Morgan Stanley reported earlier this year that bitcoin mining consumed as much electricity in 2017 as the Middle Eastern country of Qatar, and electricity demand in 2018 is expected to more than triple that of 2017.

The high power consumption has also led to a lot of controversy, with many people trying to improve consensus protocols without compromising security. All of a sudden, there are many new agreements in the industry, such as proof of interest (PoS), entrusted proof of interest (DPoS) and so on.

The most promising of these protocols is PoS, and even Ethereum will move from proof of work to proof of equity in the future.

However, Hugo Nguyen recently listed several major charges against the certificate of interest, in real name. What’s going on here? Let’s find out.

Multi-angle ANALYSIS of PoS is not a panacea

Many people are advocating the use of proof of interest. In my opinion, proof of interest is not a panacea, and its disadvantages can be found from many angles.

Evolutionary Psychology/History

What ‘collectibles’ or’ primal money ‘have in common throughout history is the idea of Unforgeable Costliness (some might confuse Unforgeable cost with labor theory of value, but they’re not really the same thing, as it’s not enough to consume resources, assets must be Unforgeable), Or at least unforgeable costs in the context of their time, as history evolved from shells, furs, teeth, and precious metals into today’s coins.

Since proof of equity merely temporarily locks up existing capital without consuming it, it does not meet the unforgeable costs that Nick Szabo, a computer expert and father of smart contracts, has identified as one of the three key attributes of money.

economics

If something has value, people will expend energy chasing it until the amount of energy expended is equal to the value of the item (marginal cost = marginal benefit, MC = MR). Energy here can be seen as a form of “work.” Paul Sztorc, a former Yale statistician turned blockchain entrepreneur, sees proof of interest as a confusing form of proof of work.

The work in proof-of-claim can come in many different forms, such as loans from banks, block rewards for running a round-the-clock proof-of-claim mining server, or even stolen money from a private key.

Proof of equity not only confuses proof of work, it’s worse than proof of work. Any potential cost savings you get from proof of equity comes at the cost of a corresponding loss of security.

As we’ll see below, briefly locking in $1 of equity creates a much lower level of security than actually spending $1 in mining.

Computer science

Blockstream mathematician Andrew Poelstra wrote the industry’s first critique of proof of interest, in which he created Costless Simulation, Disinterested) and long-range Attacks.

A recent paper by Jonah Brown-Cohen, a researcher at the University of California, Berkeley, and Arvind Narayanan, author of blockchain Technology Driving Finance and a researcher at the University of Texas at Austin, illustrates the lack of a good and reliable source of random numbers in proof of interest protocols. For cryptocurrencies using proof of interest, relying on external sources of random numbers may lead to Circular Reasoning Fallacy. Therefore, proof-of-interest protocols urgently need to internally generate random numbers using the contents of their blockchain. The process, however, proved to be a difficult trade-off.

The engineering practice

From the perspective of Engineering practice, I wrote an article about proof-of-stake & the Wrong Engineering Mindset [1], which lists some specific scenarios in which the proof-of-stake mechanism is particularly vulnerable to attack. These include network fragmentation, stolen private keys, and low proof-of-interest participation rates.

Perhaps the easiest way to look at proof of interest is through a time scale.

PoS should be called PoTS

Proof of interest is a misnomer. The correct name is proof-of-temporal-Stake (PoTS), which is more accurate because it adds the time factor missing from Proof of interest.

In order to understand the influence of time factor in the proof of interest, we first analyze the role of time factor in the proof of work.

The ongoing consumption of resources in proof of work protects the entire blockchain network in two ways:

  • The resources consumed by each block protect not only utXOs belonging to that block (unused transaction output), but also all UTXOs in the preceding block. Why do you say that? Because it is impossible to restore the past UTXO without first restoring the current block. Thus, each new block protects all the existing utXOs of the preceding sequence.

  • In essence, an investment in specialized mining equipment represents an optimistic expectation of potential future returns. For miners, investing in new mining equipment can be seen as buying shares that pay regular dividends. This means that mining equipment roughly represents potential future blockchain energy expenditures.

This might be a little abstract, but imagine a timeline. Units of work spent in the past accumulate in the ledger, and units of work consumed in the future accumulate in the current mining equipment.

Books accumulate units of work from the past, and mining equipment accumulates units of work from the future

Over time, the units of work on the right materialize and move to the left. The mining equipment here can be thought of as a “buffer” where units of work are stored until they reach their final destination, the ledger. However, not all units of workload can be directly added to the ledger, most are discarded, but it is these discarded units of workload that ensure the decentralization of the entire network.

The official term for this time-based accumulation of resources is stock & Flow, and it often occurs in nature. Essentially, bitcoin is protected by a high stock-to-traffic ratio between the ledger and the mining equipment.

By contrast, proof of interest does not have this kind of security.

In a certificate of interest, past interests (to the left of the timeline) do not accumulate in the books because they are released after a freezing period of time. However, the proof of equity does not involve the accumulation of resources and does not affect the concept of “Finality”, because different “Finality” can also be seen in newly established nodes, long-term dormant nodes and partitioned nodes.

Remote attacks are a manifestation of this weakness: they attack on the principle that proof-of-interest does not protect transactions that occurred in the past. Thus, remote attacks are one of the most serious problems facing proof-of-interest. The emergence of such attacks shows that proof-of-interest mechanisms cannot guarantee the integrity of the ledger in the long run, which is the core feature of blockchain.

In proof-of-interest, future interests (to the right of the timeline) also do not accumulate in the current validator, because proof-of-interest actions are meaningful only in the short window in which they occur and do not affect the future. Private key theft is a manifestation of this shortcoming: it works on the principle that proof of interest does not protect the future.

Private key theft completely avoids the financial cost of gaining majority interest, whereas in proof-of-work, an attacker would need to overcome the cost of mining equipment and ongoing energy consumption to launch and sustain a 51% power attack, and any attacker would have to deal with that. Large-scale seizure of mining equipment (e.g., state bans) is the biggest risk in terms of proof of work, but this risk can be greatly reduced if mining equipment is sufficiently decentralized.

However, this decentralized approach to mining equipment cannot be used in the certificate of claim because the validators in the certificate of claim are software nodes that can easily be located remotely. More importantly, even if you control the hardware in proof of work, an attacker can’t avoid the cost of continuous energy consumption, so proof of work is more secure.

There is a form of accumulation in proof of equity, that is, periodic equity rewards obtained by the verifier. However, unlike accumulation in proof of work, reward accumulation only benefits each proof of interest validator and does not improve the security of the entire network.

In general, if the time factor is further removed from the proof of interest, the faster proof of interest loses its meaning until the proof of interest becomes meaningless.

Proof of work can withstand the ravages of time, but proof of equity cannot. The robustness of the proof of work is due to the amount of hash power, not the resources consumed. New technology could make mining more efficient, but at some point the gains will be slowed by physical constraints. The robustness of bitcoin’s proof of work also depends on the security of the SHA256 hash algorithm.

The fact that the workload proved to consume a lot of resources was an important feature, not a design bug. Research on proof of interest usually falls into the misunderstanding that proof of work is a loophole and inefficient.

Write in the last

Now, I’m sure you understand why I object to proof of equity, but that’s not the whole story. Another major criticism of proof of equity is that it arguably sets up a plutocracy system in which the rich get richer and the poor get poorer. This is also a good topic to discuss, but because the topic of this article is security, we won’t discuss it much here.

[1] Proof-of-Stake & The Wrong Engineering Mindset https://medium.com/ @Hugonguyen /work-is-timeless- Stake - is-not-554C4450ce18 Block chain base (https://blog.csdn.net/Blockchain_lemon/article/details/83189705)Copy the code