Vitalik Buterin, the co-founder of Ethereum, the third largest cryptocurrency by market cap, spoke about the reason for opting to Proof of Stake [PoS] from Proof of Work [PoW], in an interview with Blockchain Insider.
Buterin started by giving a brief introduction of Proof of Stake and Proof of work, stating that PoS is a different kind of a consensus mechanism from Proof of Work. Buterin further added that PoW is just a way for computers, that make up the Bitcoin, Ethereum and other networks, to talk to each other and agree on “what messages to process in what order”. He said:
“Proof of work you can think of it as a kind of sort of voting mechanism where you know one unit of computing power one vote well that’s a huge oversimplification but it’s kind of an ok way to think about it proof of stake replaces that with like essentially one coin inside of the system equals one vote”
He went on to say that both the mechanisms are kind of similar as they use economic resources to “gatekeep what level of participation you can have in the network”, adding that this is one of the factors that is necessary. If this was absent, then a participant could pretend to be a “billion fake participants”, and take over the entire network.
Buterin further stated that Proof of Stake is better at this in comparison to Proof of Work, adding that there were a couple of reasons for the same. He said:
“One of them is that with Proof of Work in order to prove that you actually have in these computing power you have to basically turn on these computers and have them solve mathematical puzzles 24/7 and this means to a huge amount of energy consumption”
He further elucidated:
“and I think, a Bitcoin is at the point of exceeding probably the majority of the world’s countries and Ethereum is definitely not nearly at that point but it still and much higher than I would like it to be”
Additionally, Buterin stated that PoS is much more efficient as the only pre-requisite is to prove that one has coins and sign a digital signature with the same cryptographic key that has those coins, and thereby decreasing the energy consumption of the network.