TD₿: A Bitcoiner's Guide to Proof of Stake by Scott Sullivan
TD₿: A Bitcoiner's Guide to Proof of Stake by Scott Sullivan
TL;DR With PoS you have a token susceptible to endless tinkering, with PoW you have money that will store its value indefinitely without changing on a whim.
Hey Bitcoiners,
Last night, Ethereum proponents celebrated around the world as their project merged to go from a Proof of Work consensus mechanism to a Proof of Stake one.
From the VCs with premined ETH, to the staking-as-a-service providers, to King Vitalik himself, they all cheered as the project moved to an inferior consensus mechanism that’s more prone to centralization and censorship.
This might be why the World Economic Forum also joined in on the Merge party.
The WEF currently has this plastered on its homepage as they herald the Merge as a “sea change towards sustainability among crypto-currencies.” Of course, they will publically use ESG as the reason why they support Ethereum when in reality, it’s all about power and control.
By moving to Proof of Stake, Ethereum has jeopardized its security, decentralization, and very soul, all in an attempt to make its existing shareholders richer in fiat terms.
Already, ~73% of the total ETH staked is held by known providers, with four entities controlling an astounding ~60% of the total ETH staked.
This centralizing dynamic is likely to get worse, not better, as more users choose the convenience of staking-as-a-service over running their own nodes.
It’s not hard to understand why this new version of Ethereum is more centralized and more prone to censorship than before. As it stands today, if four regulated entities got tapped on the shoulder by a government authority to censor transactions, they would need to comply or else suffer the consequences.
Furthermore, if an entity like the WEF, with their infinite supply of fiat resources and power, decided to purchase a vast amount of ETH and stake it, well, nothing can stop them from exerting their influence over the PoS Ethereum protocol.
In Ethereum’s Proof of Stake protocol, money is power. Congratulations, you just recreated the fiat system.
This blog post by Scott Sullivan has been circulating the internet recently, and for good reason. It’s a fantastic summary of Proof of Stake and the differences between Proof of Work and Proof of Stake. (08/29/2022)
In Bitcoin’s Proof of Work protocol, the richest tycoon and the poorest vagabond have the same rights. No one can exert dominance over others against their will, and users can trust that the rules won’t change given its decentralized nature.
This means Bitcoin functions outside the WEF’s control, which is why they will do everything in their power to stop its adoption, including supporting alternative cryptocurrencies that are easier for them to co-opt.
Now that Ethereum has abandoned decentralization and Proof of Work for good, that makes Bitcoin the only decentralized Proof of Work blockchain of any meaningful scale that exists today.
The good news is…we only ever needed one decentralized sound money anyways.
Tick tock next block,
Cory Klippsten
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