Swan Bitcoin founder Brandon Quittem said that Ethereum (ETH) co-founder Vitalik Buterin does not “deeply” understand the Proof-of-Work (PoW) consensus mechanism.
1/ I said “Vitalik never understood PoW deeply”
I don’t know if I’m right or wrong, but here are some examples of @VitalikButerin misunderstanding PoW
— Brandon Quittem (@Bquittem) August 15, 2022
In an August 15 Twitter thread, Quittem cited instances he believes prove Buterin’s lack of understanding of the mechanism.
Centralization and censorship risks
The first Buterin assertion questioned by Quittem is about exchanges staking their customers’ deposits and the belief that “PoW can get captured by big mining.”
3/ V gets a lot wrong with this one…
A) V doesn’t think exchanges will stake customer deposits. (lol how could he possibly miss this?)
B) “PoW can get captured by big mining cos”
Cheap energy is geo-distributed, often in small packages. Favors a fat tail of smaller miners. pic.twitter.com/bC9GKUoL9y
— Brandon Quittem (@Bquittem) August 15, 2022
Quittem pointed out that 11 regulated providers already control 67% of Ethereum staking, showing that it is at the risk of centralization and government sanctions.
Quittem continued that Buterin’s logic that exchanges will not stake their customers’ holdings without their consent is wrong.
The Bitcoin (BTC) advocate said the risks highlighted by Buterin are a “major reason to outsource staking. Incentivizes exchanges/providers to gobble up supply.”
10/ “lots of PoS chains have been working successfully” –@VitalikButerin
I guess if you don’t care about censorship resistance… then sure go ahead with PoS.
Otherwise, go look at BSC, Solona, Tron, Stream, and Peercoin. I assume Ethereans don’t want to go that direction? pic.twitter.com/dKNaYsiEqp
— Brandon Quittem (@Bquittem) August 15, 2022
According to Quittem, Ethereum is at the risk of “censorship,” citing other blockchain networks like Solana (SOL), Tron (TRX), and Binance Smart Chain (BSC).
The crypto community has identified this censorship risk in light of the recent US sanction on Tornado Cash.
Meanwhile, Coinbase has said it would rather shut down its staking services than comply with regulators’ requests to censor transactions.
Barrier of entry
Buterin had previously argued that the barrier of entry is lower for proof-of-stake (PoS) than PoW. According to Buterin, 32 ETH costs much less than building an ASIC mining firm.
8.1/ @VitalikButerin argues barriers to entry…
PoS: 32 ETH costs $60k today, most cannot afford that. So they delegate which is a centralization risk.
PoW: Home BTC miners can buy an S9 for $200 and start today. (profitability varies widely) pic.twitter.com/k3CMtVBSfO
— Brandon Quittem (@Bquittem) August 15, 2022
However, Quittem counters this view saying home Bitcoin miners can get an S9 mining machine for as low as $200 while staking on Ethereum costs 32 ETH (roughly $60,000).
Additionally, he questioned Vitalik’s argument about ASIC manufacturers being a monopoly and the cost of mining equipment. In his view, the risk keeps reducing since ASIC mining equipment is becoming more commoditized, and manufacturer monopoly is reducing.
4/ V argues “ASIC manufacturers are a monopoly”
This risk is real for Bitcoin, but less so each day as ASICs are becoming commoditized, reducing manufacturer bottleneck.
(~stock to flow of ASICS is increasing over time)
Larger issue here in PoS as @nic__carter point out. pic.twitter.com/FAa91J6XXT
— Brandon Quittem (@Bquittem) August 15, 2022
Buterin says PoW mining breaks down under restrictive government
Buterin claimed that PoW breaks down more quickly under more restrictive government conditions while staking is easier to hide.
6/ “Physical PoW easier to attack than digital PoS”
PoW: Attack requires global coordination in a multi-polar world. Expensive attack, easy to fail.
PoS: Eth stake is walking into the financialization trap just like gold. Cheap attack, hard to stop.
h/t @kendallweihe pic.twitter.com/9z7WvAcQvv
— Brandon Quittem (@Bquittem) August 15, 2022
But Quittem does not see it that way, highlighting a tweet from Kendall Weihe that says PoW can only be co-opted through government force while PoS is vulnerable to government funds.
Quittem continued that an attack on PoW would require global coordination, which makes it expensive, and can fail easily. On the other hand, “Eth stake is walking into the financialization trap just like gold. Cheap attack, hard to stop.”
7/ Vitalik says separation of powers are the same in PoW and PoS
Major issue here…
PoS: economic power = political power. No longer neutral, it’s political money. new boss old boss.
PoW: separates economic power from political power. Enables neutral commodity money pic.twitter.com/eoXWpjE5fn
— Brandon Quittem (@Bquittem) August 15, 2022
Quittem also disagreed with Vitalik claim that PoS and PoW have the same separation of powers. Instead, he believed that in PoS, economic power equals political power but PoW separates the two.
Quittem says PoW is the innovation
Quittem discredited several other claims by the Ethereum co-founder and called PoW the innovation rather than PoS.
12/ Reminder that PoW is the innovation here.
PoW enables a non-political money.
ETH abandoning what works (PoW) seems very risky.
Too late now though. Social consensus in ETH land is PoW is bad.
How many verified this claim? How many trusted Vitalik because he’s smart?
— Brandon Quittem (@Bquittem) August 15, 2022
According to him, ETH switching to PoS is quite risky but is already too late now, and PoS will likely give the state control of blockchain space.
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