BTC098: Proof of Stake (PoS) Versus Proof of Work (PoW) w/ Jason Lowery (Bitcoin Podcast)
Oct 5, 2022
02:02:20
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Jason Lowery, an expert in Proof of Stake (PoS) and Proof of Work (PoW), discusses the importance of property rights, abstract power, and basic computer science in understanding PoS and PoW. They also explore the contributions of Hal Finney and Adam Back to blockchain development, the vulnerabilities of exploiting PoS or PoW systems, and the revolutionary impact of Bitcoin. The podcast highlights the risks and challenges of coupling control authority to non-physical factors and emphasizes the need for policymakers to consider the long-term strategic importance of cryptocurrencies.
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Quick takeaways
Understanding the evolution and significance of property rights in different species and human societies.
Exploring the role of computer programming and symbolic languages in creating virtual realities.
Examining the influence and consequences of abstract power in cyberspace and its potential for control and manipulation.
Highlighting the security aspects of proof of work and proof of stake systems, emphasizing the tie to physical reality and the need for trust.
Recognizing the importance of imposing physically prohibitive costs on the abuse of abstract power hierarchies for cybersecurity.
Deep dives
The Evolution of Property Rights
The podcast episode explores the evolution of property rights and the different protocols used by various species, including humans, to establish control over resources. It discusses how animals like pack animals and wolves use proof of power protocols to determine resource control and ownership, while humans in the Neolithic era developed abstract power hierarchies with God kings who held the authority to decide property rights. It also highlights the advantages and disadvantages of using physical power versus abstract power in managing resources, emphasizing the systemic security of physical power and the potential for exploitation in abstract power hierarchies.
Computer Science and Programming
The podcast episode delves into computer science and programming as a means to better understand the concepts of virtual reality and symbolic languages. It explains how computer programming allows humans to communicate abstract ideas and designs to machines through symbolic languages, creating a virtual reality where programs exist as imagined instructions for state machines. The discussion touches upon the complexity of programming, the use of logical languages like machine code, and the practice of applying symbolic meanings to circuits. It emphasizes that software itself is an abstraction, and that system security in software is often maintained through abstract power hierarchies.
Abstract Power Hierarchies in Cyberspace
The podcast episode explores the parallel between abstract power hierarchies in the physical world and in cyberspace. It highlights how individuals and entities in the digital realm, such as social media CEOs, can wield immense levels of abstract power over information and technology, which can, in turn, influence people's behaviors and actions. The episode emphasizes the potential consequences of having abstract power over machines and the dependence of people on those machines, with real-world implications for control, misinformation, and manipulation.
The Security and Exploitation of Proof of Work and Proof of Stake
The podcast episode ends with a teaser discussion on the security and exploitation aspects of proof of work (such as in Bitcoin) and proof of stake (like Ethereum). It emphasizes the tie between physical reality and energy expenditure in proof of work, highlighting the difficulty of exploiting physical power projection. On the other hand, it notes the potential vulnerabilities of abstract power hierarchies in proof of stake systems, highlighting the need for trust in these systems. The episode sets the stage for a deeper dive into these concepts in future discussions.
Abstract Power vs Physical Power
The podcast explores the concept of abstract power versus physical power in the context of data storage and cybersecurity. The speaker discusses how abstract power is represented by the data stored in servers, which is symbolic and assigned meaning through complex language. On the other hand, physical power is associated with the actual hardware and physical defenses, such as fences and armed guards. It's highlighted that although physical power is essential for defending physical assets, it pales in comparison to the abstract power and control authority that is wielded through cyberspace. The discussion emphasizes the importance of imposing physically prohibitive costs on the abuse of abstract power hierarchies to ensure cybersecurity.
Proof of Work and Imposing Physically Prohibitive Costs
The podcast delves into the significance of proof of work in imposing physically prohibitive costs on those trying to exploit abstract power. It is explained that solving a hash function requires the use of physical power in terms of electricity and brute force. By doing so, a receipt is obtained as proof of real-world power, which can be used to defend against systemic abuse and exploitation. This approach is regarded as a major leap in cybersecurity as it establishes a direct connection between real-world electricity and abstract power in cyberspace. Proof of work is seen as a countermeasure to systemic exploitation and abuse of abstract power hierarchies.
Challenges with Proof of Stake and the Importance of Physical Power
The podcast examines the challenges and limitations of proof of stake as an alternative to proof of work. It highlights the issue of control authority over the ledger and the potential for centralization when stake is not verifiably physically decentralized. The speaker raises concerns about the ability of those with majority stake to tactfully withhold transactions from the blockchain and exploit the control authority they possess. Slashing is presented as a mechanism to impose costs on validators who abuse their control authority, but the speaker questions how attacks would be attributed in such a scenario. The discussion emphasizes the need for physical power and the boundlessness of watts in maintaining the security and decentralization of a system.
Abstract power hierarchies and the challenge of verifying decentralization
The podcast episode explores the difficulty of identifying and verifying a 51% attack on a decentralized blockchain. The speaker highlights that if a single entity controls millions of validators, it becomes challenging for honest participants to even detect the attack. The physical impossibility of independently verifying decentralization makes it hard to determine if an attack is occurring or if the system is already centralized. Achieving consensus on the existence of an attack is also problematic since people may not universally perceive censoring as a bad thing, as seen in real-world examples. Furthermore, the potential for retaliation by the majority stakers against honest participants diminishes the effectiveness of slashing as a deterrent system.
Bitcoin as a power-based defense infrastructure
The speaker presents Bitcoin as a power-based defense infrastructure that allows individuals to physically defend their property and policies in cyberspace. They argue that the significance of Bitcoin goes beyond its role as a monetary system. It provides an unprecedented means of using physical power to impose prohibitive costs on attackers and to secure access to valuable resources. The podcast highlights the importance of recognizing Bitcoin's strategic security implications and advises against dismissing or condemning the technology prematurely. The speaker emphasizes the need to consider Bitcoin's potential as a global physical defense system and urges policymakers to approach it from a national strategic defense standpoint.
