What is Bitcoin?
Bitcoin is a protocol that aims to achieve consensus of strangers in a value exchange. It achieves this task by making sure everyone in the network is on the same page or “block”. While the Blockchain is just a long book with all transactions ever taken on the network, what makes Bitcoin the genius invention is the understanding of human nature. To make sure everyone plays by the rules, it makes cheating ether A. Not as profitable as playing by the rules or B. So expensive in form of raw force needed that it is just not worth it.
Having understood the fundamentals is key to see why proof of stake will (yet) not work in the short term, or at least on the same scale as PoW.
While most people argue that the energy consumption is the key factor of why proof of stake is necessary, it ignores the main driving force in human wealth accumulation: Greed.
It should be considered that Bitcoin digitalized our need for automatic consensus in an exchange, while at the same time triggering pretty much all primal impulses.
What the Chyperpunk movement understood is:
Humans are lazy (Automatic Consensus, everyone can mine)
Humans are greedy (Automatic difficulty scaling that is key to security)
Humans want everything now (Instant gratification in mining)
Humans try everything to cheat the system for own gain (Unprofitable to cheat)
Humans blame others (“Inventor” Vanished, Bitcoin is self-sustaining and cannot be stopped)
While most of first world inhabitants take their surroundings for granted and mostly ignore the problems of others, nearly 22% of all living humans are in Poverty. 35-40% do not have a Bank account or access to the banking system. A lot of smarter people than me got into this problem on why we willingly destroy the planet and abusing and using others directly or indirectly with our actions but you can boil it down to one thing: Greed. As one of the seven vices in culture and literature, it perfectly fits into why we are what we are. Tracing the start of a commodity to the end of production, you will almost always find a human right violation until it is on your table. While this is a known fact, not many people really care about it: “That’s how the system works.”. How could they care in the tangle of life? This fact is woven into the protocol. While i highly doubt the inventors are too stupid to understand the consequence of mining, it is catered to our nature. In some terms – criticizing mining is criticizing human nature. This critic is of course necessary, but will only take roots in a long time span. One of the main drivers on why we don’t burn ourself on the stake anymore, at least here, is this critique over time but I would argue that most of it has to do with a. Making things easy AND friendly to humans / nature b. Education.
While things get better over time, the proof lies in itself because we are still here, ultimately it is foolish to believe that people will change in one or two or three generations.
While greed is only one of the vices, it fits very good into why Bitcoin is so successful. Not only counters it our will to betray anyone for more, the protocol itself has a fail-save for our own broad term stupidity. While there is no Human that distributes coins, the main problem is solved. With making it unprofitable or less profitable to cheat the system, the second problem is solved.
The simple genius solution to greed is: No Human distributor.
Now proof of stake does the same, but:
PoW also caters to something more. Anyone can put muscle into it. Anyone can “physicly” participate. Its not a random number or lottery where you put money in and hope for better odds and more money. It is actual work that can be made and seen. Now you can build the smartest PoS system but I will bet anything it will not get the same participation in the short term as the Bitcoin network has.
It caters to more vices.
While I genuinely believe that bitcoin is one of the greatest invention with the internet (and many more) to bring humans away from destroying themselves, I also have my problems with the energy consumption. In the long term I can see banking swallowed and all smaller jobs in Finance/Archiving/Proofing that are not programming the system will be gone. We will invent chips that use less energy and go away from anything that is not sustainable. At least in the first and second world countries. You cannot expect anything from anyone that has problems putting food on the table or has no clean water.
In the short term we will choose the system that caters best to our vices.
In the long term we will use those systems to save us all.