This is a transcribed excerpt from the “Bitcoin Magazine Podcast,” hosted by P and Q. In this episode, they’re joined by Paul Sztorc to explain why all roads lead to proof-of-work and how proof-of-work protocols participation they are deluded into thinking that proof-of-stake technology can remain decentralized and secure.
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Q: Start by defining at a high level what we mean when we say proof-of-work versus proof-of-stake. How would you define proof of work and how would you define proof of participation?
Paul Sztorc: That’s fine because that’s the point of my article. The proof of work is that you do this kind of calculation over and over again. So your computer is working really hard. There is no other way to do it, it’s just based on quantity. How many times can you do this SHA256 hash? You are doing it very fast and every other week the lower performers are fired. Basically, because you’re just doing a lot of computation, it comes down to the electricity you spend, the money you spend on hardware, physical chips, the money you inject to cool the chips, and basically it’s like you’re running. your computer, you are making your computer work very hard.
This doesn’t happen as much anymore, but back in the day, you would be using your computer and it would just make little sounds, but then if you started a game, something that was intense, the fan would go crazy and start making more noise because the computer is working very hard. So that’s the job; this poor computer is working really hard instead of doing nothing or only works when you ask it to. Will try to produce 100% as much as possible.
In proof of stake, the idea is in the reality of the cryptosystem, in the reality of the blockchain or in the reality of the currency, in this reality of the full node software, you know somehow, that it is part of of the problem , that in a way, but knows who has what coins and also knows who bets which coins. These people put the coins in a kind of dangerous state, a dangerous box. The coins are staked. They say, “I buy” with a certain amount, and then they join this – what would be – class of miners in their world.
They have a certain amount of coins bet and then there is a complicated lottery system. There are many variations, but in general it is as if the more money you bet, the more likely you are to be chosen. When you are chosen, you have the ability to create the next blog and then create the reward because you get a chance at that $10 billion.
