Swan Bitcoin founder Brandon Quittem says Ethereum (ETH) co-founder Vitalik Buterin does not “deeply” understand the Proof-of-Work (PoW) consensus mechanism.
1/ I said “Vitalik never deeply understood PoW”
I don’t know if I’m right or wrong, but here are some examples of @VitalikButerin PoW misunderstanding
🧵👇 https://t.co/Uo1oZolpVU
—Brandon Quittem (@Bquittem) August 15, 2022
In an August 15 Twitter feedQuittem cited examples that he says prove Buterin’s lack of understanding of mechanism.
Risks of centralization and censorship
Buterin’s first claim questioned by Quittem relates to exchanges staking their clients’ deposits and the belief that “PoW can be captured by large mining operations”.
3/ V is very wrong with this one…
A) V does not believe exchanges will stake customer deposits. (lol how could he miss that?)
B) “PoW can be captured by large mining cos”
Cheap energy is geo-distributed, often in small packages. Promotes a big tail of small miners. pic.twitter.com/bC9GKUoL9y
—Brandon Quittem (@Bquittem) August 15, 2022
Quittem pointed out that 11 regulated providers already control 67% of Ethereum staking, showing that it is at risk of centralization and government sanctions.
Quittem continued that Buterin’s logic that exchanges will not stake their clients’ holdings without their consent is wrong.
The Bitcoin (BTC) advocate said the risks highlighted by Buterin are a “major reason to outsource staking.” Incentivizes exchanges/providers to gobble up supply.
10/ “many outlet chains are operating successfully” –@VitalikButerin
I guess if you don’t care about censorship resistance…then go with PoS.
Otherwise, check out BSC, Solona, Tron, Stream, and Peercoin. I guess Ethereans don’t want to go that way? pic.twitter.com/dKNaYsiEqp
—Brandon Quittem (@Bquittem) August 15, 2022
According to Quittem, Ethereum risks “censorship,” citing other blockchain networks like Solana (SOL), Tron (TRX), and Binance Smart Chain (BSC).
The crypto community has identified this censorship risk in light of the recent US sanction on Tornado Cash.
Meanwhile, Coinbase said it would rather shut down its staking services than comply with regulators’ demands to censor transactions.
entry barrier
Buterin had previously argued that the barrier to entry is lower for proof-of-stake (PoS) than for PoW. According to Buterin, 32 ETH is much cheaper than building an ASIC mining company.
8.1/ @VitalikButerin raises barriers to entry…
PoS: 32 ETH is $60,000 today, most can’t afford it. So they delegate which is a risk of centralization.
PoW: BTC house miners can buy an S9 for $200 and get started today. (profitability varies greatly) pic.twitter.com/k3CMtVBSfO
—Brandon Quittem (@Bquittem) August 15, 2022
However, Quittem contradicts this view by saying that home-based Bitcoin miners can get an S9 mining machine for as little as $200 while staking on Ethereum costs 32 ETH (about $60,000).
Additionally, he questioned Vitalik’s argument that ASIC makers were a monopoly and the cost of mining equipment. In his view, the risk keeps decreasing as ASIC mining equipment becomes more commonplace and the manufacturer’s monopoly diminishes.
4/ V asserts that “ASIC manufacturers are a monopoly”
This risk is real for Bitcoin, but less every day as ASICs become commonplace, reducing the bottleneck for manufacturers.
(ASICS ~stock to flow increases over time)
Bigger issue here in PoS like @nic__carter report. pic.twitter.com/FAa91J6XXT
—Brandon Quittem (@Bquittem) August 15, 2022
Buterin says PoW mining is collapsing under restrictive government
Buterin claimed that PoW decays faster under more restrictive government conditions, while staking is easier to hide.
6/ “Physical PoW is easier to attack than digital PoS”
PoW: Attack requires global coordination in a multipolar world. Costly attack, easy to fail.
PoS: Eth Stake falls into the trap of financialization, just like gold. Cheap attack, hard to stop.
h/t @kendallweihe pic.twitter.com/9z7WvAcQvv
—Brandon Quittem (@Bquittem) August 15, 2022
But Quittem doesn’t see it that way, pointing to a tweet from Kendall Weihe that says PoW can only be co-opted by government force while PoS is vulnerable to government funds.
Quittem continued that an attack on PoW would require global coordination, which makes it expensive and can easily fail. On the other hand, “Eth Stake falls into the trap of financialization, just like gold. Cheap attack, hard to stop.
7/ Vitalik says the separation of powers is the same in PoW and PoS
Major problem here…
PoS: economic power = political power. It’s no longer neutral, it’s political money. new boss 🤝 old boss.
PoW: separates economic power from political power. Activate neutral commodity money pic.twitter.com/eoXWpjE5fn
—Brandon Quittem (@Bquittem) August 15, 2022
Quittem also disagreed with Vitalik’s assertion that PoS and PoW have the same separation of powers. Instead, he believed that in PoS, economic power equals political power, but PoW separates the two.
Quittem says PoW is innovation
Quittem discredited several other claims by the Ethereum co-founder and called PoW an innovation rather than PoS.
12/ Remember that PoW is the innovation here.
PoW allows for non-political currency.
The abandonment of what works (PoW) by ETH seems very risky.
Too late now though. The social consensus in ETH country is that PoW is bad.
How many have verified this claim? How many trusted Vitalik because he’s smart?
—Brandon Quittem (@Bquittem) August 15, 2022
According to him, the switch from ETH to PoS is quite risky but it is already too late now, and PoS will likely give the state control of the blockchain space.