Now in the event you understood Bitcoin, in the event you REALLY understood Bitcoin, you perceive why proof-of-work is key to its design. You perceive why it is indispensable for any public, permissionless blockchain that is severe about decentralization.
I may write all day as to why however I do not imply to waste anyone’s time for one thing so rudimentary that there could not presumably be an argument about this. I am going to maintain this as clear and concise as attainable.
Basically Flawed Fiat Cash
Let’s take a first-principles strategy to why we now have Bitcoin.
What precisely was Satoshi attempting to resolve that he, as many cypherpunks who contributed to what ultimately grew to become Bitcoin, thought for many years was essentially damaged about cash? Belief.
Belief is a consequence of centralized, centered issuance and management of financial provide, exacerbated by trivial price of issuance.
Whereas issuance entails no price, the cash stays on the mercy of the basest of human qualities, self-seeking greed. All corruptive tendencies of fiat cash are a direct consequence of the trivial price to difficulty infinite cash.
So the 2 basic flaws of the fiat system Bitcoin solved have been trivial price of issuance and centralized, centered injection of cash, aka Cantillon Impact.
Satoshi’s Answer
Satoshi’s PoW algorithm solved for them by implementing an ingenious price of creation/issuance algorithm that perpetually someway scales in proportion with Bitcoin’s worth to humanity as a trustless world financial community and making certain that the fee incurred in creating cash prohibited the recipients of the brand new injection of cash from hoarding all of it.
Nothing would forestall Bitcoin miners from hoarding the bitcoins they mine in the event that they weren’t required to cowl recurring real-world prices. These prices additionally scale completely in proportion with the community’s worth, would you imagine it?
A Deadly Compromise
Proof-of-stake is a airtight system abstracted from any interface with the true world that walks again on these two options. There is not any price of creation/issuance and no disincentive to stop hoarding. If something it incentivizes massive stakers to hoard and perpetually amplify their energy throughout the community.
The biggest staker would all the time be the founding entity/firm if the mission was launched unfairly via an ICO/premine.
It’s little greater than a regression again to the fiat paradigm, if not worse.
Additional, any proof-of-stake coin, even people who weren’t launched via an ICO and/or premined, would qualify as a yield producing asset, that means that the SEC would have each authority to manage all proof-of-stake blockchains.
One man’s momentary ingenuity, humanity’s timeless inheritance.
Let’s not be so silly to throw all of it away to slake the self-seeking greed of personal corporations that launched unfairly and privately issued for themselves all of the native tokens at launch and masquerade via artful social engineering chicanery immediately as something even remotely resembling Bitcoin.
