What is the core technology used by Ethereum and what is Proof of stake?
Essentially, POWs and POSs are a way to randomly select the next block uploader. However, creating an algorithm where everyone has the same chance of being selected is very difficult. At the same time, this algorithm only sounds beautiful, but in reality, this algorithm is not fair – because you are in the virtual world. Where is the identity of a person? How do you know if an ID is behind a real user or a witch attack script?
Therefore, instead of patience to verify the identity of each, it is better to simply randomize according to something that cannot be forged, so that there is proof of work and proof of rights and many other proofs.
The POW is based on the calculation capability at random, and the POS is based on owning the property at random.
This is the essence of these two consensus mechanisms.
However, another problem is that POW is a thing that existed before the emergence of Bitcoin, and because of the success of Bitcoin, POW refers specifically to the POW of Bitcoin. On the contrary, POS is a new thing. At present, there is no mature POS application. Therefore, when it comes to POS, it does not refer to an algorithm, but it is a class. Moreover, such algorithms currently have advantages and disadvantages. And, so far, the reliability of a single algorithm has passed the test of practice. Therefore, to compare the advantages and disadvantages of POWs and POSs, I can only use the POS class as an example. All other, answers above are PPCoin’s POS, that is, the earliest POS. That thing is fundamentally flawed. For example, a save-up attack is only applicable to PPC. Not a POS issue.
Proof of work (POW)
Advantage: Reliable (or called security, I do not like to use the word security), which is its biggest advantage, because it is the only public chain algorithm that has been tested in practice.
Disadvantages: Waste of computing power, potential pitfalls for 51% of attacks – the attacker does not need to have Bitcoin, so if you want to do 51% of the attack, the cost involved is related to mining difficulty rather than directly related to bitcoin prices ( Although the mining difficulty will be related to the Bitcoin price, if the mining company’s market value is not as good as Bitcoin’s price, the risk of Bitcoin facing a 51% attack will increase.
Proof of Stake (POS)
Advantages: There is no need to waste computing power. At the same time, the 51% attack is more costly, because you want to have 51% of the attack, you have to have 51% of the currency. In other words, the more valuable this thing is, the higher the cost of the attack.
Nothing-at-the-stake attack. Someone said that POS is socialism and I do not agree with it. I think POS is complete capitalism – the more money you have, the more power you have. Of course, this is not unreasonable, because the more people who have more interests, the more willing they are to maintain the system of coins, so the money in their hands can be more valuable. Therefore, they are not willing to carry out malicious attacks, because in fact the money in their hands will also be harmed, which is why the POS can more effectively defend against 51% attacks. In other words, the more money you have, the greater your responsibility.
But on the other hand, the less the money, the less responsibility. Assuming you only have 1% of the money, your chance of success is only 1%, but you can try to fork because it does not consume any resources. That is, while you mine on the longest chain, you also create a branch that only mines in your block. In the POW, creating this branch is completely worthless because you waste a lot of power. However, in the POS, if this branch is not received, you lose nothing. As a result, even honest miners may go back and sneak at this forked attempt. Although they know that this attempt will result in a reduction in the value of the entire currency, they have very little money and they do not care. This is the so-called tragedy of the commons.
For this kind of attack, all new POS algorithms have mechanisms to deal with, such as slasher in Ethereum’s Casper. The basic concept is that if someone tries this attack and others can detect there is a possible act of attack and can publish evidence, hence, the attacker will be penalised.
Hope you find this useful to help you understand the core technology used in Ethereum and its smart contract.
Your comment is welcome.