Vitalik Buterin, Creator of Ethereum, spoke on the Proof-of-Work v. Proof-of-Stake debate, during an interview at ETHWaterloo 2. Buterin gave his opinion on why depending on transaction fees once the block issuance has hit the mark can pose security risks to a network.
“The challenge is, right, that like there’s this kind of looming elephant in the room over. I mean, a lot of different cryptocurrencies that kind of committed to a capped issuance schedule and like really committed to this idea that issuance is evil and we must have a hard cap […]”
Buterin went on to state that the problem was that miners had to be paid for keeping the network secure. The common storyline of what would happen to the network’s security once a cryptocurrency hits its supply cap has been that miners would be paid transaction fees for keeping the network safe. However, Buterin explained that in reality, there is a 50/50 difference between issuance and transaction fees.
“[…] in Bitcoin, for example, last time I checked it was about the the daily block reward was about seven million dollars the daily transaction fees were about 140,000 that’s about a factor of 50 difference […] basically it’s not at all clear that blockchains are going to continue to secure once the amount going to security providers or miners or stakers is 50 times so lower than it is now.”
The creator of Ethereum added that proof-of-stake performs better than proof-of-work in terms of low-security budgets, while also expressing doubts about Ethereum‘s proof-of-stake security with zero issuance. He said,
“I do think that proof of stake does better than proof of work with lower security budgets but even with proof of stake like I’m not confident that Etheruem proof a stake with zero issuance is something that it is guaranteed to be able to survive”
Buterin also remarked about the notion of the cryptocurrency market getting bigger in the future, thereby negating the security concern as a “crazy super optimistic assumption,” considering that it is about the security of a network that had people’s savings. He also stated that it was a “wrong assumption” altogether because “if a system gets 50 times bigger, then the security budget becomes 50 times bigger, but the size of the attacker who cares about breaking it becomes 50 times bigger.” He added,
“But number one you’re not allowed to make crazy super optimistic assumptions if you’re gonna argue that about the security of a system that protects people’s life savings.”
He further clarified that proof-of-stake is important, adding that the network did not even have to be complete proof-of-stake as it would still contribute more towards the security of the network.
“I think is like important especially for people kind of value these things like having having low issuance or potentially even zero issuance and so forth […] I mean it’s not just about Bitcoin to be clear. Like, I hope Litecoin adopts Proof-of-Stake […] Bitcoin Cash adopts Proof-of-Stake and Bitcoin Satoshi Vision adopts proof of stake like I mean I think the thing is a scam but I think scams running proof of stake is still like less environmentally harmful […]