Proof-of-work versus Proof-of-stake by the Tale

Motivation

In science you often use imagination as a tool. It helps conduct experiments without doing anything, besides, perhaps, wondering on the topic of experiment. But it is difficult to transfer your thought to someone else, because your knowledge set rarely matches exactly to someone’s. For this purposes another tool is used — analogy. It allows to project your thought experiment to some process familiar to large audience.

Lets take proof-of-work vs proof-of-stake problem and try to conduct analogy.

Proof-of-work is an approach to ensuring authenticity of something by conducting some work and by providing a proof that the work was actually made.

Proof-of-stake is an approach to ensuring authenticity of something by putting a bet baked by something valuable and agree to fulfill bet if that something is not authentic.

After describing the problem lets sync on the list of things required for the context of the experiment.

Steam engine — piece of engineering that converts heat into movement by using water as a medium. You heat water inside cylinder with piston, water becomes steam gas, steam gas pushes piston, piston does movement.

Parametric oscillator — is an object that makes periodic movements due to some periodic interactions with movement initiator.

Pendulum — is an object of some considerable weight that is tied to some fixed point with the help of the thread and capable of making periodic movements. The object is basically hanging on the thread and is able to move back and forth given some input from you.

Now it should be somewhat clearer to read and comprehend.

The tale

There is an autumn trade fair in some Scandinavian town few hundred years ago. The temperature outdoors is not that comfortable to stay outdoors for a long time. There are lots of people walking round the fair in the search of their needs. The fair would last for few days, and it is possible to find different things.

One morning strange thing occurs near the fairs entrance. It looks like a huge pendulum oscillating back and forth and attracting crowd by its movement and unusual construction. The thing is that there is bonfire along the pendulum with a vat full of water boiling in it. But the vat is covered in a way to collect steam from it and push a piston towards pendulum frequent enough to continue pendulum’s oscillations. Some curious child tries to catch pendulum and by doing so he slows the pendulum a bit, but the piston quickly recovers the frequency of the movement. The pendulum becomes surrounded by the crowd and others, who are entering the fair, can vaguely see it so they pass by. An ingenious idea comes to the mind of curious person passing by the pendulum and the crowd, he finds some firewood, came back to the pendulum’s crowd and throws it right into bonfire over the heads of the surrounding people. The bonfire responds quickly and starts burning even stronger. The heat from bonfire makes crowd step back from the pendulum as it becomes too hot near the pendulum. The number of people watching the attraction increases in turn, including that person that throw firewood. Some people in the crowd realized the way to get to the inner circle.

On the next day even more strange thing happened: besides the pendulum near the entrance few people build their own pendulums of the same construction with the hope that it would help attract crowd in their favor. But, to their disappointment, most of the people attended fair the previous day and where not impressed, so new pendulums attracted only fraction of the people of the first pendulum.

On the day after, new strange things appear: someone realized that it is possible to make even greater pendulum with forced oscillation by making multiple bonfires with vats and gathering steam from them to power one large piston. The crowd was impressed by the size of the pendulum and participated by throwing firewood into bonfires. As a result number of people involved in keeping the pendulum oscillating increased. People around bonfires was able to take a heat-bath an watch the monumental pendulum that moved in part due to their participation.

On the day four, someone realized that it is not required to use bonfire, vat, and piston to make pendulum oscillate, and proposed a crowd to participate in “the pendulum game” by some rules. The rules ware simple: by picking some set of persons of the surrounding crowd he allowed them to push pendulum in tact so that pendulum would continue to oscillate. The game looks attractive but it is possible to arrange the game to a very small set of people, as people form a circle of size comfort enough to interact with pendulum by hands. After half a day that someone realized that it is possible to arrange crowd a possibility to pick those in lucky circle by voting. And those in circle, that behave poorly when granted an ability to interact with pendulum, were forbidden to participate afterwards.

The afterthought

Lets presume that the statement “understand is to create a model that may predict future state with defined accuracy” is true.

What do you think would happen with the pendulums within fair in future?

Which model would be sustainable enough and attract more people?

What would remain after pendulum stops oscillation?

What would incentivize crowd to participate?

Which model would incentivize to innovate more?