In one of his infamous whiteboard videos, Charles Hoskinson, CEO of IOHK and inventor of Cardano, spoke of decentralization, making direct reference to the famous "Bitcoin maximalists" Jimmy Song and Tone Vays. Hoskinson began by assessing the degree of decentralization of Bitcoin and identified several issues.
As Hoskinson described, the ability to mine Bitcoin depends on access to ASICs, as manufacturers have a significant influence on distribution. Hoskinson also identified electricity costs as an issue. Thus, miners in countries where the cost of electricity is lower, the "expensive countries" are practically excluded from mining.
Additionally, companies with political influence can get cheaper electricity in a country, allowing politicians to exert direct influence over the mining and Bitcoin ecosystem. Ultimately, the result is an "economy of scale" in which larger players drive out smaller participants from the ecosystem, Hoskinson says.
So you have guys like Jimmy [Song] and Tone [Vays] saying that Bitcoin is so decentralized. Bitcoin is the best thing in the whole world, mining is the only way and the truth. "By the way, can you participate. Bitcoin is so decentralized ”. And you say well, the people who maintain the system, they live outside the system, they consume a private patented custom resource, it benefits the price of electricity tremendously and they must have a lot of money to be able to play and participate. . It doesn't sound like a decentralized system to me. And over time you become more and more federated.
Cardano's proof of participation is more secure and decentralized than Bitcoin PoW
However, proof of stake requires a different resource than ASICs, the native ADA token . Unlike Bitcoin , it is therefore independent of energy costs. Whatever the cost of electricity in a country, an ADA always has the same value within the ecosystem. Plus, as Hoskinson points out, Cardano doesn't need to access a private patented resource. In fact, Cardano's proof of stake is comparable to the early days of Bitcoin :
Which sounds a bit like CPUs and GPUs to me. He lives on an exchange and anyone can buy it.
Moreover, according to Hoskinson, there is also no economy of scale, as IOHK designed the protocol to evolve in a linear fashion and not to favor large owners. In addition, the network will increase as the price of ADA increases and thus become more decentralized. Not all of the arguments made by Sony and Vays can be substantiated, said Hoskinson:
Then Jimmy's argument is that it's just a signature, there's no security. I guess I don't understand anything that we did in any of our articles. I would encourage reading the GKL document, telling us what's wrong with this model; I encourage him to read Ouborus' article and tell us what is wrong with this model. […] You cannot go back, you have the finality in time, you can start from the genesis just like Bitcoin , the operating environment is a semi-synchronous environment, just like the environment of Bitcoin . Detailed security evidence explains why the system is functioning and why its state is secure.
As Hoskinson notes, the Proof of Stake system is safe as long as no entity has 50% plus 1 of all ADAs . And even then, it would be in the interest of the entity for the system to work, because there is a financial incentive.
According Hoskinson is what is lacking in Bitcoin , so proof of participation is also safer because miners Bitcoin n ' were not necessarily financial incentive for one blockchain. If Bitcoin is split into a chain , miners can even benefit, as the inventor of Cardano describes :
If these two chains fetch the same price, relatively the same price, then assuming the markets exist if you have enough of that security resource [the ASICs], you are actually being tricked into destroying one of the chains. Why? Because you can earn as much money as mining chain 2 you can earn money through mining chain 1.
