PoS: What are the problems? Which link is most likely to go wrong?

I have said in previous articles that 2019 is the first year of PoS. Looking back now, it should be true. The popular coins this year seem to be PoS coins, but they are only very potential and worth paying attention to. After all, from the comparison of market capitalization, it is easy to see that the market capitalization of the PoS mechanism is still far less than that of PoW:

So when PoS is popular, we still need to calm down and talk about some problems of PoS and some of my thoughts.

Generally speaking, the process of PoS is as follows:

Under normal circumstances, by pledging (locking) a certain number of tokens and providing the required servers, one can participate in the election. If elected, one can start “mining” - packaging transactions to earn revenue.

Which link in the PoS mechanism is most likely to go wrong? I believe everyone can think of it without me saying it, that is the link of "election of validators".

The place where all decentralized mechanisms are most likely to become centralized is where the most people participate.

The biggest question about the PoS mechanism, and the word that everyone who uses the PoS model hopes to "avoid as much as possible" is: centralization.

Because the most basic logic of PoS is that "holding more coins can gain more benefits and power", people will naturally think that this is an inevitable product of centralization.

Compared to the PoW mechanism (such as Bitcoin), where developers, users, and miners are similar to the "separation of powers", the PoS mechanism only has nodes and developers. If the development team (foundation) holds the most coins, then there is basically no possibility of decentralization.

Many of the improved versions of PoS, such as DPoS, sPoS, NPoS, etc., mainly hope to improve the "election of validators". Simply put, it is how many BPs (Block Producers) there are, how to elect them, how much power they have, etc.

For example, sPoS and DPoS, because of the EOS mainnet launch and super node election last year, everyone has some understanding of this model. As for NPoS, the consensus mechanism of Polkadot, a popular cross-chain project, the main purpose is to separate StakiNg income from the rights and interests of large and small nodes. If large nodes do not get the support of the community, their rights and interests will also decline. Through these methods, the dispersion of large and small nodes can be balanced and not too concentrated.

But just as EOS always faces questioning voices from PoW supporters overseas: "EOS is just 21 Amazon cloud servers", PoS still has a long way to go in decentralization.

No matter what, PoS cannot avoid the stereotype that "whoever has more coins has the loudest voice". In fact, this is not wrong. In an ecosystem, those who have the most relevant interests have the greatest say, and there seems to be nothing wrong with that.

What if exchanges also join the game of "who has more coins"? It seems to be a dimensionality reduction attack.

Of course, I am not saying that exchanges will use users’ coins, but exchanges, as the top of the food chain, have more coins than ordinary users, which gives them a huge advantage in this game.

For example, from the node ranking of EOS, it is easy to see that if exchanges are willing to participate, they will basically be the main players.

With the delisting of BSV, many people are considering the issue of centralized exchanges gaining more and more power in the cryptocurrency world. Currently, it is still an era dominated by PoW. If the era dominated by PoS comes, the power of exchanges may be taken to a higher level.

PoW currencies are secured by computing power, and the longest chain principle ensures the consensus direction and cannot be rolled back. However, the current largest representative of PoS, EOS, can be rolled back and banned, which makes people exclaim, "Is this still a blockchain?"

Yes, is this still a blockchain? Of course it is.

This is left for everyone to judge. PoS seems more humane than PoW, and more in line with the nature of human society, and more humane.

But do you prefer the cold and ruthless PoW, leaving the responsibility of security to the cold computing power, and making all transactions final and irreversible? Or do you prefer the humane PoS, trusting the nodes selected by voting?

It depends on your choice.

But no matter what your choice is, whether you like PoS or not, the era of PoS is coming soon. If you don’t learn and accept it, you may miss the next Ethereum and some opportunities that will increase more than Bitcoin.

Of course, if you are a staunch Bitcoin believer, please rest assured that the PoS mechanism will not produce a coin that replaces Bitcoin, but it is very likely to replace Ethereum.

However, Ethereum's moat is also very deep, and I think the PoW+PoS mechanism is relatively reasonable. Layer 1 should be secured by PoW, and layer 2 can be PoS, which is not a big problem.

What do you think?

Text | William Chen

Source | Chainbit (ID: William1913)

Original article; any unauthorized reproduction is strictly prohibited, and any illegal reproduction will be subject to legal prosecution.