Item — HN Reader

> From a macroeconomic perspective, it is clear that equal results at lower cost must benefit the participants of the economy.

Maybe not if that costs is directly related to the security of the network.

It takes a certain amount of money $X to control 51% of a POW network.

If X is large, it's very hard for any one entity to perform a 51% attack.

If X is small, the security bar is low as it becomes more accessible for entities to attack the network.

It seemed to me that the high cost of securing the network was the main security feature.

2 comments

No, the cost is NOT a necessary requirement for creating a secure network. Capital/stake is.

What you say is true for Proof-of-work: The more capital-intensive mining is, the harder the network is to attack.

One can say that PoW currencies are secured by a display of capital investment into mining. The stake is the electricity and hardware deprecation that goes into mining a block. Cost is used as a proxy for capital.

Proof-of-work takes the middle men out of this: You proof your capital investment (your stake) directly within the protocol.

> What you say is true for Proof-of-work: The more capital-intensive mining is, the harder the network is to attack.

Well I did say "It takes a certain amount of money $X to control 51% of a POW network." Not sure why there is an argument around PoS.

Did you mean PoS in your last sentence?

It isn't clear to me that PoS is much different, in the sense that you can imagine attacking the network by gaining a larger stake, enough to be "calling the shots on the truth" (ie silencing other stakeholders). There are other comments along these lines so I won't repeat the arguments here.

> Did you mean PoS in your last sentence?

Totally. Apoligies.

> It isn't clear to me that PoS is much different, in the sense that you can imagine attacking the network by gaining a larger stake, enough to be "calling the shots on the truth" (ie silencing other stakeholders).

I think we agree on this one: Proof of Stake and Proof of Work are both vulnerable to their respective 51% attacks.

But they are also (more or less) equally safe: If you don't have 51% of capital at stake/mining power, you cannot attack the network.

So, all things being equal, my argument is that PoS is advantagous because it requires fewer resources.

(This is expressed for example in the fact that the block reward with PoW needs to be much higher than with PoS to re-finance the same amount of capital investment. Because if proof of stake, you also get back your original capital.)

Does a 51% attack on a PoS network poison the well?

I mean if you have a 51% stack can you exploit it to increase your stake even higher to 60% then 70% until the coin is 100% under your control?

With PoW a 51% attack might only be temporary because you cannot forcibly increase your stake to 100%.