Proof-of-Work is a Consensus Mechanism, Not a Security Mechanism

Proof-of-Work (PoW) is a consensus mechanism. It has nothing to do with security.

Bitcoin is often explained as a system that uses PoW for security. This is not true. The security of Bitcoin is provided by digital signatures, hash functions, and other computational checks such as the check that prevents double spends.

Not only is PoW not required for security, it actually introduces a security vulnerability through the 51% attack. A 51% attack is when a single entity controls more than half of the mining power. This entity can then rewrite the blockchain, double spend, and otherwise abuse the system.

EarthBucks recognizes that PoW is a consensus mechanism, not a security mechanism. Increasing the PoW does not increase the security in any way. The security, like Bitcoin, is provided through the use of digital signatures, hash functions, and other computational checks such as the check that prevents double spends.

EarthBucks has an additional layer of security through the use of the Terms of Service (ToS). To cypherpunks, the use of a ToS to provide security would sound like a hilarious impossibility, because they are used to anonymous systems, or at least systems that pretend to be anonymous. However, in the real world, like on nearly every app you’ve ever used, a ToS is the first layer of security. Users who comply with the ToS are able to keep using the service, and users who violate the ToS are banned. This is a simple and effective way to prevent abuse.

Bitcoin has no identity system, so there is no way to ban a user. Like Bitcoin, the EarthBucks blockchain has no notion of real-world identity. But EarthBucks is not just a blockchain. It is a also web service, and web services have users. The users of EarthBucks are subject to the ToS, and the ToS is enforced by the mine operator. This is a simple and effective way to prevent abuse.

I am launching the first mine, and I will have a ToS that places constraints on usage. In order to join the network, as a user, or a miner, or a mine, you will have to agree to the ToS. The ToS will not just place limits on each user, but on the user’s users, and so on.

Let us consider a case where a mine violates the ToS. Under extreme circumstances, the mine will be banned from the network. I will stop connecting to the mine, and I will publish a list of banned mines. The entire legitimate network will follow my lead, because they will know they will be ostracized if they do not. I do not need to control 51% of the network to do this. I only need to control one mine: my own.

Proof-of-Work (PoW) is a consensus mechanism that has nothing to do with security. The security of EarthBucks is provided through the use of digital signatures, hash functions, other computational checks such as the check that prevents double spends, and the Terms of Service (ToS).