On September 15, 2022, Ethereum officially shifted from the original PoW mechanism (with foundation pre-mining) to PoS, and the crypto field was full of people, and some voices even said that this was "A historic step on the right path for the greatest financial innovation of mankind", which seems to mark the end of PoW's historical mission.

For a long time, some people have levelled down the comparison of PoW and PoS to a simple difference in the "Consensus mechanism" of the blockchain, and only discussed technical issues such as the security of the ledger, thus misleading everyone into thinking that PoW is an unnecessary and dispensable energy waste. This is obviously avoiding the crucial point, deliberately confusing the public. In fact, the consensus mechanism of the chain and the double-spend security of the ledger are only one aspect of the problem, and it is not the whole thing at all, nor is it the most important part.

What matters is the Money！

Ethereum's goals have changed several times due to market changes, from the world computer, the never-ending DAPP, to the token issuer, the world financial settlement layer, the story of Ethereum has been changing, and recently became an "Ultra Sound Money". It is worth noting that the original Ethereum design explicitly excluded ETH as a money: it was only used as "Gas" (gasoline) to drive the energy of Ethereum, the world's largest machine. But that's changed now, and the documentation for Ethereum.org websites and projects has also been changed. In the author's opinion, the initial vision of the world computer (programmable blockchain platform) is the most suitable story for Ethereum, which is an achievable goal and creates its due value. The problem is that the "World computer" can meet a much smaller market than Bitcoin's "World currency", because there are not so many businesses that need to bear the huge cost of decentralization, and the financial needs derived from the cryptocurrencies are the ones that need to be decentralized the most and be affordable for the cost of decentralization, so the story slowly turns to "ETH is Money".

The achievement of EIP-1559 to PoS Merge gives ETH the opportunity to reduce its circulation and thus become a fashionable new species in the mouths of Ethereum's avid proponents: Ultra Sound Money. This is entirely a conjecture, because supply is only one of dozens of indicators (monetary theory) for assessing the soundness of money. Ethereum's other problems (pre-mining ICO, continuous changes in vision, complex underlying protocols, secondary project syndrome, instability of monetary policy, centralized management, government sanction risk, etc.) are doomed to fail to assume the functions of future money, the most serious of which is the PoS mechanism. This article will discuss in eight aspects why PoW is the basis of future currencies, and PoS is not.

1) Collectibles Money Theory

Humanity's love of collectibles has accompanied the entire history of civilization, even in the prehistoric period when we were apes on a large scale. Animal teeth, shells, flint, jade, bronze, silver, gold, antiques, costumes, works of art, etc. have become valuable objects in different civilizations and different eras, and have been collected by everyone. Collectibles were actually a low-velocity-in-circulation currency in primitive societies or special periods, involving only a small number of high-value transactions; Correspondingly, metal currencies circulate more quickly and can assist in a large number of low-value transactions.

From the article "The Origins of Money" by Nick Szabo, the father of smart contracts, it is known that for a particular item to be selected as a valuable collectible, it must have the following attributes:

• Safer and less susceptible to accidental losses and theft. For most of history, this property meant that it could be carried around and easy to hide;
• Its value attributes are more difficult to forge. An important subset of this attribute is the extremely extravagant, almost unforgeable products that are considered extremely valuable;
• It is easier to estimate its actual value by simply observing or measuring it. That is, simple observation can lead to more reliable conclusions, and it is less laborious.

To produce an object just because it is extravagant seems very wasteful. However, these extravagant objects that cannot be easily forged would be continuously added value through the transfer of valuable wealth as the medium. Whenever it makes a transaction possible, or from extremely expensive to affordable, a portion of the cost is recouped. Its manufacturing costs are completely wasteful at first, but will continue to amortize with the transactions. The monetary value of metals is based on this principle. The same applies to collectibles, and the rarer the less likely it is to manufacture, hence the more valuable it is. That is to say, the value they create in the process of continuous circulation and change of hands is much higher than the "first manufacturing cost" of these collectibles. The same is true for products of human labor (such as works of art) that can be shown to contain skilled and unique works of art.

Further, collectibles are by no means just a beautiful ornament. It must have several major functional attributes, such as portability, easy hiding, and condensation of extravagant expenses that cannot be faked. Moreover, this extravagant attribute is something that the recipient can verify (the verification technique must be simple enough) – they will use the same technique that many collectors still use today.

Human desire to collect can be called the "collecting instinct". Searching for rare materials (such as shells and teeth) and making collectibles took up considerable time for ancient humans, just as many modern people have taken these activities as a habit and put a lot of effort into. The result of this search and knocking on the back for our ancestors was to give the first reliable representation of values that were very different from practicality, and the precursors of our currencies today.

PoW is expensive, but it's not a waste. Judging from the fact that something that must be labored and time-consuming to be made as a collectible, an unforgeable, easily recognizable workload is a necessary condition for an object to be able to act as a medium of exchange— that is, money.

2) Commodity Money Theory

In the modern world, producing “Money” and producing “Commodity” are two things that are fundamentally different.

But we go back to the time when precious metals such as gold, silver or copper were used as money, even in ancient times when salt, sheep, and shells were used as a medium of exchange, when money was not special, but just an ordinary commodity with its own value, when "production money" and "production commodity" were the same thing: both costs were incurred, and the fierce competition for open access to markets for which anyone could participate would put "the price of money" or "the profit from the production of money." Always limited to levels that are indistinguishable from the production of other commodities.

The situation changed after entering the industrial revolution, and the increasingly large and rapid economic development began to slowly make precious metals and other physical commodity money unable to meet the needs of people's daily payments and long-distance frequent trade due to their physical properties.

Credit money solves the defects of commodity money, but it still has its own flaws: the shrewd money bank owner or banker finds that people do not exchange all their gold back at the same time, and if they secretly issue more exchange notes, people will not find it, and the shameless bankers call these excess credit money "a gift to themselves".

From this point on, "production money" (that is, the production of paper pieces) became a costless thing, and even no need to print paper pieces at all, just need to use your fingers to modify an entry in the database software, you can quietly create a huge amount of wealth out of nothing. The competition of bank commercial expansion has made this credit over-issuance increasingly bold, the entire credit system is gradually fragile, and eventually some subtle events caused by "runs" will lead to the credit collapse of the entire banking system, and the financial crisis in the modern sense has since recurred and become more and more unmanageable.

Due to the endogenous instability of credit money, the power to issue credit money was later nationalized and the exchange relationship with any physical goods was completely severed. In this case, people for decades seem to have fully accepted that money can only be credit and should not be what it is: commodities.

PoW has enabled the information world to produce "cryptographic commodity" that have the same real value as physical commodities. Credit money is to solve the defects of commodity money, in the era of crypto commodity money, the defects of physical money (bulky inconvenience, difficulty in dividing and combining, high identification cost, easy to wear, different colors, etc.) no longer exist, so we no longer need credit money or fiat paper money this unnecessary form. The whole currency should have returned to the era of commodity money.

As can be seen from the recent regulatory actions and disclosures of the US government, PoS is more likely to be defined as a security. Because the blockchain with the PoS mechanism must need the initial distribution of tokens to start, then the individuals and institutions who get the Stakes for the first time are the issuers of this security. PoW does not have this "first release" problem, which consumes energy and is produced in an open and competitive way that is essentially the same as the production of any other commodities.

3) Energy Money Theory

The history of human scientific and technological civilization is the history of the development of energy utilization efficiency.

In 1921, the American industrialist Henry Ford proposed the creation of an "energy currency" as the basis for a new monetary system. This currency bears striking resemblance to the peer-to-peer electronic money system outlined in Satoshi Nakamoto's 2008 Bitcoin white paper. That year, the New York Tribune published an article outlining Ford's vision of replacing gold with an energy currency that he believed could break the banking elite's grip on global wealth and end the war. He intended to do this by building "the world's largest power plant" and creating a new monetary system based on "units of electricity."

Ford told reporters: "Under the energy monetary system, the standard is the amount of energy produced per unit of time, which is equivalent to one dollar. This is just an example of thinking and counting, with terminology that is different from what we are used to international banking groups set for us, so we don't think there are other criteria that are desirable. He added: "When the government is willing to listen to the value of the currency, the specific details about the value of the currency will be resolved."

Under Ford's theory of energy money, there is no difference between "the energy itself that is available" and "proof that the energy has been consumed" is no different for money, the former is oil, coal, and the latter is the electronic money produced by the PoW mechanism like Bitcoin.

From the most primitive wood, to coal, to oil, then to hydropower, wind power, solar power, and finally nuclear fission and nuclear fusion, the efficiency of human energy use has been improving, and the energy acquisition method and energy utilization efficiency represent the productivity and technological level of this civilization. Taking human transport as an example, from human-powered transport, to animal pulling cars, to steam locomotives that burn coal, then to internal combustion engines, and finally to electric motors, the way everything uses energy is becoming more direct, reducing unnecessary intermediate processes. Money is no exception: the best currency would be the one that is produced directly by consuming energy and eliminating all other intermediate processes.

There's a common mistake here that PoS is a more "green and economical" way to produce money, but the opposite is true, and PoW is the most efficient. PoS just confuses costs, but it's impossible to eliminate them.

The cost of electricity is only a part, not a whole, but the energy used directly by the miner is the most efficient.

When people say "Bitcoin wastes energy", they mean that electricity is needed to drive mining equipment that produces Bitcoin blocks; Ironically, on the one hand, this part of the energy is clearly not all the energy used to run the Bitcoin network, but only a part; On the other hand, this part is the part that is most directly used to protect the blockchain, so it is the least wasteful. To fully measure Bitcoin's carbon footprint, we also have to consider the cost of hardware (the cost of manufacturing and scrapping) as well as the cost of normal commercial operations (decorating a decent office and flying around to attend the Bitcoin Conference). The latter two types of costs are more obscure and more difficult to estimate. But it's just as important to understand what impact the entire system will have.

The more a cryptographic currency spends its security budget directly on electricity, the more secure it becomes; The more money you spend on business operations, the less secure it becomes. Proof of stake does not (and cannot) eliminate miners' expenses, but simply converts the portion of the PoW system's expenditure on electricity into capital expenditure. Locking in the externalities of capital, compared to the externalities of electricity consumption, is a complex and delicate issue – but to be unfortunate, proponents of PoS systems tend to pretend that electricity is the only price to pay.) It is clear that PoW is the most efficient and straightforward way to use energy, and the PoS mechanism is full of hidden and difficult to assess the cost of social activities. Eventually, all forms of PoS become an indirect, inefficient, and lame imitation of PoW production.

4) Clear Cost Theory

A successful currency needs to be the most widely circulated in the world. Different regions, environments, technological levels, cultural practices, social systems, etc. all require a general consensus on the value of this currency. The free competition of money will make it possible to choose the currency that can most easily and directly assess its value as a medium of exchange, because both sides of the transaction are willing to accept it. The most direct manifestation of this value is the cost of production, and preferably the direct cost under the price of energy. Because only energy is the way in which people from all different backgrounds in the world can objectively observe and directly understand the cost of spending.

A sound currency that can be used globally on a large scale on a large scale must require a production cost that can be most objectively and clearly observed and can be easily and directly observed as a value support. Otherwise, how is the "hardness" of hard currency reflected? Otherwise, how to evaluate the "force" of purchasing power?

The cost of electricity for PoS is only a very small fraction, and some people see this low energy consumption and high currency premium ($0.100 in production but $100 in nominal value) as the advantages of green savings, so on what grounds do we convince people outside the market that the $99.9 "monetary premium" is objective, just, and necessary?

No-cost paper money or credit money has value for only two reasons:

• First, valuable physical goods are not convenient to carry transactions and payments, and some organizations use paper money as exchange vouchers for goods through goodwill, such as silver bills and spot warehouse receipts and checks.
• The second is that if the notes are not pegged to any physical goods, then someone must force you to agree that the notes are valuable. Once no one is forced, the value of these banknotes will go to zero.

No-cost, unhooked paper money cannot survive in a market of free choice that does not contain violent coercion. For the judgment of objective value, you can temporarily deceive some people in the local area, but you cannot deceive everyone forever.

The kind of thing that everyone "agrees" on a piece of waste paper as valuable currency has never happened in history and will never happen in the future. To sum up, money is a commodity, not an agreement. Commodities will certainly be subject to competition in the market and the cost curve, and the market will not accept a commodity that can be manufactured in large quantities at any time at almost no cost, but the "par value" is much higher than the actual cost for a long time, and maintains the price difference.

In the free market, the precondition for an item capable of performing the function of large-scale money is that the cost of production (i.e., the value) of the good can be effectively observed in a simple and universally feasible way, at least in a more objective and unambiguous way of costing than other goods, that is subjective, short-term, artistic, unclear, time-changing, and lack of a unified way of calculating, or the "market consensus value" that is completely based on mood, cannot be relied on as the value of money. Moreover, the production of this kind of money should be completely open, and all mankind can have the opportunity to participate, and the cost of production can be assessed separately and objectively, so that the value consensus of all mankind on this currency can be formed. The cost of PoW is the most direct and effective observation of the mode of production, the earth can not find more than the direct consumption of energy (electricity) this way can be the most simple and effective direct timely observation of cost of production mode, there is no one, so PoW is the basis of future money. We will not choose an item whose production cost is unknown and unclear, as the largest circulation in the economic world, and everyone can accept hard money.

Therefore, PoS cannot be used as a mode of production of money, because the observable cost of new money issued by PoS is basically zero, which means that the new person who gets the currency is diluting and cannibalizing the wealth of the rest of the people without cost, and everyone is not stupid. In other cases of equal condition, one must choose tokens (such as PoW coins) with objective production costs that match their prices as money. On the other hand, buying a PoS coin to pledge is actually no cost, because the pledge investment does not have any capital loss (the risk of the value fluctuation of the token has been offset by its appreciation profit), which is equivalent to buying a machine and consuming electrical energy to dig gold, and buying gold to automatically produce new gold at home. In addition, the fact that after a lot of trials and failures to maintain the success of an unsecured pure algorithmic stable coin, also illustrates the principle that tokens issued at no cost cannot maintain their currency premium for long in the free market.

PoW is the best way to produce this objective cost, there is no one.

5) Judgement Costs Theory

Before diving into the theory, think about it, why is there a money? Why don't scarce items like diamonds become money? Would oil be a good money? In the transaction behavior, both parties to the transaction inevitably have to judge the cost of the goods or services provided by the counterparty, and the transaction cost paid in the process of judging the quality of the goods is called "quality fee".

The size and frequency of transactions are, of course, subject to transaction costs as a whole ("information costs", "contracting costs", "quality fees"), but the problem becomes clearer as long as we focus on the following scenarios:

When people have decided to trade with each other, why would it be better to have some sort of commodity that is acceptable to both parties? What conditions must such a commodity have (or why is one commodity more qualified than another)?

You will soon realize that this is basically irrelevant to "contracting fees" and that the adoption of a certain commodity ("money") that they both do not change the contracting fee; Nor is it so closely related to the "information cost", because after the formation of a large-scale market, the information cost (the cost of discovering the market price) of money as a commodity may not be much different from other commodities.

Therefore, the key lies in the "cost of judging the quality". That is, if both parties barter, both sides must pay a lot of costs to determine the quality of what the opponent gives, sometimes this quality test is expendable (such as testing the quality of oil), but there may be a certain commodity, its quality changes very little, it is easy to test its quality, then you can easily trade this kind of thing, at least one of the parties do not have to pay so much for the quality of the cost. And because the cost of judging the quality of different commodities is various, the advantages of being suitable for use as money are also differed.

There have been countless kinds of money in human history: gold, silver, stones, even cigarettes, eggs; But all these money have clear characteristics in the corresponding society: under certain scientific and technological conditions, their quality cost is the lowest, gold and silver only have the dimension of purity, and the inspection cost is very low like melting to check; Cigarettes produced in the United States are standardized products, so they were used as civilian currency for a period of time in post-war Germany.

Therefore, judging the strength of the quality of the currency is actually tantamount to determining the cost of the quality of the product. The lower the cost of the pledge, the more suitable it is for use as money. This is the insight of Alchian, the master of property economics. For money, the focus is not on quality (90% of gold and 95% of gold differ only in market price), but on the cost of judging (gold costs less than diamonds). Therefore, it is not the level of security that determines which distributed ledger is suitable for carrying the value, but the cost of determining the security of the ledger determines the quality of their money.

In PoW, the work of determining the security of the ledger is extremely simple, verifying the block hash and viewing the difficulty requirements of the whole network; The difficulty requirement, while not a direct reflection of how difficult it is to rewrite the ledger, yet directly shows how many hash computations are needed.

And in PoS, at least to the best of my knowledge, there is no way to verify the security of the ledger so simply:

• In a non-pledge PoS system, the verification of the legitimacy of the block is based on the state data, because only the state data can tell you how much money is in which address at which moment and whether it can be blocked, but each time the block will have more than a part of the state data; In the worst case, this difficulty can make PoS completely devoid of anti-witch effect (an attacker can attack a node with a highly previous fork chain and not have to pay any price);
• In a staking PoS system, the blocking process is done by the verifier through "initiation-pre-vote(signature)", and there must be a step in verifying the security of the ledger is to examine the verifier's signature. Moreover, whether the signature is aggregated or not, the amount of computation required for verification is difficult to reduce.

That is to say, whether it is judging the production cost of money or judging the security of the ledger, PoS is much less efficient and more complex than PoW.

Money is money because it needs to change hands countless times as a medium of exchange. The level of the quality judgment fee will continue to be enlarged with the long-term accumulation of the transaction circulation process, which will eventually lead to its circulation cost being much higher than the production cost.

We can conclude that PoW directly consumes energy in the first step of the production process, which is actually a great saving of the quality cost that will be repeated in the subsequent circulation process, making the currency produced by PoW actually more energy-efficient, so that it can be chosen by everyone.

6) Open Systems Theory

The PoS consensus mechanism ensures security by forfeiting the perpetrator's tokens. So, on a technical level, how does the forfeiture mechanism work? Do we have to build a list of all the validators before we can confiscate something? That's right, that's it. To be a validator in Ethereum's PoS consensus mechanism, you first need to move ETH to a special "staking" address. This is not only for the purpose of applying the forfeiture mechanism, but also for voting, because checkpoint blocks need to get a 2/3 majority.

Maintaining such a list of all validators around the clock can have some interesting implications. Is it difficult to join the validators team? Can I leave at any time? Can validators vote on the status of other validators? This leads us to the principle behind PoS: it is a conditionaly accessible system. The first step in becoming a validator is to deposit some ETH into a special staking address. How much ETH do I need? Minimum 32 ETH, approximately $50,000 at the current price. To add to the background, decent Bitcoin mining equipment is generally a few thousand dollars a set, if you are a home miner, you can start with a S9, a few hundred dollars. To be fair, there are technical reasons for the high threshold for ETH PoS consensus, and a higher threshold means fewer validators participating, which can reduce bandwidth requirements.

So, the barrier to entry is high, but as long as anyone has 32 ETH, could they participate if they want to? Not really. If a large number of validators leave or enter at the same time, there is a security risk. For example, if the vast majority of validators in the network leave at the same time, they can spend a sum of money repeatedly on a forked chain (which they did not quit), and they will not be punished on either side. To mitigate this risk, both entering and leaving PoS consensus have built-in queuing mechanisms (throuthput limits). In addition, although validators can now post an "exit" transaction and stop participating in PoS consensus, the code to actually withdraw funds is not yet completed.

Finally, there is the economic incentive to approve new validators to join. Let's say you're a shareholder in a large company, and the company is in a stable business and will give you dividends every quarter. Would you be willing to issue additional shares for free? Of course not, because it would reduce the dividends for all shareholders now. A similar incentive structure exists in PoS. Because each new witness joining dilutes the proceeds of all present witnesses. Theoretically, witnesses can directly review all transactions that add new witnesses, but as author thinks that in reality, such an explicit approach will not work. This will be very obvious, and it will destroy Ethereum's "decentralized" image in short. (and possibly leads to a price crash). The author thinks people will use a more ingenious approach. For example, using "security" or "efficiency" as an excuse to slowly change the staking rules makes the threshold for participation in PoS higher and higher. Any policy that sacrifices new witnesses in favor of existing ones will receive economic support, whether or not they are exposed on the table. Now, we can see why PoS has become an oligarchy.

Bitcoin's PoW mining method is not just a consensus protocol, but also raises the issuance cost by opening up the market competition of money production, so as to avoid anyone from being in a position of sitting on its own.

The "money makes money" consensus protocols like PoS and so on are essentially not open accessed systems: the distribution of new money in the future depends on who owns more money now, and the current distribution depends on earlier distribution, which is essentially a closed power distribution system, not an open system.

At present, only PoW can achieve such an open system: the subsequent production of new money can be completely independent of the current distribution status of money. It can be seen that the energy consumed in the mining process is not wasted arbitrarily or unnecessarily, but rather a necessary guarantee that must exist—a physical hard constraint that ensures that the entire system is always fair and effective by the laws of thermodynamics.

The most important reason why the US dollar can become a global currency is that it can be freely used and circulated without thresholds and conditions. We cannot imagine a world currency controlled by the richest people to succeed.

7) Intergenerational Distribution Theory

Saifedean Ammous, author of The Bitcoin Standard, argues that "In theory, the ideal money supply should be locked down so that no one can produce more money." In such a society, the only legal way to make money is to create something of value for others and then exchange it with them.” This is wrong and makes up a plausible justification for the existing flaws in the total amount cap on Bitcoin. The PoS money production mechanism faces the same flaws as fixed distribution: distributing new money proportionally to holders of old money is just playing a numbers game and nothing has changed. For currencies, what matters is your share of the total, not the units shown in your account.

Imagine a more extreme situation: I issue a fixed ceiling of 1 million NiceCoin, all into my own account that controls the private key, never increase, the supply is locked, I am also very willing to go around the world to buy a variety of products and services generously, promised to spend at least 100 NiceCoin every day, then will everyone in the world accept NiceCoin as the perfect currency happily? If everyone is reluctant to recognize NiceCoin, why? I think everyone knows the answer: unfair. I didn't do anything, but I was able to enjoy the provision of people all over the world. Therefore, the supply of money must not be locked, but must be moderately "sustainable production", so that others and future generations who later join the distribution of money can hedge to eliminate this "exploitative life" by participating in money production, through a certain part of the professional people to participate in the production of new money, while most other people are engaged in other industries, through the rate of profit competition to balance out this exploitative effect.

If this is not done, these latecomers will simply "start another stove" and if they are prevented by power, they will simply "lift the table and start over". Any monetary system with a fixed ceiling would face the fatal "first-time distribution paradox." But this "sustainable production of money" is definitely not a reason to endorse fiat and the central banking system. Money production needs to be carried out in market competition, and cannot be managed by a certain institution, otherwise it will still cause a person to "enjoy its success", and it is much more serious than the fixed ceiling of the "eternal enjoyment", after all, the fixed ceiling of the currency is spent less than one, and the central bank can endlessly continue to issue the same proportion of currency to a certain part of the people first.

Only a continuous PoW mining mechanism (such as Grin's constant block reward method) can guarantee the fairness of this intergenerational distribution, and the PoW and PoS mechanisms with fixed aggregate caps are essentially plutocratic exploitation systems.

8) Expected Stability Theory

The rapid collapse of the Luna/UST algorithm stable coin to zero, unfortunately, is not a reliable solution for currencies neither.

An even more important reason why the energy-consuming PoW goes to produce money, rather than PoS or "algorithm stability" is more suitable as money: PoW has a historical total mining cost as a reference to the total value of the current coins, which is a "real value level" that is not transferred by anyone's "confidence" and any subjective ideas, and having such a hard value reference will help the currency not to "suddenly rise to the moon" and will not "suddenly down to zero tomorrow", because the market will consider, If the current token/coin price is lower than the historical average mining cost, the coin price is "undervalued", and some people in the market will buy it. Of course, this means that the price of the coin completely follows the cost, most of the time it is demand that determines the cost, but it means that we have a unified, fixed, objective, and hard value reference in PoW, and this objective value reference is conducive to maintaining price stability.

The cost-free issuance method such as "algorithm generation" or PoS output, because it is impossible to find a hard value reference that everyone can objectively agree on, and its price depends purely on the market game under the "complete subjective evaluation" (that is, market confidence determines everything), which will bring a problem: everyone does not know what price is "reasonable", or that any price is "reasonable", which will bring more serious price fluctuations, which is not conducive to the realization of its monetary function. "Algorithmic stability" is an endogenous instability system without reference, and its operating mechanism is similar to a kind of performance of the left foot stepping on the right foot in mid-air, and whether the actor remains stable in the air or falls suddenly, there is no "value rope" to rely on, but completely depends on the audience's "opinion". Such a "confidence system" is bound to eventually collapse in the long run due to some accidents that lead to the "downward spiral of prices".

The PoS coin/token production mechanism lacks any "anchor" of objectively observable value, which will lead to very serious feedback on price fluctuations, some unexpected events lead to temporary price declines, price declines lead to a lack of confidence held by some people, and lower confidence in turn leads to lower prices, which in turn lead to a continuous jump back and forth between confidence and price.

The production cost of PoW will be more effective in stabilizing the confidence of the holder from the objective expectation. Moreover, it would be better if the supply could be dynamically scaled according to market demand under the PoW mechanism.

Written on September 15, 2022 on Ethereum PoS merge day. Time will tell.