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How to reply to a PoS shitcoiner:

PoS has been around for thousands of years, it's nothing new. Government money is proof of stake, as are company shares.

Egyptians, Romans, and Chinese were using this 2000+ years ago. Italian city states perfected it 800 years ago. Stake based systems are not new.

Using stake to solve the Byzantine General's Problem is also not new. Cypherpunks have been working on this shit since the late 80s.

The cypherpunks on the mailing list (that Satoshi sent the white paper to for peer review) are literally the people who created the *entire body cryptographic of work* used by proof of stake coins today (stake based byzantine fault tolerance). They are well aware of the fundamental limitations of stake based BFT because they are ones who came up with it in the first place...

If Bitcoin was proof of stake *you would never have heared of it* because it wouldn't have survived 5 minutes of peer review by any real cryptographers.

Time-based difficulty-adjusted PoW *is* the breakthrough and is the *only* reason you and anyone has ever heard of a "blockchain".

The failure modes of stake based BFT are well known, and it fails *every time* for a number of reasons, but if you are betting on a shitcoin to increase in value then the failure mode will probably involve the fact that stakeholders have an incentive to increase the supply to benefit from the cantillion effect.

Mathematical fact: you cannot deploy external capital to defend a system that is secured by internal history (stake). This is why stake based BFT does *not* secure against attack by a state or central bank, which means *anything* secured by PoS MUST comply with governments.

Bitcoin's value proposition is that Bitcoin let's you do things that bankers and governments *don't want you to do*. If bankers and governmensts can nuke your shitcoin, then you do what they say or they nuke it.

What's the value proposition beyond CBDCs if your shitcoin ultimately has to comply with governments and bankers?

You cannot out-stake a bad actor who has aquired sufficient stake to fuck with the system, your only option is to fork them out. Then it becomes a competition between charismatic personalities convincing the market to follow their authority (their fork) instead of the other guy.

So how do you solve the problem of removing a bad actor without requiring some form of authority? Read the Bitcoin white paper. Satoshi knew exactly how stake based systems fail, that's *exactly* why he used proof of work instead.

Juraj 2y ago

This is a bad take and won't convince anyone who understands it, even though it has a grain of truth.

The reason bitcoin required proof of work is not a vulnerability of proof of stake (although I agree it's less secure), but because the stake would have no value. PoS needs something scarce and valuable. Bitcoin was scarce at the beginning, but it did not have much of a value.

Increasing money supply - nope, stakers cannot increase money supply, pos/pow is consensus on the history, not the rules of the system. The mechanism that would lead to increased the money supply would be exactly the same in both pow (like bitcoin) and pos - change of culture, or social consensus (as opposed to automatic bft consensus).

So no, don't talk to PoS people like this, it just shows you don't understand the mechanics of consensus and it will certainly not make them change their minds.

The good part is that the stake which is internal is a chicken and egg problem - using something that you are trying to secure (from the past) to secure the future creates long range attacks. PoS chains would just fall back to social consensus in this case, but it still sucks.

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Discussion

gsovereignty 2y ago

I think you're elaborating on the details but as far as I can tell we're both saying the same thing.

The fundamental problem is external capital cannot be deployed against the adversary.

As external capital cannot be deployed against the adversary, you must comply with the adversary's demands or risk collapsing the status quo. This means you end up following rulers not rules. It's simplification but I'm writing a post not a book.

PoW at least gives the market a fighting chance at overpowering a central bank or large government, PoS does not, there's no basis for the market to fight back against the adversary's demands to allow seigniorage, do KYC at a protocol, or whatever else they want.

This is why I think Ethereum is on a direct path to being a defacto CBDC.

Juraj 2y ago

I don't agree with the second part. That is up to social consensus. If you have a privacy network, people won't follow rules like kyc or compliance, no matter the stake.

The social consensus is above block rules.

You have that in bitcoin - if all miners wanted seniorage and increase the money supply, it would not work, because hard money property is the core value of bitcoiners and they would not allow such a fork, or it would have no value.

Let's consider DarkFi - a PoS chain. It will never allow privacy intrusion or kyc, no matter the stake. People would rather slash the stake and fork out than allow compromise on their core value.

You are confusing network consensus and social consensus. The social consensus is what determines the rules and core values of the network. The BFT consensus is about censorship and preventing double spends. I think PoW is a bit better, but not against large scale attackers.

To compromise on the basic values, you can't do an economic attack, you need to attack the minds of the users. In both cases - pow and pos.

gsovereignty 2y ago

Bookmarked so I can give this a proper response, but let me see if we agree about some basic principles and terminology:

The set of participants who hold hard power over the protocol are the actors who receive coins in exchange for something else. They decide if a transaction is legitimate or not in the same way that the clerk in a shop decides if your banknote is real or not. In your terminology this set of participants is the social layer.

Block producers provide immutability as a service. This is what you term the consensus layer.

What emerges from the interplay between the two is a market where immutability is traded.

The adversary is an actor motivated to attack the market itself and prevent immutability from being traded, except perhaps under certain conditions (e.g. seigniorage, KYC, etc).

mark tyler 2y ago

Small note, miners do not decide whether a transaction is legitimate, they can only decide whether a transaction is illegitimate. They do this by not including it. This is a somewhat weak mechanism, limited by the degree of decentralization of mining.

Conversely, if they try to decide that a transaction is legitimate (that doesn’t follow historical rules) then everyone’s nodes will ignore it. This ultimately falls back to a social layer, but there is a strong bias toward not changing anything since everyone needs to physically update their nodes to work with the now-forked chain.

gsovereignty 2y ago

Social layer and consensus layer are oversimplifications, but my point is that the "social layer" cannot include a transaction that has been censored by the "consensus layer".

Thus, the attack vector that will be used is mining empty blocks.

It's not possible to use external capital to overpower the adversary if your consensus mechanism relies on stake. This is why Satoshi used PoW and not stake based consensus.