While Proof of Stake (PoS) is not a recent consensus protocol, it is increasingly popular. We all know that Ethereum 2.0 will use this to replace the Proof of Work (PoW) that many believe is aging and energy intensive. Will PoS dominate? It’s hard to decide, but Binance at its 3-year “Off the Charts” conference, asked the question for us.
Binance “Off the Charts” – Proof of Panel
This panel entitled “The future of consensus protocols, will Proof Of Stake dominate?” was animated by Anton Mozgovoy, Product Manager at Jthereum.
To answer such a complex question, Bobby Ong was present. For those who do not yet know, it is the founder of Coingecko, the most famous rival of Coinmarketcap, but also contributor to 2 books on the blockchain.
The PoS being frequently opposed to PoW, it was normal to invite Igor Runets, CEO of BitRiver which is none other than the biggest Bitcoin mining company in the Commonwealth of Independent States (CIS).
Finally John deVadoss, co-founder of the InterWork Alliance and Director of NEO Blockchain Development came to bring us his vision on the subject.
Enough of presentation, let’s start this panel too.
Bobby you have been in the Blockchain industry for a long time, can you tell us about the evolution of PoS?
Bobby Ong : Over the years, we have seen many consensuses emerge. However, it all starts in 2009 with Bitcoin and its consensus Proof of Work (PoW). Bitcoin uses a named hash algorithm SHA256 and the first innovation that some tried to make was a modification of it.
The goal was to make blockchains more resistant to Asics in order to give back to the word “decentralization” its letters of nobility. It was a temporary success because with the constant improvement of the material, it was getting faster and faster. In 2012, the project PeerCoin arrives with what we now call the Proof Of Stake (PoS). Here, a higher level of safety is claimed but above all a low ecological impact, due to a protocol that uses less energy.
Some people then think of combining the PoW and the PoS to reap the benefits of each. The DPoS arrives in 2014 with Bitshares then Steemit and finally EOS. If the DPoS From the initiative to emulate the democratic voting system, we recently saw that it could be manipulated.
However, many projects today do not reflect on the consensus mechanism and are content only to issue tokens. The PoS remains in my opinion the most promising protocol.
John, the NEO blockchain is based on the dBFT protocol, can you tell us more?
John deVadoss: Blockchain NEO is indeed based on the protocol Delegated Byzantine Fault Tolerance (dBFT) that she created.
Contrary to PoW or to PoS, the dBFT make them impossible forks. This choice is not trivial, imagine if large companies adopt a blockchain for their assets and it forks. Their assets will be doubled and this will create confusion. Such a situation is undesirable and does not contribute to the adoption of the technology. With the dBFT, such a problem is no longer possible. The other barrier to adoption is the finality of the transaction. With NEO, we respect the “True absolute finality” and fears of a canceled deal no longer exist.
I think it’s for all these reasons that Binance and Facebook have chosen to use our protocol for BNB and the Libra. It also proves the reliability and strength of such a consensus and we are very proud to be the pioneers.
Igor, can you give us the reasons why investors are mining instead of staking?
Igor runets : Contrary to PoS, the PoW proven and it is also easier to predict the return on investment. Investors are reassured by these two points and also know that they will continue to mine quietly until the end of the life of their equipment.
Do you see PoS as a potential threat to your business?
Igor Runets: No, I am not worried. More and more institutional investors are joining the PoW for the reasons mentioned above. The PoS has not yet proven itself and it will be many more years before institutions turn to it.
With the constantly increasing mining difficulties and larger and larger pools, the PoW no longer seems accessible to everyone. How do you reassure new entrants?
It is true that the competitions between the different mining pools are intense. This competition as well as the ease for minors to quickly change pools are the reasons why a attack 51% is difficult to achieve. However, new entrants can always turn to smaller pools or to the cloud mining.
The PoW is frequently singled out for the computational monopolies it generates, but the PoS will suffer from the same problem. Do exchanges not accumulate large amounts of tokens in order to stake them?
Bobby Ong, as the founder of Coingecko, you see new tokens passing every day. What do you think are the most innovative consensuses?
Bobby Ong: I have a preference for the Proof of Burn (PoB) applied to ICOs. Buyers sent their bitcoins to be burned and received the tokens in return. This principle was abandoned with the rise in value of Bitcoin.
Do you think PoS will gain in importance once ETH2.0 is officially launched?
Bobby Ong: If we look closely, things have already changed since Ethereum’s announcement to migrate to consensus PoS. The fact that a blockchain of such magnitude and popular with developers looking to PoS is proof that this is a viable consensus.
We can talk about a war of consensus, do you think John, how far will blockchains go?
John deVadoss: There is no doubt that the design of blockchain architecture and consensus algorithms is still in its infancy. I don’t know where we’re headed, but I think the next 10 years are going to be very interesting.
For you Bobby and John, where does the future of consensus protocols lie?
Bobby Ong: I think that DAO did not die in 2016 and that we will have innovations in this area. The Challenge also brings some interesting ideas and I think Maker will surprise us in the coming years.
John deVadoss: About the DAO I have some reservations, there is indeed a difference between theory and practice. For me the future of consensus protocols lies in encouraging the public to join and participate in the network. We must create reliable and profitable means for users.
Designed in 2012, the Proof of Stake has yet to prove itself. Ethereum with the launch of ETH2.0 will have the daunting task of showing everyone whether or not such a protocol is viable. The next few years promise to be full of twists and turns and blockchain is only in its infancy. With these current data, I leave it to you, dear readers, to answer this question that we all ask ourselves.
Engineering student, Community and Bounty Manager, I have been sailing on the turbulent oceans of the blockchain since 2017.
Aware that blockchain will change our future, I too want to participate in the revolution. Find me on Bitcointalk and on LinkedIn