Less than a year after proof-of-stake (PoS) became the consensus mechanism for the Ethereum blockchain — the industry’s largest blockchain network — researchers have found that PoS can complement Bitcoin.
Stanford University professor David Tsè spoke to Cointelegraph at the 2023 Bitcoin Builders conference in Miami, Florida, about his team’s findings on Bitcoin, PoS, security and energy consumption.
Tsè facilitates a research lab specializing in blockchain consensus protocols at Stanford University in California. He said the first consensus protocol it looked into was Bitcoin’s proof-of-work (PoW) protocol.
“Bitcoin was like our first love,” he said. Through this “deep understanding” of Bitcoin and then an understanding of PoS protocols, he continued to say that his team found a “very natural synergy” between the two.
“By building an extra layer of protocol that shares the security between Bitcoin and PoS, we find that it will become very strong, giving you a very strong security property.”
Tsè pointed out that on its own, the PoS blockchain has two major limitations: Due to it being based on proof of “stake,” or capital, it’s hard to start a new blockchain due to the need to attract stakers. He said, “If you don’t have capital, you don’t have enough security.”
In addition to security and capital being intertwined, the Stanford professor also highlighted that security is what he calls “short range” on PoS, whereas Bitcoin is the opposite, with stronger “long-range” security, making them “the perfect complement to each other.”
He wants it so that people can build distributed ledger applications in a more simple way:
“Security is very important, but instead of everyone trying to fragment and compete for limited capital, take capital from a huge reservoir which is Bitcoin, and use it as economic security for all these chains.”
In such a method, Tsè envisions developers being able to focus on building the application, which is the core purpose of creating a blockchain network, rather than on recruiting the stake to secure the chain.
One of the major pushbacks toward building on Bitcoin — and PoW systems in general — has been the energy consumption associated with such protocols. Tsè said that Bitcoin’s bad reputation for energy consumption makes it difficult to explain to the next generation of students.
However, Tsè says he believes the important thing is to not only look at the energy being consumed, but the “why” behind the consumption.
“Without energy, there is no security. Without security, there’s no value. In some sense, what we’re doing right now, from a technology point of view, is to make higher value use of that energy.”
He highlighted security as one of Bitcoin’s most valuable assets and pointed to new projects like Bitcoin Ordinals leveraging that security.
“What makes Ordinals interesting on Bitcoin, as opposed to any other platform, is that they’re building on the most secure blockchain in the world.”
Recently, Bitcoin nonfungible tokens (NFTs) have been sweeping through the crypto space, causing equal amounts of hype and skepticism about whether they are good for Bitcoin. Some thought leaders in the space believe they’ll fade out, but on the other hand, Binance’s NFT marketplace added Bitcoin NFT offerings on May 9.
On the same day, inscriptions for Bitcoin Ordinals had nearly doubled in a little over a week, almost hitting the 4.8 million mark.