Care to objectively articulate the arguments against switching to proof-of-stake? Why is it controversial?
- PoS is not "decentralized" nor "democratic", because it means that only those with capital can participate in the network consensus building. This is "technically correct", but (a) it ignores that existing PoW also require massive amounts of capital to deploy mining facilities and (b) it is not democratic because only those with access to cheap electricity will profit from being a miner.
- PoS implies that those staking their crypto are "investing" with their tokens, which would make the token a "security" and not a "currency". This distinction could make it easy for the SEC and governments to intervene and create regulation that would require stakers to only participate if they implement changes at the protocol level. E.g, it could happen that a staker would reject to validate any block containing transactions to smart contracts that got sanctioned. This is a more real concern, if you think about all the big players (read, centralized exchanges) who are staking ETH on behalf of their customers and therefore will have non-negligible control over the network. In this case, the community expectation is that (a) users of staked ETH pull out of the exchanges and run their own validators and (b) the exchanges realize that they will be shooting themselves in the foot, and therefore go on to fight whatever legislation that pushes on that type of control/censorship at the protocol level.
In PoW, they can’t buy gpu as long as they have money, because there is another limit that money can’t always buy, energy, resources, needs (gpu for gamers, researchers, etc)
> In PoW, they can’t buy gpu as long as they have money, because there is another limit that money can’t always buy, energy, resources, needs (gpu for gamers, researchers, etc)
Just to elaborate, the implications of this are that PoW has an extra layer of centralization that threatens the network as ASICs/GPUs are only produced by less than a dozen companies and they can pick and choose who gets what kind of hardware and when (including keeping the best for themselves). This ensures that mining cannot be a level playing field and economies of scale will take over long term. This is even ignoring the massive corruption in the energy markets.
On the other hand PoS only requires one resource which nobody has a monopoly on so anyone can stake with nearly zero overhead. It's a level playing field regardless of size or political connections which allows for a much greater distribution of actors.
IMO it's preferable to 'the ones with lucrative energy contracts get richer' but obviously not desirable.
In the first case, you perpetuate the status quo. With the second, miner's greed indirectly helps humanity find cheaper and more available sources of energy, benefiting all. Because Bitcoin or not, as humanity gets more and more advanced, it will need more and more energy. So energy generation is the bottleneck that needs optimisation.
I don't see how creating the world's first trillionaire is positive in any way.
That said, the fact that PoW has been running the longest and Bitcoin uses it to secure the most value of any chain and it has had 100% uptime for the last 9.5 years, means people naturally trust it more.
PoS also in theory incentivizes centralization of staking over time. It's already started to play out this way way with the top two stakers controlling 46% of the staked ETH on the Beacon Chain. With Bitcoin, because you constantly have to buy new hardware and find cheap energy every single block, there's been a constant rise and fall of large miners.
A related issue is that it's more fragile to government censorship as the Tornado Cash OFAC sanctions show. Bitcoin has had mixers sanctioned and it didn't affect the core chain at all. With Tornado Cash, it's possible that Coinbase and other US-based stakers will have to not validate certain transactions, which doesn’t work in PoS, so they've said they will stop staking if the US gov't decides OFAC applies to stakers (which there's a legal argument it does). It's a bit in the weeds, but basically Bitcoin/PoW works in a fundamentally different way, so miners can filter out transactions they legally aren't allow to process and all that happens is those transactions get validated in a future block by other miners.
One other is that PoS has no deterministic way to recover from a complete outage. If a huge EMP brought down every computer network on Earth, when they come back online, PoW has a clear rule for determining which chain is the real one. PoS does not, so it's unclear what would happen. This may seem like a small edge case, and it is, but trust and security are so important when $500B and growing is at stake that tiny edge cases matter.
While correct, that conveniently omits the downtime in 2010 and 2013. Why be shady?
Edit: three nines is considerably different than infinite nines. Around 2018 there was an inflation bug which was kept quiet until it was patched. It's human to have an occasional bug. Setting the bar too high may be a dis-service if/when there is an exploit.
It had 99.98% uptime since launched and 100% since 2013. That’s one of the most reliable software projects ever created in history.
You could fairly easily argue that building on a chain that includes sanctioned transactions is also "processing" them. Therefore miners would need to fork the chain to remain in the clear legally or just stop mining altogether.
I personally think even going after stakers is a bridge too far, but in that case the staker is profiting off of the illegal transaction and they're also directly participating in processing it.
They have? Regulators have made an explicit statement on this? Can you link to it?