During the past week, heated debates have erupted again, whether Proof of Work or Proof of Stake is the better consensus mechanism.
Just Published:"4 Misconceptions about PoS vs PoW"
– PoS is *NOT* the rich get richer
– PoS is *NOT* blockchain governance
– Commodity v Equity is a misnomer
Proof of Stake will go down as one of the most democratizing forces ever invented
— DavidHoffman.eth 🦇🔊🏴 (@TrustlessState) March 30, 2022
Greenpeace pushes for Bitcoin consensus change
On Tuesday, Greenpeace launched a campaign titled Change The Code, Not The Climate. The environmental organization urges Bitcoin stakeholders to switch to an energy-efficient consensus mechanism, such as Proof of Stake. On the cleanupbitcoin.com website, Greenpeace stated:
We know a basic software code change would reduce Bitcoin’s energy use by 99.9%. If only 30 people — the key miners, exchanges, and core developers who build and contribute to Bitcoin’s code — agreed to reinvent proof-of-work mining or move to a low-energy protocol, Bitcoin would stop polluting the planet. So why isn’t Bitcoin changing its code?
Greenpeace also announced that they will be running digital ads in the Wall Street Journal, New York Times, MarketWatch, Politico and on Facebook. Specifically, the activists want to pressure high-ranking celebrities in the crypto world, such as Jack Dorsey and Elon Musk, to support this consensus change. Earlier this week, the US government asked for public input on the environmental impact of cryptocurrency mining.
Ripple co-founder Chris Larsen is one of the earliest supporters, who stated that “this campaign is not anti-Bitcoin – it is anti-pollution”. He added:
The issue is not, as some have suggested, powering Bitcoin with clean energy. We need the limited supply of clean energy for other vital uses. The issue is changing the code to use far less energy.
Greenpeace wastes their money, says Samson Mow
The chances that Greenpeace will be successful in its campaign are, however, slim. Bitcoiners are known to be steadfast – some would say fanatical – supporters of the consensus rules laid down by Satoshi Nakamoto.
Since its inception in 2009, Bitcoin has only seen minor consensus changes. The most notable were the introduction of SegWit in 2017 and the activation of Taproot in 2021. Proponents of Proof of Work argue that only the absence of consensus rule changes can create a sound cryptocurrency.
Samson Mow, CSO of the Bitcoin development company Blockstream, was one of the first Bitcoiners to take a jab at Greenpeace. Via Twitter, he called Larsen an “ICO scammer” and commented that Greenpeace just wasted five million USD because “ad campaigns cannot change Bitcoin consensus rules”. He added that prior attempts to change the Nakamoto consensus have been futile in the past:
If nearly every major “Bitcoin” company and 80% of hashrate couldn’t change the blocksize, what makes you think an ad campaign can change Bitcoin to use PoS?
Others have jokingly pointed out that there already is a Bitcoin fork that uses Proof of Stake. At the time of writing, BitcoinPoS is standing at a measly market cap of 530,000 USD and is down 99.96% since its all-time high in November 2020.
David Hoffman: “PoW is legacy tech”
In the latest issue of the Bankless newsletter, Bankless founder David Hoffman wrote that there are still misconceptions about Proof of Stake. On the adage that “PoS is legacy tech”, commonly shared among Bitcoiners, he commented:
I think anyone who makes that claim is seriously confounding critical elements of blockchain design.
In the article, Hoffman dissects four common criticisms against PoS. One revolves around the false assumption that staking creates an economic system where “the rich get richer”, whereas this is not the case with mining. Hoffman argues that it is exactly the other way around, since mining operations become more cost-efficient as they grow. With staking, the return remains the same, no matter if a big or small amount is staked.
Hoffman also debunks the notion that PoS would create a different type of money, or create governance problems. Finally, he stresses that PoS is more resilient to 51% attacks than PoW and that slashing or forking out an attacker provides a more effective incentive for honest block validation. On the question whether PoW or PoS is legacy tech, he concludes:
It’s not the one that took years of research.