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From: Lloyd Fournier <lloyd.fourn@gmail.com>
Date: Sun, 23 May 2021 13:41:12 +1000
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To: Billy Tetrud <billy.tetrud@gmail.com>, 
 Bitcoin Protocol Discussion <bitcoin-dev@lists.linuxfoundation.org>
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Subject: Re: [bitcoin-dev] Opinion on proof of stake in future
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Hi Billy,

I was going to write a post which started by dismissing many of the weak
arguments that are made against PoS made in this thread and elsewhere.
Although I don't agree with all your points you have done a decent job here
so I'll focus on the second part: why I think Proof-of-Stake is
inappropriate for a Bitcoin-like system.

Proof of stake is not fit for purpose for a global settlement layer in a
pure digital asset (i.e. "digital gold") which is what Bitcoin is trying to
be.
PoS necessarily gives responsibilities to the holders of coins that they do
not want and cannot handle.
In Bitcoin, large unsophisticated coin holders can put their coins in cold
storage without a second thought given to the health of the underlying
ledger.
As much as hardcore Bitcoiners try to convince them to run their own node,
most don't, and that's perfectly acceptable.
At no point do their personal decisions affect the underlying consensus --
it only affects their personal security assurance (not that of the system
itself).
In PoS systems this clean separation of responsibilities does not exist.

I think that the more rigorously studied PoS protocols will work fine
within the security claims made in their papers.
People who believe that these protocols are destined for catastrophic
consensus failure are certainly in for a surprise.
But the devil is in the detail.
Let's look at what the implications of using the leading proof of stake
protocols would have on Bitcoin:

### Proof of SquareSpace (Cardano, Polkdadot)

Cardano is a UTXO based PoS coin based on Ouroboros Praos[3] with an
inbuilt on-chain delegation system[5].
In these protocols, coin holders who do not want to run their node with
their hot keys in it delegate it to a "Stake Pool".
I call the resulting system Proof-of-SquareSpace since most will choose a
pool by looking around for one with a nice website and offering the largest
share of the block reward.
On the surface this might sound no different than someone with an mining
rig shopping around for a good mining pool but there are crucial
differences:

1. The person making the decision is forced into it just because they own
the currency -- someone with a mining rig has purchased it with the intent
to make profit by participating in consensus.

2. When you join a mining pool your systems are very much still online. You
are just partaking in a pool to reduce your profit variance. You still see
every block that you help create and *you never help create a block without
seeing it first*.

3. If by SquareSpace sybil attack you gain a dishonest majority and start
censoring transactions how are the users meant to redelegate their stake to
honest pools?
I guess they can just send a transaction delegating to another pool...oh
wait I guess that might be censored too! This seems really really bad.
In Bitcoin, miners can just join a different pool at a whim. There is
nothing the attacker can do to stop them. A temporary dishonest majority
heals relatively well.

There is another severe disadvantage to this on-chain delegation system:
every UTXO must indicate which staking account this UTXO belongs to so the
appropriate share of block rewards can be transferred there.
Being able to associate every UTXO to an account ruins one of the main
privacy advantages of the UTXO model.
It also grows the size of the blockchain significantly.

### "Pure" proof of stake (Algorand)

Algorand's[4] approach is to only allow online stake to participate in the
protocol.
Theoretically, This means that keys holding funds have to be online in
order for them to author blocks when they are chosen.
Of course in reality no one wants to keep their coin holding keys online so
in Alogorand you can authorize a set of "participation keys"[1] that will
be used to create blocks on your coin holding key's behalf.
Hopefully you've spotted the problem.
You can send your participation keys to any malicious party with a nice
website (see random example [2]) offering you a good return.
Damn it's still Proof-of-SquareSpace!
The minor advantage is that at least the participation keys expire after a
certain amount of time so eventually the SquareSpace attacker will lose
their hold on consensus.
Importantly there is also less junk on the blockchain because the
participation keys are delegated off-chain and so are not making as much of
a mess.

### Conclusion

I don't see a way to get around the conflicting requirement that the keys
for large amounts of coins should be kept offline but those are exactly the
coins we need online to make the scheme secure.
If we allow delegation then we open up a new social attack surface and it
degenerates to Proof-of-SquareSpace.

For a "digital gold" like system like Bitcoin we optimize for simplicity
and desperately want to avoid extraneous responsibilities for the holder of
the coin.
After all, gold is an inert element on the periodic table that doesn't
confer responsibilities on the holder to maintain the quality of all the
other bars of gold out there.
Bitcoin feels like this too and in many ways is more inert and beautifully
boring than gold.
For Bitcoin to succeed I think we need to keep it that way and
Proof-of-Stake makes everything a bit too exciting.

I suppose in the end the market will decide what is real digital gold and
whether these bad technical trade offs are worth being able to say it uses
less electricity. It goes without saying that making bad technical
decisions to appease the current political climate is an anathema to
Bitcoin.

Would be interested to know if you or others think differently on these
points.

[1]:
https://developer.algorand.org/docs/run-a-node/participate/generate_keys/
[2]: https://staking.staked.us/algorand-staking
[3]: https://eprint.iacr.org/2017/573.pdf
[4]:
https://algorandcom.cdn.prismic.io/algorandcom%2Fece77f38-75b3-44de-bc7f-80=
5f0e53a8d9_theoretical.pdf
[5]:
https://hydra.iohk.io/build/790053/download/1/delegation_design_spec.pdf

Cheers,

LL

On Fri, 21 May 2021 at 19:21, Billy Tetrud via bitcoin-dev <
bitcoin-dev@lists.linuxfoundation.org> wrote:

> I think there is a lot of misinformation and bias against Proof of Stake.
> Yes there have been lots of shady coins that use insecure PoS mechanisms.
> Yes there have been massive issues with distribution of PoS coins (of
> course there have also been massive issues with PoW coins as well).
> However, I want to remind everyone that there is a difference between
> "proved to be impossible" and "have not achieved recognized success yet".
> Most of the arguments levied against PoS are out of date or rely on
> unproven assumptions or extrapolation from the analysis of a particular P=
oS
> system. I certainly don't think we should experiment with bitcoin by
> switching to PoS, but from my research, it seems very likely that there i=
s
> a proof of stake consensus protocol we could build that has substantially
> higher security (cost / capital required to execute an attack) while at t=
he
> same time costing far less resources (which do translate to fees on the
> network) *without* compromising any of the critical security properties
> bitcoin relies on. I think the critical piece of this is the disagreement=
s
> around hardcoded checkpoints, which is a critical piece solving attacks
> that could be levied on a PoS chain, and how that does (or doesn't) affec=
t
> the security model.
>
> @Eric Your proof of stake fallacy seems to be saying that PoS is worse
> when a 51% attack happens. While I agree, I think that line of thinking
> omits important facts:
> * The capital required to 51% attack a PoS chain can be made substantiall=
y
> greater than on a PoS chain.
> * The capital the attacker stands to lose can be substantially greater as
> well if the attack is successful.
> * The effectiveness of paying miners to raise the honest fraction of
> miners above 50% may be quite bad.
> * Allowing a 51% attack is already unacceptable. It should be considered
> whether what happens in the case of a 51% may not be significantly
> different. The currency would likely be critically damaged in a 51% attac=
k
> regardless of consensus mechanism.
>
> > Proof-of-stake tends towards oligopolistic control
>
> People repeat this often, but the facts support this. There is no
> centralization pressure in any proof of stake mechanism that I'm aware of=
.
> IE if you have 10 times as much coin that you use to mint blocks, you
> should expect to earn 10x as much minting revenue - not more than 10x. By
> contrast, proof of work does in fact have clear centralization pressure -
> this is not disputed. Our goal in relation to that is to ensure that the
> centralization pressure remains insignifiant. Proof of work also clearly
> has a lot more barriers to entry than any proof of stake system does. Bot=
h
> of these mean the tendency towards oligopolistic control is worse for PoW=
.
>
> > Energy usage, in-and-of-itself, is nothing to be ashamed of!!
>
> I certainly agree. Bitcoin's energy usage at the moment is I think quite
> warranted. However, the question is: can we do substantially better. I
> think if we can, we probably should... eventually.
>
> > Proof of Stake is only resilient to =E2=85=93 of the network demonstrat=
ing a
> Byzantine Fault, whilst Proof of Work is resilient up to the =C2=BD thres=
hold
>
> I see no mention of this in the pos.pdf
> <https://download.wpsoftware.net/bitcoin/pos.pdf> you linked to. I'm not
> aware of any proof that *all *PoS systems have a failure threshold of
> 1/3. I know that staking systems like Casper do in fact have that 1/3
> requirement. However there are PoS designs that should exceed that up to
> nearly 50% as far as I'm aware. Proof of work is not in fact resilient up
> to the 1/2 threshold in the way you would think. IE, if 100% of miners ar=
e
> currently honest and have a collective 100 exahashes/s hashpower, an
> attacker does not need to obtain 100 exahashes/s, but actually only needs
> to accumulate 50 exahashes/s. This is because as the attacker accumulates
> hashpower, it drives honest miners out of the market as the difficulty
> increases to beyond what is economically sustainable. Also, its been show=
n
> that the best proof of work can do is require an attacker to obtain 33% o=
f
> the hashpower because of the selfish mining attack
> <https://github.com/fresheneesz/quantificationOfConsensusProtocolSecurity=
#the-selfish-economic-attack> discussed
> in depth in this paper: https://arxiv.org/abs/1311.0243. Together, both
> of these things reduce PoW's security by a factor of about 83% (1 -
> 50%*33%).
>
>  > Proof of Stake requires other trade-offs which are incompatible with
> Bitcoin's objective (to be a trustless digital cash) =E2=80=94 specifical=
ly the
> famous "security vs. liveness" guarantee
>
> Do you have a good source that talks about why you think proof of stake
> cannot be used for a trustless digital cash?
>
> > You cannot gain tokens without someone choosing to give up those coins =
-
> a form of permission.
>
> This is not a practical constraint. Just like in mining, some nodes may
> reject you, but there will likely be more that will accept you, some
> sellers may reject you, but most would accept your money as payment for
> bitcoins. I don't think requiring the "permission" of one of millions of
> people in the market can be reasonably considered a "permissioned
> currency".
>
> > 2. Proof of stake must have a trusted means of timestamping to regulate
> overproduction of blocks
>
> Both PoW and PoS could mine/mint blocks twice as fast if everyone agreed
> to double their clock speeds. Both systems rely on an honest majority
> sticking to standard time.
>
>
> On Wed, May 19, 2021 at 5:32 AM Michael Dubrovsky via bitcoin-dev <
> bitcoin-dev@lists.linuxfoundation.org> wrote:
>
>> Ah sorry, I didn't realize this was, in fact, a different thread! :)
>>
>> On Wed, May 19, 2021 at 10:07 AM Michael Dubrovsky <mike@powx.org> wrote=
:
>>
>>> Folks, I suggest we keep the discussion to PoW, oPoW, and the BIP
>>> itself. PoS, VDFs, and so on are interesting but I guess there are othe=
r
>>> threads going on these topics already where they would be relevant.
>>>
>>> Also, it's important to distinguish between oPoW and these other
>>> "alternatives" to Hashcash. oPoW is a true Proof of Work that doesn't a=
lter
>>> the core game theory or security assumptions of Hashcash and actually
>>> contains SHA (can be SHA3, SHA256, etc hash is interchangeable).
>>>
>>> Cheers,
>>> Mike
>>>
>>> On Tue, May 18, 2021 at 4:55 PM Erik Aronesty via bitcoin-dev <
>>> bitcoin-dev@lists.linuxfoundation.org> wrote:
>>>
>>>> 1. i never suggested vdf's to replace pow.
>>>>
>>>> 2. my suggestion was specifically *in the context of* a working
>>>> proof-of-burn protocol
>>>>
>>>> - vdfs used only for timing (not block height)
>>>> - blind-burned coins of a specific age used to replace proof of work
>>>> - the required "work" per block would simply be a competition to
>>>> acquire rewards, and so miners would have to burn coins, well in
>>>> advance, and hope that their burned coins got rewarded in some far
>>>> future
>>>> - the point of burned coins is to mimic, in every meaningful way, the
>>>> value gained from proof of work... without some of the security
>>>> drawbacks
>>>> - the miner risks losing all of his burned coins (like all miners risk
>>>> losing their work in each block)
>>>> - new burns can't be used
>>>> - old burns age out (like ASICs do)
>>>> - other requirements on burns might be needed to properly mirror the
>>>> properties of PoW and the incentives Bitcoin uses to mine honestly.
>>>>
>>>> 3. i do believe it is *possible* that a "burned coin + vdf system"
>>>> might be more secure in the long run, and that if the entire space
>>>> agreed that such an endeavor was worthwhile, a test net could be spun
>>>> up, and a hard-fork could be initiated.
>>>>
>>>> 4. i would never suggest such a thing unless i believed it was
>>>> possible that consensus was possible.  so no, this is not an "alt
>>>> coin"
>>>>
>>>> On Tue, May 18, 2021 at 10:02 AM Zac Greenwood <zachgrw@gmail.com>
>>>> wrote:
>>>> >
>>>> > Hi ZmnSCPxj,
>>>> >
>>>> > Please note that I am not suggesting VDFs as a means to save energy,
>>>> but solely as a means to make the time between blocks more constant.
>>>> >
>>>> > Zac
>>>> >
>>>> >
>>>> > On Tue, 18 May 2021 at 12:42, ZmnSCPxj <ZmnSCPxj@protonmail.com>
>>>> wrote:
>>>> >>
>>>> >> Good morning Zac,
>>>> >>
>>>> >> > VDFs might enable more constant block times, for instance by
>>>> having a two-step PoW:
>>>> >> >
>>>> >> > 1. Use a VDF that takes say 9 minutes to resolve (VDF being
>>>> subject to difficulty adjustments similar to the as-is). As per the
>>>> property of VDFs, miners are able show proof of work.
>>>> >> >
>>>> >> > 2. Use current PoW mechanism with lower difficulty so finding a
>>>> block takes 1 minute on average, again subject to as-is difficulty
>>>> adjustments.
>>>> >> >
>>>> >> > As a result, variation in block times will be greatly reduced.
>>>> >>
>>>> >> As I understand it, another weakness of VDFs is that they are not
>>>> inherently progress-free (their sequential nature prevents that; they =
are
>>>> inherently progress-requiring).
>>>> >>
>>>> >> Thus, a miner which focuses on improving the amount of energy that
>>>> it can pump into the VDF circuitry (by overclocking and freezing the
>>>> circuitry), could potentially get into a winner-takes-all situation,
>>>> possibly leading to even *worse* competition and even *more* energy
>>>> consumption.
>>>> >> After all, if you can start mining 0.1s faster than the competition=
,
>>>> that is a 0.1s advantage where *only you* can mine *in the entire worl=
d*.
>>>> >>
>>>> >> Regards,
>>>> >> ZmnSCPxj
>>>> _______________________________________________
>>>> bitcoin-dev mailing list
>>>> bitcoin-dev@lists.linuxfoundation.org
>>>> https://lists.linuxfoundation.org/mailman/listinfo/bitcoin-dev
>>>>
>>>
>>>
>>> --
>>> Michael Dubrovsky
>>> Founder; PoWx
>>> www.PoWx.org <http://www.powx.org/>
>>>
>>
>>
>> --
>> Michael Dubrovsky
>> Founder; PoWx
>> www.PoWx.org <http://www.powx.org/>
>> _______________________________________________
>> bitcoin-dev mailing list
>> bitcoin-dev@lists.linuxfoundation.org
>> https://lists.linuxfoundation.org/mailman/listinfo/bitcoin-dev
>>
> _______________________________________________
> bitcoin-dev mailing list
> bitcoin-dev@lists.linuxfoundation.org
> https://lists.linuxfoundation.org/mailman/listinfo/bitcoin-dev
>

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<div dir=3D"ltr"><div>Hi Billy,</div><br>I was going to write a post which =
started by dismissing many of the weak arguments that are made against PoS =
made in this thread and elsewhere.<br>Although I don&#39;t agree with all y=
our points you have done a decent job here so I&#39;ll focus on the second =
part: why I think Proof-of-Stake is inappropriate for a Bitcoin-like system=
.<br><br>Proof of stake is not fit for purpose for a global settlement laye=
r in a pure digital asset (i.e. &quot;digital gold&quot;) which is what Bit=
coin is trying to be.<br>PoS necessarily gives responsibilities to the hold=
ers of coins that they do not want and cannot handle.<br>In Bitcoin, large =
unsophisticated coin holders can put their coins in cold storage without a =
second thought given to the health of the underlying ledger.<br>As much as =
hardcore Bitcoiners try to convince them to run their own node, most don&#3=
9;t, and that&#39;s perfectly acceptable.<br>At no point do their personal =
decisions affect the underlying consensus -- it only affects their personal=
 security assurance (not that of the system itself).<br>In PoS systems this=
 clean separation of responsibilities does not exist.<br><div><br></div><di=
v>I think that the more rigorously studied PoS protocols will work fine wit=
hin the security claims made in their papers.</div><div>People who believe =
that these protocols are destined for catastrophic consensus failure are ce=
rtainly in for a surprise.</div><div>But the devil is in the detail.<br></d=
iv>Let&#39;s look at what the implications of using the leading proof of st=
ake protocols would have on Bitcoin:<br><br>### Proof of SquareSpace (Carda=
no, Polkdadot)<br><br>Cardano is a UTXO based PoS coin based on Ouroboros P=
raos[3] with an inbuilt on-chain delegation system[5].<br>In these protocol=
s, coin holders who do not want to run their node with their hot keys in it=
 delegate it to a &quot;Stake Pool&quot;.<br>I call the resulting system Pr=
oof-of-SquareSpace since most will choose a pool by looking around for one =
with a nice website and offering the largest share of the block reward.<br>=
On the surface this might sound no different than someone with an mining ri=
g shopping around for a good mining pool but there are crucial differences:=
<br><br>1. The person making the decision is forced into it just because th=
ey own the currency -- someone with a mining rig has purchased it with the =
intent to make profit by participating in consensus.<br><br>2. When you joi=
n a mining pool your systems are very much still online. You are just parta=
king in a pool to reduce your profit variance. You still see every block th=
at you help create and *you never help create a block without seeing it fir=
st*.<br><br>3. If by SquareSpace sybil attack you gain a dishonest majority=
 and start censoring transactions how are the users meant to redelegate the=
ir stake to honest pools?<br>I guess they can just send a transaction deleg=
ating to another pool...oh wait I guess that might be censored too! This se=
ems really really bad.<br>In Bitcoin, miners can just join a different pool=
 at a whim. There is nothing the attacker can do to stop them. A temporary =
dishonest majority heals relatively well.<br><br>There is another severe di=
sadvantage to this on-chain delegation system: every UTXO must indicate whi=
ch staking account this UTXO belongs to so the appropriate share of block r=
ewards can be transferred there.<br>Being able to associate every UTXO to a=
n account ruins one of the main privacy advantages of the UTXO model.<br>It=
 also grows the size of the blockchain significantly.<br><br>### &quot;Pure=
&quot; proof of stake (Algorand)<br><br>Algorand&#39;s[4] approach is to on=
ly allow online stake to participate in the protocol.<br>Theoretically, Thi=
s means that keys holding funds have to be online in order for them to auth=
or blocks when they are chosen.<br>Of course in reality no one wants to kee=
p their coin holding keys online so in Alogorand you can authorize a set of=
 &quot;participation keys&quot;[1] that will be used to create blocks on yo=
ur coin holding key&#39;s behalf.<br>Hopefully you&#39;ve spotted the probl=
em.<br>You can send your participation keys to any malicious party with a n=
ice website (see random example [2]) offering you a good return.<br>Damn it=
&#39;s still Proof-of-SquareSpace!<br>The minor advantage is that at least =
the participation keys expire after a certain amount of time so eventually =
the SquareSpace attacker will lose their hold on consensus.<br>Importantly =
there is also less junk on the blockchain because the participation keys ar=
e delegated off-chain and so are not making as much of a mess.<br><br>### C=
onclusion<br><br>I don&#39;t see a way to get around the conflicting requir=
ement that the keys for large amounts of coins should be kept offline but t=
hose are exactly the coins we need online to make the scheme secure.<br><di=
v>If we allow delegation then we open up a new social attack surface and it=
 degenerates to Proof-of-SquareSpace.</div><div><br></div>For a &quot;digit=
al gold&quot; like system like Bitcoin we optimize for simplicity and despe=
rately want to avoid extraneous responsibilities for the holder of the coin=
.<br>After all, gold is an inert element on the periodic table that doesn&#=
39;t confer responsibilities on the holder to maintain the quality of all t=
he other bars of gold out there.<br>Bitcoin feels like this too and in many=
 ways is more inert and beautifully boring than gold.<br><div>For Bitcoin t=
o succeed I think we need to keep it that way and Proof-of-Stake makes ever=
ything a bit too exciting.</div><div><br></div><div>I suppose in the end th=
e market will decide what is real digital gold and whether these bad techni=
cal trade offs are worth being able to say it uses less electricity. It goe=
s without saying that making bad technical decisions to appease the current=
 political climate is an anathema to Bitcoin.<br></div><div><br></div><div>=
Would be interested to know if you or others think differently on these poi=
nts.<br></div><br>[1]: <a href=3D"https://developer.algorand.org/docs/run-a=
-node/participate/generate_keys/">https://developer.algorand.org/docs/run-a=
-node/participate/generate_keys/</a><br>[2]: <a href=3D"https://staking.sta=
ked.us/algorand-staking">https://staking.staked.us/algorand-staking</a><br>=
[3]: <a href=3D"https://eprint.iacr.org/2017/573.pdf">https://eprint.iacr.o=
rg/2017/573.pdf</a><br>[4]: <a href=3D"https://algorandcom.cdn.prismic.io/a=
lgorandcom%2Fece77f38-75b3-44de-bc7f-805f0e53a8d9_theoretical.pdf">https://=
algorandcom.cdn.prismic.io/algorandcom%2Fece77f38-75b3-44de-bc7f-805f0e53a8=
d9_theoretical.pdf</a><br><div>[5]: <a href=3D"https://hydra.iohk.io/build/=
790053/download/1/delegation_design_spec.pdf">https://hydra.iohk.io/build/7=
90053/download/1/delegation_design_spec.pdf</a></div><div><br></div><div>Ch=
eers,<br></div><br>LL<br></div><br><div class=3D"gmail_quote"><div dir=3D"l=
tr" class=3D"gmail_attr">On Fri, 21 May 2021 at 19:21, Billy Tetrud via bit=
coin-dev &lt;<a href=3D"mailto:bitcoin-dev@lists.linuxfoundation.org">bitco=
in-dev@lists.linuxfoundation.org</a>&gt; wrote:<br></div><blockquote class=
=3D"gmail_quote" style=3D"margin:0px 0px 0px 0.8ex;border-left:1px solid rg=
b(204,204,204);padding-left:1ex"><div dir=3D"ltr"><div>I think there is a l=
ot of misinformation and bias against Proof of Stake. Yes there have been l=
ots of shady coins that use insecure PoS mechanisms. Yes there have been ma=
ssive issues with distribution of PoS coins (of course there have also been=
 massive issues with PoW coins as well). However, I want to remind everyone=
 that there is a difference between &quot;proved to be impossible&quot; and=
 &quot;have not achieved recognized success yet&quot;. Most of the argument=
s levied against PoS are out of date or rely on unproven assumptions or ext=
rapolation from the analysis of a particular PoS system. I certainly don&#3=
9;t think we should experiment with bitcoin by switching to PoS, but from m=
y research, it seems very likely that there is a proof of stake consensus p=
rotocol we could build that has substantially higher security (cost / capit=
al required to execute an attack) while at the same time costing far less r=
esources (which do translate to fees on the network) *without* compromising=
 any of the critical security properties bitcoin relies on. I think the cri=
tical piece of this is the disagreements around hardcoded checkpoints, whic=
h is a critical piece solving=C2=A0attacks that=C2=A0could be levied on a P=
oS chain, and how that does (or doesn&#39;t) affect the security model.=C2=
=A0</div><div><br></div>@Eric Your proof of stake fallacy seems to be sayin=
g that PoS is worse when a 51% attack happens. While I agree, I think that =
line of thinking omits important facts:<br>* The capital=C2=A0required to 5=
1% attack a PoS chain can be made substantially greater than on a PoS chain=
.=C2=A0<div>* The capital the attacker stands to lose can be substantially =
greater as well if the attack is successful.<br><div>* The effectiveness of=
 paying miners to raise the honest fraction of miners above 50% may be quit=
e bad.</div><div>* Allowing a 51% attack is already unacceptable. It should=
 be considered whether what happens in the case of a 51% may not be signifi=
cantly different. The currency would likely be critically damaged in a 51% =
attack regardless of consensus mechanism.</div><div><br></div><div>&gt;=C2=
=A0<span style=3D"color:rgb(0,0,0);font-family:arial,helvetica,sans-serif">=
Proof-of-stake tends towards oligopolistic control</span></div><div><span s=
tyle=3D"color:rgb(0,0,0);font-family:arial,helvetica,sans-serif"><br></span=
></div><div><span style=3D"color:rgb(0,0,0);font-family:arial,helvetica,san=
s-serif">People repeat this often, but the facts support this. There is no =
centralization pressure in any proof of stake mechanism that I&#39;m aware =
of. IE if you have 10 times as much coin that you use to mint blocks, you s=
hould expect to earn 10x as much minting revenue - not more than 10x. By co=
ntrast, proof of work does in fact have clear centralization pressure - thi=
s is not disputed. Our goal in relation to that is to ensure that the centr=
alization pressure remains insignifiant. Proof of work also clearly has a l=
ot more barriers to entry than any proof of stake system does. Both of thes=
e mean the tendency towards oligopolistic control is worse for PoW.</span><=
/div><div><span style=3D"color:rgb(0,0,0);font-family:arial,helvetica,sans-=
serif"><br></span></div><div><span style=3D"color:rgb(0,0,0);font-family:ar=
ial,helvetica,sans-serif">&gt;=C2=A0</span>Energy usage, in-and-of-itself, =
is nothing to be ashamed of!!</div><div><br></div><div>I certainly agree. B=
itcoin&#39;s=C2=A0energy usage at the moment is I think quite warranted. Ho=
wever, the question is: can we do substantially better. I think if we can, =
we probably should... eventually.</div><div><div><br></div><div>&gt; Proof =
of Stake is only resilient to=C2=A0=E2=85=93 of the network demonstrating a=
 Byzantine Fault, whilst Proof of Work is resilient up to the=C2=A0=C2=BD t=
hreshold</div><div><br></div><div>I see no mention of this in the=C2=A0<a h=
ref=3D"https://download.wpsoftware.net/bitcoin/pos.pdf" target=3D"_blank">p=
os.pdf</a>=C2=A0you linked to. I&#39;m not aware of any proof that <b>all <=
/b>PoS systems have a failure threshold of 1/3. I know that staking systems=
 like Casper do in fact have that 1/3 requirement. However there are PoS de=
signs that should exceed that up to nearly 50% as far as I&#39;m aware. Pro=
of of work is not in fact resilient up to the 1/2 threshold in the way you =
would think. IE, if 100% of miners are currently honest and have a collecti=
ve 100 exahashes/s hashpower, an attacker does not need to obtain 100 exaha=
shes/s, but actually only needs to accumulate 50 exahashes/s. This is becau=
se as the attacker accumulates hashpower, it drives honest miners out of th=
e market as the difficulty increases to beyond what is economically sustain=
able. Also, its been shown that the best proof of work can do is require an=
 attacker to obtain 33% of the hashpower because of the <a href=3D"https://=
github.com/fresheneesz/quantificationOfConsensusProtocolSecurity#the-selfis=
h-economic-attack" target=3D"_blank">selfish mining attack</a>=C2=A0discuss=
ed in depth in this paper: <a href=3D"https://arxiv.org/abs/1311.0243" targ=
et=3D"_blank">https://arxiv.org/abs/1311.0243</a>. Together, both of these =
things reduce PoW&#39;s security by a factor of about 83% (1 - 50%*33%).</d=
iv><div><br></div><div>=C2=A0&gt; Proof of Stake requires other trade-offs =
which are incompatible with Bitcoin&#39;s objective (to be a trustless digi=
tal cash) =E2=80=94 specifically the famous &quot;security vs. liveness&quo=
t; guarantee</div><div><br></div><div>Do you have a good source that talks =
about why you think proof of stake cannot be used for a trustless digital c=
ash?=C2=A0</div><div><br></div><div>&gt; You cannot gain tokens without som=
eone choosing to give up those coins - a form of permission.</div><div><br>=
</div><div>This is not a practical constraint. Just like in mining, some no=
des may reject you, but there will likely be more that will accept you, som=
e sellers may reject you, but most would accept your money as payment for b=
itcoins. I don&#39;t think requiring the &quot;permission&quot; of one of m=
illions of people in the market can be reasonably considered a &quot;permis=
sioned currency&quot;.=C2=A0=C2=A0</div><div><br></div></div><div>&gt; 2. P=
roof of stake must have a trusted means of timestamping to regulate overpro=
duction of blocks</div><div><br></div><div>Both PoW and PoS could mine/mint=
 blocks twice as fast if everyone agreed to double their clock speeds. Both=
 systems rely on an honest majority sticking to standard time.=C2=A0=C2=A0<=
/div><div><br></div></div></div><br><div class=3D"gmail_quote"><div dir=3D"=
ltr" class=3D"gmail_attr">On Wed, May 19, 2021 at 5:32 AM Michael Dubrovsky=
 via bitcoin-dev &lt;<a href=3D"mailto:bitcoin-dev@lists.linuxfoundation.or=
g" target=3D"_blank">bitcoin-dev@lists.linuxfoundation.org</a>&gt; wrote:<b=
r></div><blockquote class=3D"gmail_quote" style=3D"margin:0px 0px 0px 0.8ex=
;border-left:1px solid rgb(204,204,204);padding-left:1ex"><div dir=3D"ltr">=
Ah sorry, I didn&#39;t realize this was, in fact, a different thread! :)</d=
iv><br><div class=3D"gmail_quote"><div dir=3D"ltr" class=3D"gmail_attr">On =
Wed, May 19, 2021 at 10:07 AM Michael Dubrovsky &lt;<a href=3D"mailto:mike@=
powx.org" target=3D"_blank">mike@powx.org</a>&gt; wrote:<br></div><blockquo=
te class=3D"gmail_quote" style=3D"margin:0px 0px 0px 0.8ex;border-left:1px =
solid rgb(204,204,204);padding-left:1ex"><div dir=3D"ltr">Folks, I suggest =
we keep the discussion to PoW, oPoW, and the BIP itself. PoS, VDFs, and so =
on are interesting but I guess there are other threads going on these topic=
s already where they would be relevant.=C2=A0<div><br></div><div>Also, it&#=
39;s important=C2=A0to distinguish between oPoW and these other &quot;alter=
natives&quot; to Hashcash. oPoW is a true Proof of Work that doesn&#39;t al=
ter the core game theory or security assumptions of Hashcash and actually c=
ontains SHA (can be SHA3, SHA256, etc hash is interchangeable).</div><div><=
br></div><div>Cheers,</div><div>Mike=C2=A0</div></div><br><div class=3D"gma=
il_quote"><div dir=3D"ltr" class=3D"gmail_attr">On Tue, May 18, 2021 at 4:5=
5 PM Erik Aronesty via bitcoin-dev &lt;<a href=3D"mailto:bitcoin-dev@lists.=
linuxfoundation.org" target=3D"_blank">bitcoin-dev@lists.linuxfoundation.or=
g</a>&gt; wrote:<br></div><blockquote class=3D"gmail_quote" style=3D"margin=
:0px 0px 0px 0.8ex;border-left:1px solid rgb(204,204,204);padding-left:1ex"=
>1. i never suggested vdf&#39;s to replace pow.<br>
<br>
2. my suggestion was specifically *in the context of* a working<br>
proof-of-burn protocol<br>
<br>
- vdfs used only for timing (not block height)<br>
- blind-burned coins of a specific age used to replace proof of work<br>
- the required &quot;work&quot; per block would simply be a competition to<=
br>
acquire rewards, and so miners would have to burn coins, well in<br>
advance, and hope that their burned coins got rewarded in some far<br>
future<br>
- the point of burned coins is to mimic, in every meaningful way, the<br>
value gained from proof of work... without some of the security<br>
drawbacks<br>
- the miner risks losing all of his burned coins (like all miners risk<br>
losing their work in each block)<br>
- new burns can&#39;t be used<br>
- old burns age out (like ASICs do)<br>
- other requirements on burns might be needed to properly mirror the<br>
properties of PoW and the incentives Bitcoin uses to mine honestly.<br>
<br>
3. i do believe it is *possible* that a &quot;burned coin + vdf system&quot=
;<br>
might be more secure in the long run, and that if the entire space<br>
agreed that such an endeavor was worthwhile, a test net could be spun<br>
up, and a hard-fork could be initiated.<br>
<br>
4. i would never suggest such a thing unless i believed it was<br>
possible that consensus was possible.=C2=A0 so no, this is not an &quot;alt=
<br>
coin&quot;<br>
<br>
On Tue, May 18, 2021 at 10:02 AM Zac Greenwood &lt;<a href=3D"mailto:zachgr=
w@gmail.com" target=3D"_blank">zachgrw@gmail.com</a>&gt; wrote:<br>
&gt;<br>
&gt; Hi ZmnSCPxj,<br>
&gt;<br>
&gt; Please note that I am not suggesting VDFs as a means to save energy, b=
ut solely as a means to make the time between blocks more constant.<br>
&gt;<br>
&gt; Zac<br>
&gt;<br>
&gt;<br>
&gt; On Tue, 18 May 2021 at 12:42, ZmnSCPxj &lt;<a href=3D"mailto:ZmnSCPxj@=
protonmail.com" target=3D"_blank">ZmnSCPxj@protonmail.com</a>&gt; wrote:<br=
>
&gt;&gt;<br>
&gt;&gt; Good morning Zac,<br>
&gt;&gt;<br>
&gt;&gt; &gt; VDFs might enable more constant block times, for instance by =
having a two-step PoW:<br>
&gt;&gt; &gt;<br>
&gt;&gt; &gt; 1. Use a VDF that takes say 9 minutes to resolve (VDF being s=
ubject to difficulty adjustments similar to the as-is). As per the property=
 of VDFs, miners are able show proof of work.<br>
&gt;&gt; &gt;<br>
&gt;&gt; &gt; 2. Use current PoW mechanism with lower difficulty so finding=
 a block takes 1 minute on average, again subject to as-is difficulty adjus=
tments.<br>
&gt;&gt; &gt;<br>
&gt;&gt; &gt; As a result, variation in block times will be greatly reduced=
.<br>
&gt;&gt;<br>
&gt;&gt; As I understand it, another weakness of VDFs is that they are not =
inherently progress-free (their sequential nature prevents that; they are i=
nherently progress-requiring).<br>
&gt;&gt;<br>
&gt;&gt; Thus, a miner which focuses on improving the amount of energy that=
 it can pump into the VDF circuitry (by overclocking and freezing the circu=
itry), could potentially get into a winner-takes-all situation, possibly le=
ading to even *worse* competition and even *more* energy consumption.<br>
&gt;&gt; After all, if you can start mining 0.1s faster than the competitio=
n, that is a 0.1s advantage where *only you* can mine *in the entire world*=
.<br>
&gt;&gt;<br>
&gt;&gt; Regards,<br>
&gt;&gt; ZmnSCPxj<br>
_______________________________________________<br>
bitcoin-dev mailing list<br>
<a href=3D"mailto:bitcoin-dev@lists.linuxfoundation.org" target=3D"_blank">=
bitcoin-dev@lists.linuxfoundation.org</a><br>
<a href=3D"https://lists.linuxfoundation.org/mailman/listinfo/bitcoin-dev" =
rel=3D"noreferrer" target=3D"_blank">https://lists.linuxfoundation.org/mail=
man/listinfo/bitcoin-dev</a><br>
</blockquote></div><br clear=3D"all"><div><br></div>-- <br><div dir=3D"ltr"=
><div dir=3D"ltr"><div><div dir=3D"ltr"><div style=3D"font-size:small">Mich=
ael Dubrovsky<br></div><div style=3D"font-size:small">Founder; PoWx</div><d=
iv style=3D"font-size:small"><a href=3D"http://www.powx.org/" style=3D"colo=
r:rgb(17,85,204)" target=3D"_blank">www.PoWx.org</a></div></div></div></div=
></div>
</blockquote></div><br clear=3D"all"><div><br></div>-- <br><div dir=3D"ltr"=
><div dir=3D"ltr"><div><div dir=3D"ltr"><div style=3D"font-size:small">Mich=
ael Dubrovsky<br></div><div style=3D"font-size:small">Founder; PoWx</div><d=
iv style=3D"font-size:small"><a href=3D"http://www.powx.org/" style=3D"colo=
r:rgb(17,85,204)" target=3D"_blank">www.PoWx.org</a></div></div></div></div=
></div>
_______________________________________________<br>
bitcoin-dev mailing list<br>
<a href=3D"mailto:bitcoin-dev@lists.linuxfoundation.org" target=3D"_blank">=
bitcoin-dev@lists.linuxfoundation.org</a><br>
<a href=3D"https://lists.linuxfoundation.org/mailman/listinfo/bitcoin-dev" =
rel=3D"noreferrer" target=3D"_blank">https://lists.linuxfoundation.org/mail=
man/listinfo/bitcoin-dev</a><br>
</blockquote></div>
_______________________________________________<br>
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bitcoin-dev@lists.linuxfoundation.org</a><br>
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rel=3D"noreferrer" target=3D"_blank">https://lists.linuxfoundation.org/mail=
man/listinfo/bitcoin-dev</a><br>
</blockquote></div>

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