An essay on value in POW vs. POS
An opinion articulated by Iksgizacat
This is one of the eleven shortlisted articles from the 1st Ed. Nervos Community Writing Contest. If you like this article, vote for it with a like and RT ❤️!
Author: @judahridgway
Note: This article solely represents the author's personal views. The content here should not be taken as investment advice. We welcome any comments, suggestions, or corrections of errors.
While scrolling through a seemingly endless list of crypto projects recently, searching for a gem. I asked myself, ' what is the real value?'. This token here gives you special access to their platform, and that token there burns tokens to decrease the total supply. But I can burn leaves in a pile in the yard from sunrise to sunset, and at the end of the day, a single leaf has no more value.
Proof of stake is a likable concept people go for like candy because it means staking potential to the end-user. I can use the tokens I now have. To get more tokens, with nothing more than time spent, wow. I'm sold! Right? Except staking rewards the rich with more riches for being rich. While the smallholder sees gains but may suffer a loss of value that surpasses his staking gains. Tokens that are staked are out of your control. You must trust they will be returned upon your request. Transfers and other fees eat heavily into your gains. The validators on proof of stake must also have a vast token wealth to participate, casting doubt on the decentralization of the network.
If a network of data is not decentralized or only partially decentralized. Why not use the much simpler method of storing your data on a single computer?
Proof of work is proof of agreement. The blockchain maintains an unchanged record of what we have agreed upon. It can't be changed without altering the entire chain. This method has been secure in the minds of many people since 2009. Or only 12 years??
Proof of what? The beauty of code is you can write it any way you want. You could write code that rewards every transaction with 200% of the original value. And you can rewrite the code if you don't like it. But what about loopholes and vulnerable points in the program? Some of these have caused enormous losses in the crypto space. Most of the time, nobody knows about these weaknesses in various consensus mechanisms until everyone knows, and it's too late.
The self-governance of proof of stake is weighted in favor of the cryptographically rich. Who use their wealth to further influence the landscape in their favor.
Ethereum transaction fees fluctuate like the value of the token itself. Unpredictability in the cost to move tokens deters me from touching them at all. Combine this with natural market volatility, and you start to realize timing is crucial. But your bills don't care. And your bills are not affected by market conditions.
Neighborhood value is reflective of the buildings and businesses contained therein. A highly traveled area attracts stores, banks, gas stations, and other businesses, which in turn attracts more traffic. The value of the land goes up as profits are realized. Land value remains relatively stable because changes occur in a timely manner.
In a blockchain, The 'miners' are like policemen on the corner. Each one asking the other 'is the ledger correct?' and then comparing their information to the next corner of the network. Link these confirmed blocks of information together cryptographically, and that's how Bitcoin has survived for 12 years. But the streets of Bitcoin are empty except for one large building named BlockChain Explorer. Coins scurry to and fro under the policing eye of the miners. Going from one home to another. The Nervos network allows for dapp's to be the storefront shops, and the interoperability brings the potential for more traffic. Coins, tokens, and NFT's. Building a blockchain city on the backs of the native coin itself. And as the city grows, more coins will be needed to lay down as the foundation stones of the decentralized application storefronts in a digital city on The Nervos network.
Indeed, Nervos will be the future intersection of the blockchain world. As for the power consumed for POW, you should consider that anything of value is not and should not be free to acquire. The power consumed by mining gold, silver, good production, and even the production and secure transportation of paper money has never been called upon for scrutiny. The exchange of value is fair, and in the case of POW Mining, it can be moved to wherever conditions are most favorable.
What good is an NFT? In my mind, it presents a way of signing and verifying authenticity. So maybe my bank will send my important notification in the form of an NFT in the future. Maybe I won't have a bank in the future. I don't know.
Whatever the future does bring. I'm sure blockchain technology will be a part of it. POW is the oldest, most tested, and most trusted way to do it. And Nervos is well-positioned to stay in the middle of the developing industry. So what is value? What has value? Reasonable predictability of the future conditions. Knowing that is what I did yesterday. I can do it again tomorrow. Or I can choose to do something different, but the choice is mine. The objects, both physical and non-physical that enable you to do that Have value.
This is one of my top favorite PoW vs PoS articles I have read to date. I have explained my views, verbally, to other individuals who do not completely understand the difference between PoW and PoS. Now, I'll share this article. Thanks for creating this article and for your time. $CKB