Blockchain technology company Blockstream’s co-founder and CEO, Adam Back, tweeted on Wednesday, January 4, criticizing the Proof-of-Stake (PoS) consensus method of generating and validating transactions on the blockchain, popularly employed by blockchains such as Cardano and Ethereum, calling it a Sybil attack. This he made known in his tweet and subsequent comments, where he stated that the Proof-of-Work (PoW) mechanism, which Bitcoin uses, was a solution to Sybil attacks and denounced PoS.
PoW is a solution to sybil attack.
PoS is a sybil attack.— Adam Back (@adam3us) January 4, 2023
Blockchains such as Cardano and Ethereum 2.0 are built on the PoS consensus model, as opposed to Bitcoin, which is PoW. Thus, it follows that Back’s criticism throws shade at Cardano, Ethereum, and other blockchains employing proof-of-stake.
A Sybil attack, named after the popular character diagnosed with dissociative identity disorder, is a way to undermine the reputability of a peer-to-peer network by creating and operating several fake identities with a single node. In crypto, a Sybil attack would be able to undermine a blockchain’s security and validity, as one individual would be able to vote using however many identities they were able to create, upload forged blocks, or create alternate transaction histories and attest their validity using the compromised identities.
The founder of Hashcash, the PoW system used in Bitcoin mining and CEO of Blockstream, Adam Back, explained that the cost of finding blocks in Bitcoin and the miners’ inherent anonymity rendered Sybil’s attack without advantage, as using a different identity does neither negate the cost nor enhance the anonymity already present. In this way, Bitcoin solves game theory’s Byzantine Generals Problem through its objective, immutable, and trustless rules.
Cardano and Ethereum 2.0 employ proof-of-stake in which validators stake their own crypto to be allowed to validate new blocks of transactions. Thus, the more crypto a user has to stake, the more validator nodes they can control. If one individual or group manages to control enough nodes this way, they can dictate the rules of the network and undermine its security and decentralization. Thus, many Bitcoin purists do not consider Ethereum and Cardano to be truly decentralized.
When asked whether a hybridized model combining PoW with PoS would work best, Back replied, “No. A hybrid makes no sense.”
However, not all responses agreed with Back, however. Notably, Marshall Hayner, founder and CEO of payment processing platform, Metallicus, asked why none of the top 20 Proof-of-Stake blockchains, which includes Cardano and Ethereum, have forked yet if they were indeed Sybil attacks as Adam Back claimed.
Despite Adam Back’s critique, proof-of-stake is undoubtedly popular, as more than 260 cryptocurrencies, including ETH 2.0, employ a PoS consensus mechanism.
