Ethereum Classic on its official micro-blogging handle went on to present certain facts which are contrary to the popular belief that mining in blockchains with proof of work mechanism is completely trust-less. The cryptocurrency in its tweet dated 23rd April 2019 shared that in reality, proof of work blockchains have trust-minimized mining, not the total trust-less mining as a majority of people think.
Mining in proof-of-work blockchains is not totally “trust-less” as many confuse, it is really “trust-minimized.”
— Ethereum Classic (@eth_classic) April 23, 2019
ETC (Ethereum Classic) also highlighted the fact that proof of work mechanism has its power divided between both Full Nodes and Miners. Proof-of-stake mechanism, on the other hand, doesn’t have such a feature or functionality.
When Bitcoin was being developed by Satoshi Nakamoto, there were concentrated efforts to come up with a solution to curb the problem of Byzantine Fault Tolerance found in the distributed systems. As the solution materialized, the blockchains with proof of work mechanism showed almost 50 percent fault tolerance, instead of the 33% -1.
However, experts suggest that Nakamoto did not directly solve the tolerance problem, but he actually avoided it by establishing the activity of mining.
Very few people know that if enough miners collaborate for the purpose of reorganizing the blockchain, the purpose is actually achievable. It is widely known as the “51 percent attack” threshold.
The Power Division Reality
One of the best things about proof of work blockchain networks like Ethereum Classic and Bitcoin is that in such networks, full nodes can split from all the possible malicious miners as and when they come across one.
The split can be accomplished simply through rejection of the blocks that are created with unwanted rules. For instance, it is possible to modify the algorithm of mining so that the malicious miners get excluded from the blockchain network instantly. Also, such actions would leave the mining equipment as well as the capital investment of the malicious miners completely useless, making the network safer again.
This is considered as an extremely powerful feature in proof of work networks because even a single identified malicious behaviour will lead to the exclusion of the miner right away. That makes any miner think twice before indulging in malicious activities such as reorganizing the network of blockchain, building blocks with a contrasting set of rules, or disturbing the entire network’s safety with their corrupt blocks.
The Reality of Proof of Stake Mechanism
The proof of stake mechanism found in Distributed Ledger network does not facilitate the power division offered by blockchains with proof of work mechanism.
Proof of stake backed distributed ledger networks are sorted in such a way that only validators can produce, collect, and register new data into the ledgers. To become a validator, one has to just deposit a cryptocurrency in their account which places them in that same ledger where others nodes reside as well.
So what happens when the ledger is attacked by harmful validators?
Well, the corrupt validators would end up being carried along with its honest counterparts as well as full nodes to the newer ledger too even if the split of nodes is decided and implemented.
It is a massive loophole of the proof of stake networks as the power is solely offered to validators.
There are more such loopholes present in the proof of stake mechanism, outlined below:
- As the validators don’t have any risk of being shut out from the entire network, the mechanism of proof of stake is considered primarily flawed.
- Networks with the proof of stake mechanism have a security threshold which is as low as 33% -1 of the validator nodes.
- The proof of stake mechanism doesn’t have accumulated work hence, it is unimportant to reverse the entire chain to the genesis. This is not the case with proof of work. That’s because, even if the miners possess 100% mining power, reversing the blockchain with its accumulated work is practically impossible.
- Lack of objective fork selection during the network split is yet another vulnerability of proof of stake networks.
- There is no symmetrical power division like proof of work. The symmetrical power division enables the full nodes to fire the corrupt sources directly without violating the ledger immutability, smart contracts or accounts. As proof of stake doesn’t support such a feature, it makes it vulnerable to a greater extent.
Among all these facts, we must note here the primary truth that networks with proof of stake mechanism are not blockchains, contrary to their claims. That’s because, in such networks, no one is actually building the “blocks”. That only happens in proof of work blockchains where miners create “blocks”.
To conclude, we can say that the trust-minimized proof of work blockchain is a far better option than a security-vulnerable proof of stake network.