I am a little bit confused about proof of work and proof of stake. I need someone to clarify.
In proof of work, miners get rewarded for solving computational puzzles in the network and adding new blocks to the chain. And people were saying that this is power consuming which I agree on. But it’s also said that miners form a group called pools which is a threat to decentralization if some group takes 51% of the nodes. So here’s my doubt,
- Even if people form a large group of pools for mining, the mining process is automated and everything about verifying a transaction is predefined. In this case, how come the power or control can go into the hands of people? The only thing we are required to do is to set up a mining node and everything is automated, right?
In proof of stake, people can become validators by pitching a certain amount of the native currency and can mine based on their stake. In the case of ETH 2.0, 32 ether is required to become a validator. And we say that this method reduces the flaws from proof of work. And my question here is,
- In proof of work, even though most miners don’t have the top hashing power, they are still nodes and can take part in verifying a transaction. While in proof of stake, not everyone will have that 32 ether though the stake amount is reduced further. So the miners will get reduced than the ones we had in proof of work. Will this not give that centralized power to the validators? Since the miners might get cut into half due to the pitching of ether, how come this be a more decentralized consensus method than proof of work?
This would be a noob question for some people but please do bear with me. I know I am missing something and that’s why am here to fix it. Thanks
first on the programming side and the logic side openZeppelin, Solidity and all the stuff will work and there is no change. So currently I just don’t care when developing stuff.
So regarding your topic, it may be a question of ethereum blockchain itself. The question is: Can we still rely in the same way as we did with proof of work. And the answer for my feeling is yes.
Proof of work eats up a lot of power and today only a few minerpools are able to buy the equipement and drive the proof of work. I settet up mining rigs in the past and maintained them a while. Believe me it is stuff for specialist, and nothing that you can do part time or on behalf of something.
Of cause you can mine it with weak hardware, but this is redicelous. It wont’ protect anything and cost money. For developing you just use development blockchain like ganach which cost almost nothing.
The trust in Proof of work at the end is trust of compute power and algorithm, and that noone will ever get in position of an 51% attack. But this happened to some of the altcoins in the past. I think this is well documented.
Going to proof of steak will not eat up that much compute power. But the model of trust change from compute power to stakeholders that pay for there instances. So stakeholder have a deep interest to not crash the underlying blockchain. This is by the way a standard financial model in theorie. But you need a certain number of nodes that this will work.
Let me at this point, that some “private blockchains” in finance, banking, insurance and others are driving 100% of the computing power. They sell blockchain, but not trust! So be careful.
I think you question relates to trusted public blockchains. So coming to an answer. One goal of proof of stake is to reduce the number of compute nodes for calculating consense, which will reduce enegry consumption and investment cost in hardware.
This is done by letting someting like “trusted nodes” (stakes) compute the consensus. So the discusson is if this model is as good as the proof of work model. So hashing power is not that important on POS. It’s a trust of node concept.
So my answer is today yes. Since the proof of work model was broken in some cases and noone could to anything, the proof of stake model seems to be more advanced to heal such scenario. But we will see.
So this is just my personal view. Hope this helps
The Ethereum Wiki proposes the benefits of PoS vs PoW:
I suggest you follow along and if possible contribute to the Blockchains Study Group