Oddbean

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.

Attempted to simplify using AI: Imagine you and your friends want to make decisions together. In Proof of Stake (PoS), it’s like the friend with the most toys or money getting more say. However, this can have problems because someone with a lot of toys might do things that are not good for everyone. Now, think of Proof of Work (PoW) like a game where everyone has to solve puzzles. The more puzzles you solve, the more say you get. This way, it’s harder for one person to control everything because everyone has to play the game. Bitcoin uses this game idea to keep things fair, so no one can boss everyone else around too easily.

A shorter answer; PoS takes the rent-seeking middleman mentality of our modern fiat economy and applies it to digital currency. It's a rich get richer system that discourages productive investment, because wealthy holders have less incentive to deploy their capital productively when they can simply earn a risk free reward though staking.

The bitcoin white paper explaining POW is relatively easy to read and reason about, even if working out how things will actually play out in reality might not be. I've yet to see anything similar for a POS consensus mechanism. It just inherently seems more complex and for that reason I'm out.

A simpler way to say this, is that both PoS and PoW are useful but in very different contexts. PoS is when you need hierarchical organisation with skin in the game. PoW is when you want something that more resembles physical laws. The former is fantastic for structuring organisations that require management, leadership and direction. I don’t believe that will ever change, and trying to apply PoW in this context is stupid. The latter is great for money bc no amount of stake in the money should allow you to change it. The point of money is to have a ledger for the social / economic game of life. To be accurate, it must live where physics lives.

That said , I love shitcoins ..because this is how btc proves what works and what doesn't .. .. if we think of last fifteen years as a "proof of concept" for the ideology of digital value- exchange (for next ten thousand years) .. it is important to try out all things that don't work to find one that does ..