Forbes Writer ‘Cries on Crypto’ Claiming Bitcoin’s Proof-of-Work is ‘Intrinsically Flawed’
As per a story released by Forbes earlier this week, Gerald Fenech, a regular contributor to the publication, has claimed that the current PoW algorithm being used by the Bitcoin ecosystem comes with its fair share of ‘fundamental flaws’.
While elaborating on his bold proclamation, Fenech did not give any strong factual proof, rather relied on generalized statements such as the PoW framework “contains a host of flaws”.
As is already well-established, a host of cryptocurrency projects currently make use of the PoW framework even though it is quite energy consuming. This is because in order to validate blocks on such a network, a lot of electricity-intensive mining operations need to be carried out.
Other than this, another frequently cited issue with PoW-based platforms is that they are quite expensive to administer (especially since the equipment needed for such activities is very expensive). Owing to these high peripheral costs, a host of mining entities have come together to form ‘pools’— an approach which has often led critics to say that Bitcoin could face a problem of centralization later down the line.
Fenech: “Geographic Centralization” Could Become A Problem Soon
Rounding off his article, Fenech said that the use of PoW could pose serious risks associated with “geographic centralization” of the bitcoin mining process. To counter such an issue, Fenech noted that the “use of proof-of-authority (PoA) should become more commonplace within the industry”.
Expounding on the aforementioned statement, Fenech elaborated by saying:
“Users [‘staking’ their] identity … A validator has to be personally identified and verified on the platform, making them a trusted node. Users who confirm their identity earn the right to validate blocks on the chain. The crypto rewards they receive are public, as are malicious actions undertaken; this means that individuals have their personal reputation at stake when acting to secure the network.”
Even though Fenech has repeatedly called for a global switch from PoW to PoA, it is worth noting that the latter does not really fulfill some of the purposes that are met by PoW. For example, PoA’s implementation is suited primarily for permissioned (or private) blockchains. Not only that, PoA also poses certain security challenges that could become quite serious later down to line (in a PoA ecosystem there is only one/a couple of authority nodes that make decisions on behalf of the entire blockchain).