SHOW NOTES:
https://www.whatbitcoindid.com/podcast/why-proof-of-stake-is-flawed

In this interview, I talk to Ethereum Core Developer Lane Rettig. We discuss the history and logic behind PoW, the drivers for developing new consensus protocols, how PoS is set to work within Ethereum, and the significant flaws and risks this proposed change entails.

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TIMESTAMPS:
00:00:00 Introduction
00:05:59 Byzantine Fault Tolerance
00:15:50 Nakamoto consensus, PoW
00:28:24 Scaling, nodes, decentralisation
00:37:53 Solving different problems (ETH)
00:58:07 Proof of stake and ETH 2.0
01:17:49 Risks: Nothing At Stake
01:37:58 More criticism & existential threats

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****

“When you make this change that we just talked about going from Proof of Work to Proof of Stake you break a lot of the really cool stuff…I don’t think any of us appreciated the complexity and how much fixing we’d have to do after breaking Nakamoto consensus.”
— Lane Rettig

Location: New York
Date: Sunday 5th December
Project: Ethereum
Role: Core Developer

The Proof of Work (PoW) consensus protocol is under relentless attack.

Earlier this month The House of Representatives held a hearing on digital assets. Rashida Tlaib dismissively questioned PoW, quoting erroneous Bitcoin transaction energy cost data. In response Stellar’s CEO Denelle Dixon implicitly agreed PoW was energy intensive, and that “we all need to focus on minimizing the energy consumption as much as possible”.

The next day Ripple’s co-founder Chairman Chris Larsen published a medium article that stated “Bitcoin’s code needs to be changed to a low energy consensus algorithm like those used by nearly all other major crypto protocols.”

Last week CNBC interviewed the CEOs of 2 wealth management firms. One stated the following:

“Bitcoin operates on PoW: that’s the older technology, it’s slower, it’s really a drain on energy. Proof of Stake (PoS) is the newer system, it’s where I’d want my money going. It’s less energy intensive. It’s faster. It’s more secure."

In potentially the biggest change to any blockchain ever implemented, Ethereum is planning to move from PoW to PoS. PoS has been argued by its proponents (most notably Vitalik Buterin) to not only be less energy intensive than PoW, but to also provide significantly much cheaper security, and greater decentralization.

But, the arguments dismissing PoW and recommending PoS are fundamentally flawed.

In this interview, I talk to the former Ethereum Core Developer Lane Rettig, who now works as a core developer for Spacemesh. We discuss the history and logic behind PoW, the drivers for developing new consensus protocols, how PoS is set to work within Ethereum, and the significant flaws and risks this proposed change entails.