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I have become a firm believer that POW is obsolete because POS can be as secure or more secure than POW without the extreme waste in energy.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.
I still believe that PoW is superior, in any case when a coin is used as a store of value. In case of PoW the security adds up when a block gets older, in case of PoS this not the case. Also PoS makes the rich richer, what leads to centralization over the long term. PoS still have to be proven at scale and I think it will fail. I think finally there will only be one huge PoW chain and all the other chains will use the security of this chain. I know I will not make myself popular when I say this, but I think even Steemit will finally fail because of cartels of wales in the PoS system.
'Nothing at stake' and 'Long range attacks' are addressed with the concepts of bonded staking and finality.
51%+ of bitcoin hashrate is currently controlled by three mining pools. The only way for POS systems to be more centralized than this is for only 1 or 2 individual stakeholders or staking pools to control more than 51% of stake.
POS has been in existence for years and has yet to see a catastrophic failure, although the newest and most advanced protocols, casper and ouroboros, have yet to be thoroughly tested in production at scale.
This is possible. POS chains could also anchor to a POW chain for added security. It remains to be seen how this will evolve.
This is one of the biggest problems with steem, but I don't think it will cause complete failure. It may, however, discourage usage and investment if the problem is not addressed in a meaningful way.
I’ve been staking Reddcoin and Vericoin for a couple months, and have made a nice profit so far.
Thank you for this post @helikopterben it is good when someone else comfom your own observation. I invested in coins that are using POS like NEO and I am verry happy of the return I got so far. I believe the global crypto market will come to this realization even more fully in the future. Even biggest players turning around about this idea that POS is better then POW and ETH is turing it protocols in the next fork and they becoming POS also. Not that gone turn to be only POS or POW but I am happy there is diversity and the market and technical utility will determine which way is better.
Hint: DONT choose 100% SP payout because of the current high valuation of the SBD!!
First redeem 50% SBD and then sell it against steem in the internal market. At last power up.
Bye the way: Are you German?
Bye the way 2: You can participate here and win 10 SBD:
https://steemit.com/deutsch/@freiheit50/bitcoin-preisprognose-gewinnspiel-10-sbd-reward-ergebnis-und-neues-spiel
No I am not German.
I agree with you that the future is the more economical POS. Sometime this year, Etherium is supposed to move from POW to POS. I am wondering if you have any more detailed info on this and if you could write a blog post about it. Thanks.
Wuao loved it
I have been looking into getting into the more technical aspects of the assets so I am very interested in this difference. Look forward to your future posts.
Please sir what the full meaning of pow and pos
Proof of Work vs Proof of Stake