Pow vs PoS debate is pointless, Bitcoin has already won

The endless debates of pros and cons of Proof of work vs Proof of State need to stop now

Pow vs PoS debate is pointless, Bitcoin has already won
proof of work vs proof stake POW vs POS 

Before we discuss the merits of PoW vs PoS, let's understand what they are.

Proof-of-Work or PoW is a system for approving transactions in blockchain whereby the systems need to spend a lot of energy to achieve a random number which results in the creation of a new block which is added to the block of the previous transaction chain hence the name 'blockchain' however PoW is being criticized for consuming a lot of energy for seemingly just adding transaction data to a database.

Proof-of-stake or PoS is a system where the ability to add transactions into a blockchain is decided by validator nodes which stake certain tokens as collateral into the system and as such there is no need to burn a vast amount of energy to guess the random number which is used in block creation, for this reason, PoS is often touted to be a greener low-cost alternative.

PoS has many theoretical flaws to which developers offer a  band-aid-based approach

In plain English, what are the problems with using proof of stake in cryptocurrencies/block chains?
Answer (1 of 3): Kind of older, but here is a paper with an argument why PoS is fundamentally incompatible with distributed consensus: https://download.wpsoftware.net/bitcoin/pos.pdfNew versions of PoS side-step this by requiring that the user be around during system setup or trust a friend to g...

Now the issue with proponents of PoS is they somehow seem to ignore the fact that in real-world people who want to invest their life savings into a blockchain token like Bitcoin don't care much about the 1% of its value being spent on energy ( not to mention, over 60% of Bitcoin mining is now green  and also has great synergies with the current grid )

At a deeper level, only Bitcoin's consensus mechanism is able to arrive at a decentralized time which is so very important for organizing the blocks properly. Read about this truly marvellous article on why Bitcoin is time

Energy- The wall of  Defense

History is filled with defense walls as they act a barrier to entry from enemies , for which empires spend significant resources. There is also a reason why we have armed guard near bank vaults. Anything precious needs to be protected or else gets destroyed or taken over by hostile forces.

In the case of a decentralized monetary network like Bitcoin, a strong defence is all the more important. When a hostile force does try to attack the network there are no guided missiles that can be fired back at the enemies, so in this particular case ( i.e Bitcoin )  the defence should be as strong as it gets.

The massive energy spent on Bitcoin Mining actually works as a shield that stops bad actors, the proponents of PoS in their incredible naivete believe state-level attackers will keep quiet in attacking Blockchain networks.

You see attacking a PoS network like Ethereum is as simple as serving notices to Ethereum Node owners to respect OFAC /FATF regulations. Once these regulations can be enforced without any spending by the US govt the network is as good as dead. Not to mention in a PoS system node owners can artificially increase the token supply at their will.

It's not to say US Army cannot attack Bitcoin with a 51% attack by owing the majority of Mining power, but doing so takes a significant amount of time and resources even for a superpower like the US  ( making it almost impossible for any other country to even attempt ). So in the 2-5 years, it takes for the US govt to procure these chips and mount an effective attack on the Bitcoin network, the US voters would make some noise for wasting so much money on an unconstitutional act. Should the Bitcoin price go up by 10x from here, attacking Bitcoin is impossible even for the US govt.

Ultimately , buying this precious time gives the developers and network owners to come up with an effective response which is simply not available in a PoS network.

The Real Reason

The real reason Bitcoin has already won is simply because of the 'Lindy effect' people trust things that have stood the test of time. Decentralized currencies like Bitcoin can absolutely revolutionize international payments, this however doesn't need 20 different tokens, infact using only one currency like Bitcoin maximizes utility by cutting fees for both sender and receiver due to the liquidity effect.

Over the next 10 years, most of the international payments will slowly move to Bitcoin away from SWIFT and businesses and banks have no incentive to use a PoS chain with much higher fees as it has lower liquidity.

Liquidity begets liquidity

For Payments

As more and more international payments get routed through Bitcoin Network the liquidity i.e ABC currency to BTC  &  BTC to XYZ currency etc gets cheaper. As it gets cheaper more people who are using SWIFT will start using Bitcoin Network. As more people use Bitcoin Network ( even briefly ) the price of Bitcoin goes up ( as the supply is limited ) and as the price goes up more people will hodl Bitcoin which further shoots up the price. As more people hodl Bitcoin the liquidity of Bitcoin grows even further which further helps the International Commerce use-case. As the price goes up, more mining takes place which further improves network security as discussed before, which pushes sceptics to jump from the sidelines to Bitcoin.

For Lending

The worlds largest corporation in history 'The East India company' was created as a sharholding entity so that they could get cheaper loans, low cost loans do wonders over long term.

Bitcoin backed loans currently have the best terms of all , lenders are happy to offer larger LTV ( Loan to value ) and lower interest rates  as Bitcoin typically has lower volatility compared to all other crypto assets out there. In a way bitcoin acts a reserve currency within the greater crypto eco-system.  As more people borrow against their bitcoin, more money is lent in the system , as more money gets lent, more lenders will want to get-in, this decreases the rate further,  which encourages more lending.

Now 2-of-3 multi-sig backed lending pioneered by valuete finally offers solution to some of nagging problems associated with Bitcoin backed borrowing like security and legality

This creates an incredibly strong network effect which is simply impossible to compete with no matter what the underlying consensus mechanism is ie. pow or pos.

Now you know why Bitcoin has already won !