A panel at the Oslo Freedom Forum #OsloFF had the simplest explanation I have seen in quite some time.
Every system that existed has been a stakeholder-run system, so they’re all PoS (Proof of Stake) systems. PoS systems are the legacy systems that have existed for centuries, where people who control the coins, “the stakeholders”, can disrupt the network, change the network or even shut it down.
Bitcoin created a triple entry ledger from the old double entry ledger and the ledger self audits and writes on chain. It’s an immutable ledger entry that can never be altered.
That’s the best accounting technology that’s ever been created by humans.
So anything that lives on top of the Bitcoin network will be better than the legacy system that it replaces.
And it is only because of PoW (Proof of Work) that you are able to have this immutable ledger and all the other layers for financial and economic freedom.
Energy serves a very important role. It minimizes human governance.
If you remove the energy component, you are recreating the legacy system but on a blockchain.
Basically, PoS relies on circular logic, where the largest coin holders determine the state of the ledger and the state of the ledger determines who the largest coin holders are.
PoS is doing completely different things than what Bitcoin is doing.
Bitcoin without energy, is like airplanes with the flight removed. It is taking out the key innovation of what makes it so useful.
PoW allows everyone to decide on the correct ledger state with no human oversight or governance.
PoS is just a fancy way of referring to shareholder governance or a stakeholder led system where ownership in the system determines authority in the system.
This is precisely how SWIFT works. It’s how PayPal works. It is how banks work. Those are all examples of PoS systems.
In my view, money should be depoliticized.
It should be a right to transact with whomever you want in a private way and that has been stripped away from us as we have digitized finance.
