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Blockchain: proof-of-work vs proof-of-stake consensus models

There’s a false assumption that proof-of-work consensus mechanisms are computationally unscalable and overly energy consumptive. Let’s clear the air.

Since 2009 a revolutionary technology has existed that offers an open, honest, and stable architecture, providing the foundation for connected systems that can help to make better real-time decisions, vastly improve information security, increase the efficiency of energy usage, and globally improve the overall quality of life. 

To date, the Bitcoin protocol has been greatly misunderstood by many experts, educators, enthusiasts, and consumers. Rather than having a negative impact on the environment, key aspects of the original functionality of the Bitcoin software have been restored, allowing the technology to scale beyond its previous arbitrary limitations, while providing a tangible roadmap to carbon neutrality and environmental responsibility.

Due to the false assumption that proof-of-work consensus mechanisms are computationally unscalable and overly energy consumptive, blockchain researchers sought to find more environmentally friendly systems. 

Proof-of-stake networks mimic the structure and processes of real blockchains as an appeal to authority, however at their core, they are just distributed ledger networks, they are not blockchains nor offer the robust economic and cryptographic security as proof-of-Work. 

Unlike proof-of-work systems where one CPU equates to one vote, proof-of-stake consensus is achieved through voting of the largest ‘Stake-holders’. This governance model facilitates control of the “truth” by those who hold the most coins, masking themselves as distinct entities, whilst in fact, opening up the network to sybil attack and questionable record keeping.

In 2009, 21 million bitcoins were issued by Satoshi Nakamoto as part of the unilateral contract to miners as a subsidy for providing honest validation of transactions. Bitcoin node operators are paid at a predetermined rate, based on a combination of a decreasing subsidy and the collection of fees from users of the network. The tokens are paid as consideration for the effort of validating transactions to the nodes.

Ethereum was privately crowd-sold to 6000 individuals who, when proof-of-stake becomes the consensus model, control the influence of what the truth of the ledger is, opening up the network to sybil attacks.

‘I was in the crowd sale of ethereum… There were only like 6,000 people who were able to do that.’ (source) Herein lies the source of proof-of-stake compromising network security, reliability in exchange for false sustainability.

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