Bitcoin security inheritance
The security of the Botanix EVM depends on that of Bitcoin, particularly the security features provided by its Proof of Work (PoW) system. If Bitcoin’s security were to be compromised, it would also have a negative impact on the security of the Botanix EVM. More specifically, three risks in any Proof of Stake system are mitigated by leveraging Bitcoin:
Decentralization
Finality
Randomized Validator Selection
1. Decentralization
The security of a proof of stake (PoS) system is closely tied to its initial coin distribution and it's (de)centralization trend over time. More specifically:
When a new Proof of Stake launches, it needs to distribute the initial coins in a fair and decentralized way
Over time the consensus should ensure that the coins become more and more decentralized.
The initial distribution
Various methods, including airdrops, can be designed to ensure the initial coins are distributed with maximal fairness. Nevertheless, among all the distinct cryptocurrencies, Bitcoin stands out for having achieved the most impartial initial distribution. This factor has played a crucial role in its decentralization. During Bitcoin's inception, very few anticipated its enduring survival and remarkable value growth. It was primarily regarded as a novel collectible and an enjoyable experiment, which ultimately resulted in a substantial loss of many initial bitcoins over time.
The decentralization trend over time
Proof of Stake (PoS) algorithms, which are closed systems, often exhibit a tendency towards centralization over time. This is primarily attributed to the way PoS functions. In a PoS network, validators are chosen to create new blocks and validate transactions based on the amount of cryptocurrency they hold and are willing to "stake" as collateral. As the system progresses, validators with larger stakes will accumulate more rewards, and eventually gain a bigger and bigger share of the total supply.
Over time, this dynamic can lead to an accumulation of wealth and influence among a small subset of participants with significant stakes. As their stake grows, their influence over the network's decisions and operations increases, potentially concentrating power and control.
In contrast, Proof of Work (PoW) consensus mechanisms, like Bitcoin, have a decentralizing effect due to being a leaking system (in comparison to a closed PoS). PoW requires miners to use a significant amount of computational power. This process demands substantial energy expenditure and specialized hardware, which ensures that "money" is expended into the real world (hence a "leaking system"). this makes it less vulnerable to concentration over time.
While PoS algorithms can lead to centralization in closed systems due to the accumulation of stake, PoW's energy-intensive requirements contribute to a more decentralized distribution.
The Botanix EVM inherits Bitcoin's decentralization
The Botanix EVM inherits both the initial fair launch of Bitcoin and the general decentralization trend of Bitcoin. While the argument can be made that the Botanix EVM as a Proof of Stake has a centralizing trend, this will always be trumped by the overall decentralization trend of Bitcoin's Proof of Work.
2. Finality
See more in the section Finality to see how the Botanix EVM leverages Bitcoin's Proof of Work to inherit Bitcoin's finality and thereby solves of the biggest problems in any Proof of Stake blockchain.
3. Randomized Validator Selection
In a proof of stake (PoS) system, validators are typically selected to create new blocks in a randomized manner, with the probability of selection being proportional to the amount of stake that the validator holds. This randomization process is intended to ensure that the system is fair and decentralized, as it allows anyone with a stake in the network to have a chance of being selected as a validator. Randomization is however a difficult problem to solve and the randomization process could be manipulated or gamed in some way, either through collusion or by an individual or organization with a large stake trying to increase their chances of being selected as a validator. Proof of Work solves this by spending energy and solving the difficulty problem. The process of finding a hash is essentially a random one, as miners must try different combinations of inputs (i.e. ”nonces”) until they find a solution that meets the required criteria. The miner solving the current block in Bitcoin’s Proof of Work first is a verifiable random event. A miner finding the solution does have the opportunity to withhold its result and yielding the block reward. Since the benefit (the Bitcoin block reward) of withholding a block is negligible to the edge the miner gains in Orchestrator selection, the Bitcoin block hash production is verifiable random for the purpose of Orchestrator selection. The Botanix EVM leverages the randomization from Bitcoin’s Proof of Work to ensure a fair Orchestrator selection.
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