[article] The problem with the proof-of-work


#1

The article if full of good quotes and explains the PoW networks quite well, I like the paragraph bellow:

Let’s slip into an analogy for a moment: if mining is like a car race, then security is your energy spent. The only object is to race: the faster you are, the more money you’ll get. Everyone’s been racing with a 4WD (the GPU) — it’s versatile and adaptive to any terrain, but just this week, the F1 (the ASIC) has been launched. It’s a little more expensive, but it’s faster and more energy efficient per mile. How could you pass that up?

The F1 seems like the obvious choice, and early adopters will undoubtedly come out ahead. But, what happens once everyone takes an F1 to the track? Everyone has now been incentivized to switch to these cars, and now everyone is racing at the same speed, spending the same amount of energy for the same amount of work. Nothing was gained. The only person that benefitted from this ‘upgrade’ of machinery was the manufacturer.

It’s important to understand this key concept before we go forward: there was no gain in this scenario. The rewards are still distributed relatively. The energy-to-work ratio is the same. The network isn’t anymore secure.


#2

But an attacker won’t sell the newest, fastest car on the open market. There is an arms race with an invisible attacker. So if the whole network moves over to the F1, it will be more resiliant against the secret manufacturer who is privately building a car of unknown speed.