Bitcoin Forum

These days it is the hype of pos-coins. I thought a thread is needed to show the advantages of POW over POS.
I prefer pow-coins for a number of reasons. Those are:

-POW gives everybody the opportunity to get in on a coin through mining. POS on the other hand favours early adopters. People who come late to the show have a serious disadvantage.
-For the above reason POW-coins are more widely distributed over a longer period of time.
-POW means the creation of coins is decetralized where many POS-coins are mined out within days and weeks which makes flashmining an even greater issue
-POW is time-tested
-POS means high inflation. Of course it is nice to get 100% interest on an asiacoin but that also means the coin is not scarce so its value will after the initial pumps probably decline while the high pos-interests last.

These are the main reasons i prefer POW-coins with a good reward-decrease over highly inflationary, even more experimental pos-coins as an investement.

Please stop thinking pos would be superior to pow which is not the case. POS just makes the rich ones richer while excluding people with no coins or not so much money as well as miners from accumulating the coin. POS-coins are more like exclusive circles of traders while pow is open for everybody even later in the game.

So really, i don't buy into the hype. I think anything over 2% or 3% interest a year is not a good investement even if i would be the one harvesting those interests.
Also decentralized moneycreation over a longer timeperiod is to prefer from an ethical standpoint over a flashming or ipo in the beginning and heavy whale-monopoly thereafter.

love to hear your opinion on the pow vs pos discussion.

Great post!

Is this always the case? I believe that Nxt has very low inflation.

The reasons the POS coins are so popular right now as it is the only way devs have of fighting the incoming ASIC's.  Soon the majority of coins will be X11 or some other algorithm, as there will no longer be coins spread out for the everyday miners, as the people that purchase the $10,000+ machines will be the ones owning all the coins, while the average person will be forced to turn off their scrypt miners, much like they have been forced out of the SHA-256 mining game.  

If you notice all the POS coins are hitting hard before the big ASIC's come out.  Once they are shipping, the POS coins will probably slow to a halt as another trend picks up.  

Also POS coins are very popular with the tree huggers, as there is no constant waste of huge amounts of power being drained to keep the game going.  This is the reason it was created in the first place.  The trying an idea to stay 1 step ahead of the ASIC's was just a secondary side effect.

I myself have some Gridseeds to play around with, so I won't say I am an ASIC hater, but I do know the effect scrypt going ASIC's will do in the long run, look at BTC.  Going from a widely distributed model to one where soon only big businesses will be able to make any profit from mining.  The exact thing BTC was trying to fight all along.  

As with all coins, the distribution method is always the sour grapes part.

Many proof of work coins are hyper mined in their first days and some proof of stake coins have almost their entire coin distribution owned by a small select few. Even NEM tries to fix this by having 4,000 people share the adoption of the genesis block, but really, 4,000 people is very low. Perhaps if a proof of stake coin such as Nxt instead had it's original distribution made over a million verified people it might work.

In the long run if proof of stake can work it will beat proof of work, especially the proof of work that burns energy without any other gain than security of the network. If Bitcoin were to become the de facto world currency it's calculated that several percent of humanities energy usage would be Bitcoin mining. Basically that is a disaster.

The trick is initial distribution and coin release schedule.

If something like Nxt was created where millions of people had a part in the genesis block it might actually take off.

-people late to the game can just buy PoS coins on an open exchange.

-PoW coins can be flashmined, and large mining farms continue to get the large share of coins in the future.

-PoW can also be high-inflation during the initial stages of distribution. BTC had 100 percent inflation its first year.

-Not all PoS coins have high inflation (i.e. Blackcoin), and coins based on NVCS (Novacoin, Hobonickels) will actually lower the interest rate as more coins are staked. High interest also protects early adopters against adverse price movements and rewards the risk they take vs zombie coins like Worldcoin where plenty of bagholders can only pray the price goes up.

-high interest in PoS coins also results in volatility, which is desirable by traders and investors. Most of the altcoins are being used for speculation. If you really want to make real world purchases, use bitcoin.

-this is a free-market and a zero-sum game. Quit thinking about fairness, capitalism doesn't work that way. Those that put more into it, get more out of it. It works that way with PoW, PoS and Pos/PoW hybrids.

I disagree with several of balu2's points:
I think just the oppposite - Those with the biggest and best mining equipment (ASICS, gridseed, graphics cards, or whatever) get a greater percentage of POW coins.

I agree here.

Also, as said by others - POW uses up a lot of energy.  POS is superior in this respect. 
The other argument I've heard is that POS usually means more centralization.  POW tends to be very decentralized.  I'm not sure that is necessarily a bad thing.

I'm cool with BTC POW as it earned its place, but other POW clones are pretty much trying to do the same thing, we'd be ended up with many different flavors of ASIC. One unavoidable nature of POW is it leads to mining centralization pool, whereas in POS, users have to put their coins as the stake thereby having to mine on their own.

In POS, the more spread of coins, the better. IPO POS coins such as next, or coins that transform to 100% POS too soon such as dark, is bad, as it screams the sense of unfairness and centralization.

If POS is that good then Bitcoin will eventually switch to POS. But my main concern is security of POS, I'm not sure how well it was tested with real life attacks.

People like PoS because it's easier to corner the current supply when there are very few coins added daily. This makes it easier after buying low to run up the price and dump for profit. How secure are PoS coins that offer near zero incentive to stake? You don't need 51% of coins in existence, only 51% (approx., some argue much, much less) currently staked..

Good points

-POW gives everybody the opportunity to get in on a coin through mining. POS on the other hand favours early adopters. People who come late to the show have a serious disadvantage.
Being able to mine efficently today has high costs. With PoW you pay the hardware to get the coins, with PoS you directly pay for the coins.

-For the above reason POW-coins are more widely distributed over a longer period of time.
Distribution is proportional to the age of the coin and other factors, it has anything to do with PoS or PoW, Bitcoin cannot be considered well distributed at all, it's more distributed then new altcoins only because it's older.

-POW means the creation of coins is decetralized where many POS-coins are mined out within days and weeks which makes flashmining an even greater issue
Consider a proof of stake 100% premined and distributed via IPO when launched. Now take all the cash of the IPO and litterally burn it. Distribution fairness is now similar to a PoW. Smart no?

-POW is time-tested
PoS will be time tested too in one year or two.

-POS means high inflation. Of course it is nice to get 100% interest on an asiacoin but that also means the coin is not scarce so its value will after the initial pumps probably decline while the high pos-interests last.
NXT has 0% against 11% yearly inflation of Bitcoin

i like pow coz i have a farming rig << well that is a better point

edit: anyway both  are in experimental stage ea has their own advantages and disadvantages and ea have their own community / fan
like not all people have hash power or the ability to buy equipment for mining and cpu is almost obsolete to use cept for some coins that is only intended for cpu mining.

Wrong. Many who are daytrading don't even have the hardware to mine a single bit, what they do is gamble with the prices and chances to gai more BTC than they started out with by investing in new altcoins that they think may or may not take off. These are the people that lose a lot of money on a day to day basis to people who have the ability to mine with a lot of hardware and dump the coins that most of the time don't make it anywhere and investors are stuck holding a lot of dead coins.

POS is the salvation of POW
POW is just a sitting duck even with BTC
look at ripple progresssion,step by step it will take over BTC if you not even realized that the wasting of power resources is a very big trouble of POW,i don`t like ripple actually due to its centralize and this only bring to 1 conclution....> 100% premined POS will take over both BTC and ripple..the only question is: what is the best and fair distribution to start with?

POW<POS if you care about our planet not beign destroyed becouse of digital money and selfishness.

Excellent discussion, that has answered many questions I've had for a while now.  It is nice to see all your perspectives on the issue.  I''m thinking a POW/POS method is a good idea and just needs to be tweaked in order to find balance.  Nothing is going to be perfect but a coin that is prepared for the worst is a good goal I'd say.

The only reason why someone prefers POW is that he bought expensive mining hardware and his ROI is dropping to nowhere.

Nowadays, to be successfull in PoW mining you have to be priviliged in several ways:

- have access to 'free' (usually means stolen) energy
- live in a country with low-taxed offshore deliveries or got ASIC manufacturer in your neighbourhood
- win in 'pre-order' gambling game

To get in PoS minting you just have to purchase BTC. Of course you have to deal with market swings, but nobody says that crypto-business is risk-free.
Early adopters of PoS cryptos had their chance to dump their coins when price went up for the first period of time, or patiently wait and risk. It's the same as dealing with any other algo new released currencies.

So IMO this is the point:

I would like to hear arguments whether POS is more/less safe than POW.

i have to thank you for the constructive responses. Was good to get a few different perspectives on things. I think i have learned some things here.

I totally agree with this, the only problem the current PoW design is that as soon as it is profitable enough GPU's are no longer valid and ASICS take over. While that is good to secure the network, the mining gets more centralized and that is no good.

There is however one solution to this, multi-algo PoW - such as Myriadcoin.

It makes the ASIC securing of the network possible (for 1-3 algorithms) while small-time miners such as myself can mine using the other algos and secure the network that way (and get mah coins)

I just wish more people would see this as the breakthrough it is instead of claiming that PoS is the solution.. because it is definitely not..

darkcoin is not pos. i think you maybe thinking of xc which is a x-11 pow/pos hybrid that had something like a 3 week 5 million coin instamine.

That may be true for compute-bound PoWs but not for memory-bound PoWs
that need random access to more memory than can be fit on an ASIC.

Thus an ASIC for such a PoW needs to be equipped with (more expensive) memory modules,
and only needs to be optimized to saturate the memory latency, which also limits power-use.

Such an ASIC would also not have much of a performance advantage over a multi-core cpu
running the PoW, since both are limited by memory latency.

The OP here is right. Sorry to resurrect this thread but I have been grappling with this for quite some time. what brought me to post, and what angered me the most, was PIVX and the multitude of early adopters who, got in early, took a price rise, and now enjoying staking benefits. Let me tell you why I am annoyed. I will say that I am an investor of sorts; I have a nice array of GPUs that mine for me daily and enjoy excellent rewards, even with the high cost of electricity in my locality.

1. Early adopters are the only winners in POS coins.

- With PIVX, the early adopters took enough coins to stake and to hit up the master nodes. So they now enjoy excellent rewards at an entry point that reduced their risk. If you open the PIVX staking calculator now, you will notice a VERY startling fact, both for investors and the future security of the coin. This was before halving; A stake equivalent of $150,000USD would earn approximately $1400USD per month in equivalent PIVX. There is no investor alive stupid enough to dump that sort of scratch into such a high risk project and earn such crappy interest.

2. If the entry gate is too hard to squeeze through and there is no incentive to stake because of the fact listed above, who will secure the network in the future when early adopters profit take?

- I have no idea who will. There is no investor alive that would agree to such a proposition. You might earn less in capital appreciation of a piece of land or property, but the backing is tied in the land and the bricks. Not a new digital currency.

3. Your coins are hostage for residual income and/or ROI.

- Says it all. Artificial price boosting by forcing coins to remain on the network, does not good investment make.The big bad wolf of downward mining pressure is always seen as a bad thing, but it is an honest account of liquidity.

4. Scream all you want, there is NOTHING AT STAKE.

- Called a fruitless argument, though there is still merit to it. In almost all capital mediums on Earth in our modern economy, there is value added to the ledger itself through other means. I build you a table, I put work into building it. The Table has inherent value. I mine a coin at a certain cost, the coin has inherent value as it was an equal exchange of real world resources. Essentially your investment into PIVX was no more than investing in a Zero Value line in a database.

Bleeding hearts, bleeding hearts; electricity is a worry? When the coin reaches a huge marketcap the electricity use becomes the most efficient and the hashing power becomes the most secure than any other system in existence today.

Bit of a flame; may cry babies get upset because they are unable to earn mining equivalent rewards because they do not want to fork out the EFFORT and MONEY to buy equipment. Instead they want rewards at no effort, which is only really achieved in hitting up and gambling on an ICO. After prices rise, the rewards become crap for new investors. Wake up to yourselves.

POW gives the value to the electric companies.
With the current setup, like BTC or LTC, some 95+% of the coin reward goes to electric companies and hardware companies.

So it favors some companies and the rest get their pockets emptied.

When I'm just starting out I thought I could mine some coins using my machine but I found out you need a specialized hardware to mine these coins,then I found these pos coins,easy to acquire instead of buying these specialized hardware and paying a big electricity cost I opted for pos coins everybody can acquire it compare to pow coins where you have to buy hardwares ..

HAHAHAHAHAHAHAHA you must be kidding.

A man payed 10000 BTC for a pizza once.

POW favored early adopters too... Even more extremely. Nothing can even compare.

pure whining to me... most NEM stakeholders dumped their stakes for peanuts and anyone with foresight could have bought them.   If a stake gets too expensive or a coin debuts with too high a price, just don't invest in it. Simple.

Yeah suggesting everyone can get in on mining is crazy, just look at bitcoin mining anyone without those preconditions you just mentioned will lose money instead of earning money. It's definitely still the privileged few that can take part in PoW, the only difference being that the privileged few are a different group under PoW than under PoS.

For me the deal breaker is the fact that PoW will waste huge resources if the marketcap of bitcoin or any other PoW coin gets in the hundreds of billions, to the point where the majority of worldwide energy consumption would soon go towards mining.


edit: only just noticed it's an old resurrected thread, though the discussion of PoW vs PoS gets more relevant by the day due to the electricity usage done on PoW

Yes, ok. And throughout the course of said coin activity, it still provided adequate rewards to secure the network and invest in it.

Yes, a man payed 10000BTC for a pizza once, fine, fair enough. However throughout the existence of the coin, it could still be mined. And at the very least, it did not require 150K to make less than 1% monthly return. The reward stayed consistent with the network difficulty.

This argument is not because early adopters made more than late ones, this argument is about providing adequate incentive for investing in a network and securing them voluntarily. Why would any idiot in their right mind decide $1400 monthly return was worth the staking of $150K. Where is the incentive and the balance in the Risk/reward there in PIVX? It's an absolute joke.

And to the people saying they needed "specialised hardware" are just ignorant to the entire game. GPUs are not specialised hardware, and I have made a lot more in PoW than I can possibly in investing in staking in a coin that already took a price jump. NEM, PIVX, CROWN; it's all the same shit. The reward is crap, the network needs the stakers, so only early adopters see a proper return as per their stake and risk. You can't lie about the figures. $150K can earn you a lot more with other investment vehicles. I think the PIVX devs are dreaming.

If you are not making money staking, then it is working.
This is supposed to be a payment system for the people. Not a vacuum cleaner to eat wealth from other people.

GPU bla bla bla..  As soon there is a PoW coin that gets valuable, there will be a hunt to make a chip.

Years of Monero, Groestl, Skein... Where's the chips?

This is the dumbest thing I've ever heard. So you are comparing bitcoins ASIC driven network to Altcoins with memory intensive algorithms? Oh please. I prefer PoW because I know that the distribution method and security works. I know that I can work with that coin to generate a profit based on my efforts and investment. And the resources are the deal breaker? Oh please, you are sure it isn;t because you realized you could stake a coin and make money as an early adopter without any effort? Come on now...

Privileged few - what utter garbage. The cries of someone who wants something from nothing, which is exactly what PoS is. Can you explain why I turn a profit enough to sustain myself with GPUs and 0.28kWH electricity prices?

Edit: decentralization; you need individuals to work it. If there is no reward, why bother with the risk? Ideology alone won't fuel the network. Wake up to yourself.

Also to the guy who mentioned Ripple; poor example. Ripple is a bridge currency aimed at the baking sector. It provides liquidity to low liquidity pairs, with a faster and more efficient transfer system. Show me one PoS currency, that isn't a god damn Token, that is working. It has to start out as a PoS currency, and not derive itself off the backs of PoW miners giving the ledger intrinsic value ie. ETH.

So just be because it is working for you at the moment, with your electric prices, we know it will be the same in 2 years?

i agree with all you said, and in fact there is a reason why all the pos shit coin die quickly or eventually die withoutbuy supporter, because there is no reason to buy when you have coins for free, instead with pow buyers are incentivate to buy because maybe they can't invest in mining, and they have no other way to acquire the coins, POW is always the way to go for me, and every coin that have no pow is a died coin

So now is forever?

You do realize it is just a challenge?

Fortunately its just shitcoins and won't become anything. So no, we don't see chips.

Oh yeah, Monero is a shitcoin but PIVX isn't... LOL

Groestl and Skein are algorithms, I said Monero but means to say Cryptonite. Do you know why no ASICs actually exist for it? Because they will be more expensive! It's a memory intensive algorithm. Strawman arguments.

Strawman is to praise a coin because there are no chips today. Something that can change any moment.
I know Groestl and Skein are algorithms, but it's for mining shitcoins.

So I should dust of some PoW shitcoin and use it as an example of bad Pow too?
I never praised PIVX. This is a general discussion of PoW vs PoS.

Oh please. My arguments are more to do with PoW offering incentive for new people to jump in and secure a network. It's about the coin having community support that goes beyond a bunch of cheerleading. It;s about longevity. PoS cannot provide that. ETH can, because they enjoyed a long life of PoW mining, intrinsic ledger value and popularity.

Haha.. ETH is doing everything it can to leave PoW behind and go for PoS.

If it gives you more value it means it takes it from someone, which means people won't be attracted to your coin, because there are better deals out there.
There is no winning with such a setup. You drain it of value, you kill it.

How can it take it from someone when the rewards are in the form of the coin itself not yet in existence because as well as security, it is also the distribution method?

I am telling you that from an algorithmic point of view, maybe PoS might be interesting, workable. But socially and economically, it does not work. Satoshi had a point.

What point? It has failed.

The control has gone to where the electricity is the cheapest and where some high-tech company make new chips.

Both methods are cost effective , as with POW you spend money on electricity costs in order to mine the block which could end up with an unsuccessful haul or successful. With POS it's the same except you use the funds in your possession which is on the line in contrast to electricity costs & mining equipment. As with the POW the more funds you use could result in a larger reward but also bares an increased risk of losing majority of your funds invested in the POS. Someone beautifully summed up POS, saying as it's basically putting your money where your mouth is.

I'm thinking to mine ethereum asap before the POS comes in , save up some coins until the protocol changes over. Then use the vast amount of eth you've stored to result in more using POS system. But also could the ethereum blockchain split again?, this time one POS and one POW! who knows :p

Great explanation. Also I dont think we would have this scaling  problem with POS becaus the miners and the holders are the same party.

mate this is wrong, these same gpu cost way less and earn much more, you did the math in the wrong way, let's do it again, 4 antminer consume also more than 5 rig, 4 antminer consume 5600watt/h, 6 rig consume only 4800watt/h, 30 gpu would cost $7k if not less and with dual mining they can be $3 per gpu a day which is $90 with 30 gpu

How is this even the case? How can you jump in the mining game in bitcoin anymore? it's centralized in china for a long time so im just wondering how it's possible in your mind to get started with mining in 2017, that's ridiculous.

At the end of the day, in both POS and POW, it's the same, you need to invest millions to have a say in the mining game.

Traditional banks have been more like more like exclusive circles of traders " since there inception. They pay interest on your deposit. Dont see why anybody finds the idea unpalatable.

POW is shit. It damages the whole environment. We should save the natural, not kill it. The environment is very very terrible and and we need to improve within our posibility

You forgot the two most obvious

• There is an unlimited supply of pos coins you going to invest in them all? No successful new pow can be released.
  
  pos only has value because of pow. If Bitcoin would not exist no one would invest in pos

also
http://bitfury.com/content/5-white-papers-research/pos-vs-pow-1.0.2.pdf

Did you mean PoS being shit? Because PoW is actually what one can call 'natural'. That's how it is with bitcoin and most of altcoins. Some are getting ready for the big change (like ethereum) and are ought to change. I think that neither PoW not PoS kills anything. Miners can start mining something else if a coin changes. And I guess PoS is better at least because there is no useless waste of energy on this thing.

Cheers dude took me awhile to spit it out in a comprehensible form :p 

I prefer PoS as others have said because it removes the inefficiency from the huge electricity usage used for PoW, and both PoS and PoW incentive centralisation, PoW incentivizes centralisation in mining operations while PoS incentivizes centralisation in the form of hoarding.

How did you manage to post without electricity? All the computers running just posting nonsense is an enormous waste of electricity. Did you sell your Mobile cause all the repeater towers consume a lot of power. Did your town, turn of the streetlights, such a waste of electricity. I guess you're also a rawtarian because cooking food is totally unnecessary and unhealthy. Radio you have thrown away a long time ago because every Radio station needs hundreds of thousands of watts to broadcast, what a waste. Quadzilion watts are needed to mine gold, just so you can wear a wedding ring ....................

POW (Bitcoin or any other fair pow coin) is needed to know how much joe's pos coin is worth in relation to john's pos coin or token, a common fair reference point.
Most pos coins are vastly overvalued at this time because millions billions of new pos coins or tokens are still to come. As a matter of fact, most people will have their own pos coin or some xrp style token as a kind of enhanced CV (curriculum vitae) to prove their net worth.
No private person, company, country will ever create a pow coin. Every club, political party, organization.....will have their own non pow coin because it cost little to produce or operate. A raspberry pi is hopelessly overpowerd. Crypto is still in its infancy.
To have the own token will be as normal as having the own email address.