Resources and 1 to N for Consensus

Opens June 8th 2021 apologizing for the late start after an unexpected office visitor interrupted him just before broadcasting.

The Miami Bitcoin conference had unbelievable disinformation and mean-spiritedness from Bitcoin maximalists about proof of stake, who are now part of a religion.

Consensus algorithms order transactions across a decentralized mesh, a classical distributed-systems problem discussed for over 40 years since the 1960s, not invented by Satoshi, with proof of work an engine deciding who serializes each block, the heartbeat of a blockchain.

Says whether proof of work or proof of stake, three things happen, choose a leader to order the block, make the block, and have the network accept it, and they are identical except in leader selection using different resources: hashes for PoW and ownership for PoS.

Controlling 25 percent of the resource, hash rate or stake, means being selected leader about 25 percent of the time on average over a long period.

Resources can be combined, citing Peercoin in 2011, Sunny King's hybrid proof-of-work-and-stake protocol with two resources, and the 2016 TwinsCoin follow-up by Hung-Chun and Alex Chepurnoy.

Blocks should come regularly, 10 minutes in Bitcoin and 15 seconds in Cardano, and one, two, or N resources could decide the leader, since each resource pool carries a philosophy.

Proof of work assumes ASIC availability, energy cost, and a 200-million-dollar data center while proof of stake assumes you can buy ADA in decentralized markets, and that both assume an honest majority with different incentives, since proof of work risks a Goldfinger attack when the same algorithm is minable elsewhere while proof-of-stake owners hurt their own value if they attack.

Going from one to N resources makes the system more dynamic and resilient by drawing security from multiple pools, though stitching them together is hard and the TwinsCoin paper had issues.

Introduces proof of merit where Bob earns a token for doing good things for the cryptocurrency, raising research problems of defining good and sybil resistance against a bot Bob.

Introduces proof of storage for an eight-exabyte blockchain, citing Permacoin and Chia connecting history to a blockchain using hard-drive space, and says resources can compose computational power, social power, storage, and unincentivized network relay capacity plus ownership.

You balance resource scales so no constituency is overrepresented, biasing the social component toward the poor to counter plutocratic ownership.

The hard first step is going from one to two resources, then two to N is easier, so they are examining a proof-of-work-and-stake system with a paper coming later in 2021.

GUC general universal composition proves the proofs do not break when composing protocols, a big Cardano 2025 research agenda, since Cardano 2020 built the best proof of stake capped by Omega, which represents one constituency, so the goal is more constituencies of voters, workers, and developers with delegatable, fungible or non-fungible, permanent or temporary resources like a social coin expiring in 30 days.

The community can decide to stay a plutocratic pure proof of stake or mix and match the size of N and the weights, since a proof-of-work-and-stake system need not alternate equally but can weight resources differently.

Maximalists decided any proof-of-x is a scam outside one particular proof of work despite peer-reviewed publications and running systems with 50 billion dollars of value, and that Nakamoto consensus wastes so much energy it centralizes and leaves no room to optimize throughput.

Cites Viveck Cadambe's Prism sharded-proof-of-work protocol, a namespace collision with their Prism identity, that accelerates Bitcoin 10,000 times, but notes Miami attendees would not discuss it and someone threw a toilet paper roll at him.

Omega, ETH2, and Algorand will peak proof of stake for 5 to 10 years, after which fourth-generation protocols with N resources give more balanced control with interesting monetary policies.

Uses biology's cell specialization, since single cells are simple but eyesight and immunity need differentiation, so cryptocurrencies move from Bitcoin's homogeneous system to heterogeneous nodes, already differentiating delegators holding resources from stake pool operators running beefy full nodes and relays while sharing the same DNA.

Cryptocurrencies will be built with many tissue types serving different roles with emergent properties, as DeFi protocols like Uniswap and MakerDAO already specialize with their own units of account, aiming for a resilient decentralized ecosystem with no god cell like a human body in homeostasis where removing too much of any tissue kills it.