Nothing is cheaper than proof-of-work consensus – Crypto
This is a transcript of the ” Crypto Podcast” hosted by P and Q. In this episode, Paul Sztorc joins them to describe why all paths lead to proof of work and how proof-of-stake protocols are used. they are fooling themselves into thinking that proof-of-stake technology can remain decentralized and secure.
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P: Start by defining at a high level what we mean when we say proof of work versus proof of stake. How would you define proof of work and how would you define proof of stake?
Pál Sztorc: That’s fine, because this is the essence of my article. Proof of work is to do this one kind of calculation over and over again. So your computer is working very hard. There is no other solution but based on quantity. How many times can you do this SHA256 hash? You do it very quickly and the lowest performers are fired every two weeks. So basically, since you’re just doing a lot of math, it’s down to the electricity you spend, the money you put into the hardware, the physical chips, the cooling of the chips, and basically it’s like you’re running. your computer, it makes the work of the computer very difficult.
It doesn’t happen as much anymore, but you used to use the computer and it would just make soft sounds, but then when you started a game – which was intense – the fan would go crazy and start making more noise because the computer is working really hard. So this is the job; that the poor computer is working very hard instead of doing nothing, or only works when you ask it to. He tries 100% to throw away as much as possible.
In proof of stake, the idea is in the reality of the cryptosystem, the reality of the blockchain or the reality of the coin, the reality of the whole node software, you know, somehow – which is part of the problem. , it kind of is – but it knows who has what coins and also knows who is betting which coin. These people put the coins in a kind of dangerous condition, a dangerous box. Coins are gambled. They say, “I’ll buy in” with a certain amount, and then they join this class of—what if—miners in their world.
A certain amount of coins are staked and there is a complicated lottery system. There are many variations, but in general, the more money you put up, the more likely you are to be chosen. When it is selected, you can create the next block and then create the reward because you will get the 10 billion dollars.