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It has been 15 years since Satoshi Nakamoto published the Bitcoin whitepaper. Withinonly 3,192 words in9 pages, Nakamoto presented an innovative blueprint for a peer-to-peer electronic cash system. This system employed the Proof of Work (PoW) mechanism and a practical incentive system to ensure the security of the network.

The Bitcoin whitepaper, as the groundbreaking contribution to cryptos, has had aprofoundimpact on the entire crypto market, due tothe features of innovation, security, and decentralization presented. With its PoW consensus mechanism, Bitcoin has emerged as one of the mostpopular cryptos worldwide, thanks to its decentralized nature.Furthermore, the success of Bitcoin hasinspired the innovation and development of numerous othercryptos,catalyzing theboom of the entire crypto market.

However, as cryptos become more mainstream and their applications expand, alternative consensus mechanisms like Proof of Stake (PoS) and its variations such as Delegated Proof of Stake (DPoS) have gained increasing attention. Especially whenEthereum,the worlds second-largest crypto, transitioned from PoW to PoS, it has sparked extensive discussions within the crypto community about the pros and cons of PoW and PoS.

Compared to the PoW mechanism, PoS is superior in its ability to enhance energy efficiency and reduce energy consumption and computing costs for miners. However, one of the significant challenges facing PoS is the issue of centralization. The PoS mechanism gives the bookkeeping right to those who own a certain amount of a crypto. Larger holders of the crypto can exert control over the bookkeeping right of the entire network, raising concerns over centralization and security.

For instance, according to Dune data, Lido, the largest liquid-staking protocol on the Ethereum network, currently has approximately $13.08 billion in total value locked (TVL), dominating the market with a share exceeding 77%.By contrast, even among the top Bitcoin mining poolswidely criticized for their high level of centralization, ViaBTC Pool that ranks in the top 5,for example,holds a market share of only around 8.88%.

Indeed, decentralizationunderpins the sustained development of the crypto industry, and also represents the core belief of the industry. It is also the cornerstone laid by Satoshi Nakamotos Bitcoin whitepaper, whichset the tone for the industry.

Thegreatest advantage of PoWlies in its decentralization. In the PoW mechanism, any node has the opportunity to become a validator, and any miner with the necessary hardware can participate in the mining process. This enables a global distribution of nodes andsecures a distributed network system. As a result, when compared to the PoS mechanism, a system network that uses PoW is more decentralized and can effectively prevent a single institution or individual from controlling the network.

Global Distribution of Bitcoin Nodes

Someone has compared PoWwith PoS through an analogy: PoWis similar to an internal combustion engine that consumes fuel, emits exhaust gases, but provides robust performance while evoking a sense of traditional mechanical aesthetics. On the other hand, PoSresemblesa rapidly evolving,environment-friendly electric motor that emits no exhaust gases but may encounter certain limitations in specific scenarios.

Bitcoin emphasizes the consumption of and competitionaround computing resources, while Ethereumhighlightsthe ownership and community governance of tokens. It is difficult to determine which one is superior in the current landscape. Belief and technology are twodistinctdimensions. Belief fosters community cohesion, while technologyrealizes those beliefs. Bitcoin serves as a public chain that aims to provide fundamental trust resources,and it is alsodriven by community belief. This belief bestows upon Bitcoin beauty of simplicity while supporting its ongoing development and innovation.

From an individual perspective, the Bitcoin community is a staunch supporter of the PoW mechanism. However, from an institutional standpoint, mining pools are firm advocates of the PoW mechanism. Someargue that the mining pools have made PoW-based cryptos,such as Bitcoin, more centralized. However, this is not the case.Just look at industry veteran ViaBTCPool, which was originally established with the goal of lowering the barriers for all users to participate in crypto mining. Without mining pools, as hashrate and difficulty increase, crypto mining would become the pursuit of only a few miners. Those with limited hashrate would find it difficult to earn profits.

It can be said that mining pools help to protect the Bitcoin network andfacilitate the development ofBitcoin. In addition to Bitcoin, crypto projects such as Litecoin and Kaspa also embrace the principles of PoW.Litecoinis thesilver to Bitcoinsgold.Litecoin (LTC), a Bitcoin fork, is based on the same underlying technology, thus heading towards the same direction.

Kaspa is regarded asarising staramong PoW projects. While attempting to address the blockchain trilemma by balancing decentralization, scalability and high performance, the Kaspa community prioritizes decentralization most, which is fundamental to the crypto community and blockchain technology. Therefore, the community is also devoted to building itself into a decentralized autonomous organization (DAO) which adheres to the PoW consensus mechanism.

It is noteworthy that several mining pools havealready introduced mining services for KAS, the nativetoken of the Kaspa protocol. ViaBTC, aworld-leadingcomprehensive crypto mining pool,has also launched the KAS poolrecently.During its latest event,ViaBTCusers mining inthe KAS pool can enjoy zero fees forone month, in reward for their dedication to PoW mining.

http://www.viabtc.com

There is apopular belief thatPoW provides enhanced security and a greater degree of decentralization, while PoS offers improved speed and scalability. Nevertheless, projects such as Kaspa have managed to strike a balance between speed and scalability,thuschallenging stereotypesof both mechanisms. Despite being considered anold school andclassical consensus mechanism, PoW continues to evolve through technological innovation.Emerging PoW-basedprojects like Kaspa are expected to address theimpossible triangle of blockchain, propelling the development of blockchain technology tothe next phase.

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Decentralization Challenges Facing the Crypto World: How PoW Persists - CoinCodex