inform of good/positive Reputation, Merit etc

This is not true.

"Verifiers" do not receive merit neither reputation.
The correct term is "miners", and they receive only bitcoin as a reward for their processing power and energy costs. This is not dependent of a "high degree of accuracy in a certain period of time", they just join a pool and receive rewards proportional to their processing power.

[HeRetiK]

As the "arms race" escalated from single to multiple CPUs, and then to GPUs and on to ASICs, it becomes more and more costly for the average network participant to get involved with mining.  Many would now consider it an unaffordable endeavour.

Ironically the minimum staking requirements that come with most PoS schemes makes the barrier for entry even higher than PoW.

[bitmover]

As the "arms race" escalated from single to multiple CPUs, and then to GPUs and on to ASICs, it becomes more and more costly for the average network participant to get involved with mining.  Many would now consider it an unaffordable endeavour.

Ironically the minimum staking requirements that come with most PoS schemes makes the barrier for entry even higher than PoW.

Not exactly.

Although there is a minimum 32 ETH to become a validator, you can join a pool with basically any value.

Low barrier to entry
Not a whale? No problem. Most staking pools let you stake virtually any amount of ETH by joining forces with other stakers, unlike staking solo which requires 32 ETH.
https://ethereum.org/en/staking/pools/

You can see in ethereum.org website many pools from 0.01 to any eth minimum.

As basically all small miners join pool in BTC, we should compare BTC pools with ETH pools.

[BlackHatCoiner]

It does work, and now with the launch of Ethereum 2.0 with Proof of Stake we will see if is there any alternative that will really work.

Seeing it working doesn't equate to seeing it working properly. Proof-of-Work works exactly as envisioned. It's a mechanism that gives a solution to an actual problem, that is the Byzantine generals' problem, and provides decentralization on both decision making and minting. It can't suffer from problems similar to Nothing-at-Stake, as in Proof-of-Stake.

Debunked theory comes with problematic practice.

[Lucius]

With the right PoW anyone can aswell be a verifier in the consensus mechanism without high barrier to entry problem. Verifiers could also earn some reward in a more advanced PoW when they achieve high degree of accuracy in a certain period of time. The reward does not necessarily have to be financial, it could be inform of good/positive Reputation, Merit etc

This is not true.

"Verifiers" do not receive merit neither reputation.
The correct term is "miners", and they receive only bitcoin as a reward for their processing power and energy costs. This is not dependent of a "high degree of accuracy in a certain period of time", they just join a pool and receive rewards proportional to their processing power.

I think you are all mistaken because you think that our greatest magician is talking about POW in the context of Bitocin, when in fact this thread is a continuation of his mission to show that he himself is a very special and not appreciated enough person considering his alleged abilities. The man is actually telling you about some imaginary POW that would reward people like him, which of course is a fantasy that has nothing to do with Bitcoin.

https://bitcointalk.org/index.php?topic=5412147.0

[HeRetiK]

As the "arms race" escalated from single to multiple CPUs, and then to GPUs and on to ASICs, it becomes more and more costly for the average network participant to get involved with mining.  Many would now consider it an unaffordable endeavour.

Ironically the minimum staking requirements that come with most PoS schemes makes the barrier for entry even higher than PoW.

Not exactly.

Although there is a minimum 32 ETH to become a validator, you can join a pool with basically any value.

From my understanding you still have to deposit your coins with a third party though, best case in which you receive a centrally issued token as an IOU. That seems only marginally better than storing your coins in an exchange. Ie. it seems more like giving the illusion of autonomy, rather than actual autonomy. I'm not really up-to-date with Ethereum though so I might be missing something.

As basically all small miners join pool in BTC, we should compare BTC pools with ETH pools.

Not comparable at all though.

As a small miner, you have full control over at which mining pool you point your hashrate at. You're free to change mining pools whenever (e.g. when a mining pool is gaining to large a portion of the total hashrate or it seems like a mining pool is behaving maliciously). You can even go solo, if you feel like playing the lottery.

As a small staker, you give up control the minute your coins move to the staking pool. You have to trust the staking pool to return your coins eventually (once unstaking has become possible, that is). And going solo is prohibited by design unless you have at least 32 ETH in the bank.

[franky1]

all methods of creating coin. do not last long from a beginning point of 'paying the poor'
if there is any competition/difficulty/way to game the system where one person can get more than another person. you are sure as hell going to see it happen
many people talk about resetting bitcoin PoW back to CPU. but thats just a time lag of maybe half a day before things ramp back to GPU via some mining software modification to run on a GPU
and in months blueprints of an asic design turn into a final product.

so envisioning some PoW that has some low barrier of entry does not last long. if the coin is popular/has utility beyond a very small crowd. as people will compete

[bitmover]

You have to trust the staking pool to return your coins eventually (once unstaking has become possible, that is). And going solo is prohibited by design unless you have at least 32 ETH in the bank.

Not necessarily trust, it can be trustless managed by a smartcontract.

Some pools operate using smart contracts, where funds can be deposited to a contract, which trustlessly manages and tracks your stake, and issues you a token that represents this value. Other pools may not involve smart contracts and are instead mediated off-chain.

https://ethereum.org/en/staking/pools/

I believe there are other problems with PoS, but not about the staking itself, which can be secure and trustless (it is just a decentralized contract that manages the coins).

The problems are the ones mentioned by BlackHatCoiner, and specially the decentralization problem related to coin distribution and censorship resistance (holders may be just forced by authorities to take some protocol decisions) .

[BlackHatCoiner]

The problems are the ones mentioned by BlackHatCoiner, and specially the decentralization problem related to coin distribution and censorship resistance (holders may be just forced by authorities to take some protocol decisions)

Exactly. Voting centralizes overtime with Proof-of-Stake. That's because in order for someone to vote, he needs to get the required permission by a coin owner. He can't just enter the system in a permissionless manner, oppositely to Proof-of-Work wherein to vote you just need to have hardware and energy.

Not to mention that large corporations (like centralized exchanges) suddenly gain power over the protocol, besides their financial power.

[bitmover]

Not to mention that large corporations (like centralized exchanges) suddenly gain power over the protocol, besides their financial power.

Exchanges are very susceptible to regulations and authorities, which can simple force them to apply to whatever any government demands or they just shut them down.

Recently, Vitalik buterin was proposing high punish for exchanges that block address or do any other misbehave.

He suggested that at the protocol level the staked coins from the attacker are destroyed. This is specially interesting if exchange are forced to apply to authorities. The only alternative left for them would be to not offer staking server, and their coins will be just sit in the exchange (not participating in PoS, because they risk losing their stake if authorities force them to do anything that the protocol do not permit, such as blocking address or coins)


https://twitter.com/ercwl/status/1559268027983593474/photo/2

Anyway, let's see if such things will be implemented or not.

[yhiaali3]

The biggest problem with Proof of Work is the increase in fees at the time of congestion on the network, the presence of a large number of transactions takes longer and causes higher fees as the number of transactions increases and this has become an annoying thing for many people, but the most exciting feature of the Proof of Work method is that it is more secure, Proof of Work is more secure than networks that rely on Proof of Stake. The more miners there are, the greater the decentralization and the more secure the network.

[HeRetiK]

You have to trust the staking pool to return your coins eventually (once unstaking has become possible, that is). And going solo is prohibited by design unless you have at least 32 ETH in the bank.

Not necessarily trust, it can be trustless managed by a smartcontract.

That's the thing though, even with a smart contract it's not really trustless. Or rather, it's about as trustless as USDT or other centrally issued stablecoins. That is, transferring the token that represents your share in the stake that is managed by the third party may be trustless, but it's still nothing more but a token whose worth relies on the issuer's credibility and reliability. It's a hidden dependency.

[BlackHatCoiner]

The biggest problem with Proof of Work is the increase in fees at the time of congestion on the network

This has nothing to do with Proof-of-Work, or any other mechanism. Increase in fees is resulted due to increase in transactions with a steady block size. The block size limit is what pushes the network to congestion. Proof-of-Work is just a cryptographic proof that the miners have spent computational power to protect the network. Theoretically, (but not practically!) we could have no such limit, and still use Proof-of-Work.

[franky1]

The biggest problem with Proof of Work is the increase in fees at the time of congestion on the network, the presence of a large number of transactions takes longer and causes higher fees as the number of transactions increases and this has become an annoying thing for many people,

PoW is about hashing a block HEADER(not the individual transactions)..
it doesnt matter how many transactions is put into a block transaction area, the header of that block are the same size and hash is the same length
more transactions do not cause longer delays in block solutions/confirmations
because PoW miners are not mining transactions. they are mining a hash of the block header.. which is always the same data lenth no matter the number of transactions
..
transaction congestions causes transaction congestion due to the limits implied of the block DATA area which is outside/separate from the header area..
thus PoW has nothing to do with transaction numbers

.
bitcoins transaction limit was a decade ago set as a arbitrary small amount due to not needing to be so big(not many transactions in in first few years). but now its set so low to push LESS people to transact so that devs can advertise some other project for people to use

the fee's are high because a rational fee formula was removed and not replaced with another rational formulae.. instead it was replaced with a freemarket bidding war concept, aswell as others code that multiply the costs of certain standard/older formats, using bad math to make certain newer features appear cheaper, by miscounting data

in short devs 5 years ago expanded blockspace to be deemed that 4mb of blockspace was acceptable safe for decentralised data sharing compared to the 2010-2017 1mb space.
but then they added unfinished unclean cludgy rules to then not fully utilise that 4mb of space. unless you transact in their new/young unfinished feature devs implemented

..
with all that said
whether it was 32mb space or 1mb space or 4mb space. no matter the number of transactions allowed. the block header is the same length and the blockhash is the same length meaning the work PoW has to do is the same .. PoW work has no relation to number of transactions.

transaction congestion is not linked to PoW
any blockhain of any "proof" can have transaction congestion if it has an implied transaction count per block limit or data size limit to impose how many transactions can be put into a block data area (separate thing to the block solving task)

[pooya87]

When you think about when Proof of Stake was created (2012) and the fact that all the coins that have been using this consensus algorithm are either dead or centralized (like Peercoin), it starts looking weird how we have to restart decade old discussions about an algorithm that everyone knew is flawed. All that began when a superpumped shitcoin called ethereum started switching algorithm to ensure its own survival and free money for the holders of premined ethers!

It does work, and now with the launch of Ethereum 2.0 with Proof of Stake we will see if is there any alternative that will really work.

Always remember that PayPal works too.

[2stout]

Agree, it should be interesting to see to see how ETH 2.0 plays out.  It should only further prove and solidify PoW for Bitcoin.  IMHO, ETH staking will further centralized it and be an even bigger boon to the whales there.

[BADecker]

When the price of Bitcoin goes down, Proof of Work is a guaranteed loss. Proof of Stake in some altcoin might maintain more value because of interest (Stake) earned... if the company is trustworthy and has a good plan.

[DooMAD]

When the price of Bitcoin goes down, Proof of Work is a guaranteed loss.

There's a difference between unrealised and realised losses.  If miners hold until the price later recovers and they then take that opportunity to sell, it's clearly not a loss.  If it were as risky and problematic to mine as you describe, no one would do it.

Proof of Stake in some altcoin might maintain more value because of interest (Stake) earned... if the company is trustworthy and has a good plan.

You must have a different definition of the word "value" to me. 

[bitmover]

Proof of Stake in some altcoin might maintain more value because of interest (Stake) earned... if the company is trustworthy and has a good plan.

You must have a different definition of the word "value" to me. 

The earned stake may be illusionary profit if your stake lost value. This is what happen to a lot of PoS projects.

When the price of Bitcoin goes down, Proof of Work is a guaranteed loss.

I dont think this is true. The miner doesn't need to hold the earned bitcoin, he can just sell it. If there was a profit when he was mining, he can just sell the BTC to pay for his operation costs and take out the profit.

[HeRetiK]

Proof of Stake in some altcoin might maintain more value because of interest (Stake) earned... if the company is trustworthy and has a good plan.

Interest earned is unlikely to even remotely compensate for a bear market, ie. 5% interest are a drop in the bucket in the face of a 50% downturn. Of course stakers like miners don't necessarily need to realize their losses, but still... if I'd wanted to invest in a company... I'd invest in a company.

[franky1]

here is the thing
having the main economic nodes of exchanges and merchant services also being the main stake custodians is a huge risk which regulators can poke at..
even if they HAD a algo to slash exchange stake if 1 exchange changed things the fantasy is that.. however.. if all economic nodes(many exchanges grouped together like the UAHF/NY agreement style). they can just remove code parts that threaten their stake/hoard)

it is more of a network protocol risk because there is no financial loss/risk/cost to those custodians/services because they would be the ones still accepting those new style blocks as valid.. thus not 'slashing' their own reward. thus no risk/no cost


in a PoS state..
if the major exchanges and merchants were the main Stake pools.. and they VIA REGULATOR INSTRUCTION done a UAHF (NY agreement comparable)
where some main custodians agree on a new path..
DUE TO REGULATORS mandating that exchanges perform a change..

guess what
those exchanges/merchants most people use continue to accept the blocks of their mandated new regulatory approved change. and reject the old paradigm.

the new paradigm/feature/direction activates and the regulated exchanges/services continue to trade on that chain as if it is the main chain.. and because they are both the main economic nodes (exchanges/merchant tools) and the block creators... users not supporting the UAHF(NY agreement comparable) end up being rejected by the most popular services(exchanges)

its not a simple idea of  users not supporting a change 'lets reject those new blocks and destroy/slash coins of those support it"
its actually the opposite way round those not wanting the new feature get rejected by the main regulated(economic node) exchanges.. where the new feature opposers are left as a altcoin. destroying coins on their altcoin. and also detached from being recognised by the main exchanges/services.. thus end up as a useless alt

in the end those rejecting the new feature have then a choice.. be left to follow some useless altcoin that has no exchange/merchant support.. or re establish themselves with the (USAF/NY/mandate activated comparison) feature chain to be then be re established to have value on the chain that exchanges are accepting..

compare that to the FUD spoke about bitcoin risks of "51% attack"
bitcoins decentralisation talks about the FUD fear of a 51% attack that only causes
1. a empty block risk for prolonged period which doesnt benefit the attacker in the long run(cant spend if they are empty blocking the potential spends)
or
2.redoing old blocks to do a chain re-org to double spend certain tx they control (but that is only worth performing if the value they want to re-unconfirm to respend are not worth the attack cost amount of value..
thus not worth trying.)

[dezoel]

I disagree. It is not the system or mechanism that is the best or worst in any situation, it is the blockchain and its code. I could write a proof of work that is horrible and I could write a proof of stake that is better, or I could write a great proof of work and a horrible proof of stake. Both are possible and people who do not understand it are people who have no idea how things work.

I personally believe that ETH becoming proof of stake is not easy, it is taking a lot of work and effort to turn it into POS but the reality is that we are talking about something that is a bit more difficult to handle so it is going to be a bit longer to adjust to this new life.

[franky1]

I disagree. It is not the system or mechanism that is the best or worst in any situation,

signing a block. requires no work/cost
thus its simply a game of who has decision power (who do people follow)

EG

if people decide to follow a block the main thing is the why.
in PoW its the not just
a block that reaches most nodes the quickest
a block that follows the rules that is the quickest
a block that everyone then agrees they seen first thats valid

but also in PoW that block has to have done X work, which:
is not just about cost. but also an extra layer of puzzle complication, which not any random/chosen person can do in milliseconds(unlike PoS)

PoS does not have this extra layer which means chain re-orgs are both cheap and easy to perform.
heck PoS is just a 2 layer of "fastest first" they are always in a constant state of re-org. they have several possible blocks that are quickest seen. and then confirm when one of them gets far enough ahead of a threshold height.

on a PoS chain it becomes easy to perform them by, for instance easily changing code to have the initial peer connections to connect to specific DNS which then tell peers to follow certain nodes. which then control which relayed data to see first

where as in PoW if a certain DNS listed certain peers. those peers data that connect to selected pool(s). still need to perform expensive work to even have a block thats acceptable to the network. thus cant be easily manipulated to just accept some "quickest first" peer of their choosing