The Big Long – Sell POW, Buy POS – 02/15/18
I have been following the POW (proof of work) vs POS (proof of stake) debate for years in the cryptosphere and have concluded that POW has been obsoleted by superior POS protocols.
That said, consensus mechanisms in these systems are not the top priority when it comes to end-user security. Here are the top three security functions in blockchain-based systems in order of importance:
1.) Digital signatures
2.) Constant looming threat of a (non-trivial) hard fork
3.) Consensus mechanism
Original POS protocols, such as the initial versions of Peercoin, were somewhat insecure and centralized, although no large-scale attacks were ever successful on these networks. These issues are largely being solved and have been in the process of being solved for years. Bitcoin maximalists like to tout 2012 POS problems as if they still exist, ignoring the past 6 years of innovation:
I have become a firm believer that POW is obsolete because POS can be as secure or more secure than POW without the extreme waste in energy. Miner centralization is another issue with POW, but much less so because of the constant threat of hard fork by other factions of network participants. Ultimately, end user financial security is the end goal and POS can accomplish this task just as well or better than POW, and provide stakeholders with some income instead of needlessly burning electricity and hardware resources.
I will be expanding on this topic in the coming weeks and months as several different varieties of POS protocols are available (and some in production), which is too much information for a single post. I will also be explaining the nature of digital assets: not quite currency, not quite commodity, not quite equity - but a bit of all three.
Disclaimer: None of this is advice of any kind.