Bitcoin Forum

So I've given this some thought. What would happen if Bitcoin was changed to PoS(Piece Proof of Stake), and mining becomes replaced by "forging" or "hatching"? Wouldn't that be better for bitcoin overall?

There would be less power consumption, much faster transactions because you won't have to worry about orphaned blocks, and more can be included(chat messaging etc etc)

I know there are some major risks with PoS, but isn't there a way(sometime in the future) to eliminate those risks and change Bitcoin to PoS?

bitcoin foundation, mark karpales instantly get majority of new coins, simply using their GPU.. coz they own a large stake.

i see no benefit of PoS for average joe. all it does is reduce the electricity bills of the already rich and corrupt bitcoin hoarders whilst making them alot more coin. ruining any chances of new people gaining a slice of the pie

If it was changed, it would not be bitcoin, but an alt-coin, perhaps called POScoin.  

To truly find out what would happen, one would have to fork the software and fork the blockchain at some point and create an alt as POS.  Then it would be interesting to see what happens with the new fork and the old.  There have been a number of discussions about POS here which detail a lot of the questions.  

(Must be a slip to say 'POS' with the P being 'piece'...kind of makes one think of the other POS alt-coins where the S is not stake).

PoS actually refers to "Proof of Stake."

And, no, Bitcoin proper will never implement proof-of-stake: even if it is objectively better.


Replacing "Proof-of-work" with "Proof-of-Stake" would invalidate the experiment. We don't really know if a Decentralized (which is not an easy goal in itself) Proof-of-Stake currency would be a secure as proof-of-work. It is still an open question if the Bitcoin network can withstand state-sponsored attacks. Because it is so revolutionary, states may be reluctant to attack the network due to it's possible strategic importance.

Proof of Stake?

Unlikely with bitcoin. The inherent weaknesses within PoW are also its advantages.

The trouble with Proof-of-stake is that there is nothing at stake. Bitcoin derives its value not just from the network effect of adoption and development but the billions of dollars invested in the hardware which secures the protocol. Additionally, most PoS currencies unfairly favor large bag holders and original investors.

This is a good thread that explains the weaknesses of PoS as well (especially with regards to the History attack)-

https://bitcointalk.org/index.php?topic=615843.0

Perhaps the author made a small mistake and meant to title the thread:

"Changing Bitcoin into PoS(Piece of Shit)"

Perhaps?  Otherwise, I don't get the joke.

True, I forgot that PoS gives interest according to the # of coins you hold. It would actually be easier for the rich to get richer through PoS(since mining can sometimes be unprofitable), and the poorer ones would hardly get any coins, not to mention they probably wont be able to keep their coins in their wallet for long for it to stake, unlike the rich.

So yes you guys are right, PoS favors the rich largely over the poorer, even more than mining in PoW does.

If Bitcoin required the use of a piece of steak, I think vegetarians, vegans, and animal lovers around the would would revolt and it would never become adopted.

When I saw the title of this thread I thought he said "Piece of steak", and I thought it was going to be an account of how he started with bitcoins and exchanged them to get his dinner. That would have been more interesting.

No dude...you dont get it. It's not Proof of Stake....it's Piece of stake and will always be that. Stake...we all need some stake...

It simply isn't necessary at this point. Maybe in the future as the protocol matures their could be a place for it but the system functions really well as is and the problems that a POW protocol would be designed to fix will probably be addressed in other ways.

Not only that it is not necessary, it's imposible to do. Hardware manufacturers have their hands on BTC  decision makers and they wont let anything change the way it works. I don't know how many of you realize this, but BTC decision makers are payed by same companys that are making ASIc hardware...how neat is that....

NXT is 100% Proof of Stake and seems to me to be a good protocol.  Sure the initial investors will be gozillionaires (so are the bitcoin early adopters), but eventually all those coins will be relatively evenly distributed if there are enough people involved in the network.  Even hoarders will eventually succumb to the lure of high prices and sell their coins for either goods/services or fiat.  The price will fall temporarily and people will scoop up cheap coins and there will be a more even distribution.  Plus, the whole electricity savings thing, I think, will be a big issue in the future. Sadly, right now, you have to be pretty rich to afford mining…..

Besides the additional security concerns with NXT and PoS I don't see how the direction will move to a more egalitarian distribution model. Centralization of mining I believe is merely temporary(Asic space heaters and hot water heaters may be a great future to recycle all that wasted heat. )  Bitcoin and Nxt both have finite supplies and when most of the btc is mined all those miners will have to depend upon transaction fees for profit just like in NXT forging. The difference between the two is that with bitcoin their are high maintenance(electricity and equip) costs; profits from transaction fees are linear and competitive with new entrants adopting new technology everyday. With NXT you can effortlessly scoop up most the transaction fees with no competition further securing your dominance. Large bag holders from nxt may eventually be able to hold onto their initial investment and use the "interest" from transaction fees as spending money.

This is further exacerbated with crypto currencies because a portion of those anonymous investors will choose to not pay taxes thus aren't subject to progressive policies of wealth redistribution as we see with fiat.

Thank God.

Agreed, but this also further stresses the importance of using a protocol that doesn't unfairly benefit early investors. There will always be income disparity as their should be based upon different individuals efforts but we don't want to live in a society where a 75 people control a bulk of the monetary supply just because they were at the right place at the right time.

While nxt may possibly have a similar distribution curves to btc currently it is likely to become more imbalanced in the future based upon how its designed. At least PoSv tries to partially solve this dilemma, albeit could easily be gamed.

Is PoS based directly on wealth? I'm not sure of how it works and would appreciate a link related to this.

Someone is already doing that  

https://bitcointalk.org/index.php?topic=584719.0

However
Here is the problem of PoS .

https://bitcointalk.org/index.php?topic=615843.msg6751334#msg6751334

  which basically means current holders will depend on the goodwill of past holders not to attack or if you want to avoid that dependence you create centralized trust which is something subject to government/bankers attacks by coercing those individuals holding the trust

Even if you exclude the history attack problem which is fatal large stakeholders will never be able to avoid government influence

If you can identify the minters which are clearing the transactions you can ask them to obey all govs regulations and money transmission rules. It is far easier to identify stakeholders than miners

Those are some reasons I am personally against PoS fork of bitcoin proposed in the first link

LOL!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!


I now noticed I wrote Piece of Stake, instead of Proof of Stake.

interesting that this keeps coming up

Has any POS ever been forked?  esp NXT or PeerCoin

even if there was "nothing at stake" for other chains, so what for the main chain its just becomes like merged mining. So nothing wrong here.


it seems that POS or not mining will eventually come to dominate as it avoids the mining issue. The technical issue of security is just a matter of time.

I think NXT had a fork problem in the beginning and then they added checkpoints. As for peer coin I don't know if they ever removed the checkpoints. I believe these technologies will either have checkpoints or some other web of trust type of solution that . makes proof of something unnecessary you can just trust someone or a group of people instead of proof of something

There has been plenty of forks with PoS. None of them have really solved the issue of the History attack( not found in Bitcoin) and the solutions thus far all depend upon using centralized checks and checkpoints which somewhat defeat the whole purpose of a decentralized currencies key advantages.

Perhaps there is a solution to this security dilemma, but I haven't heard of any valid hypothetical whitepapers proposing one as of yet. Until their is some proposed decentralized solutions that could work the point is rather moot.

Bitcoin's greatest weakness is also its greatest strength and solves the consensus problem where it takes a great amount of resources to perform an attack unlike with PoS where either an early stakeholder can perform an attack or a later investor can make a sizable investment, sell the coins , and than perform the attack with no risk.

A PoS currency would be far more interesting if there was a way to airdrop all coins evenly without investors and forging of coins rewarded tx fees a flat amount across every node regardless of the amount of coins they had.

You guys keep repeating about bitcoin and waste of resources

First let's put things into perspective

http://www.reddit.com/r/Bitcoin/comments/27d793/research_is_the_bitcoin_network_sustainable/

 Second mining energy will turn into a feature. There is lots of energy wasted. Electricity utilities waste excess power during nights. They can use bitcoin to earn income with that wasted power. Same for geothermal. For solar panels people will replace batteries to store excess energy value with bitcoin. Lower cost for them. It is not feasible now because chips are very expensive but once competition heats and hashing chips prices drop to the ground all the mining will move to energy waste resources. Even biking has excess energy that we don't have a commonly used battery to store. Why not store it in bitcoin. Cars harness wasted energy into expensive batteries costing thousands each. Storing in bitcoin will be cheaper. All the wasted energy can be stored in bitcoins

Proof of Stake means that the greater "stake" a person has (i.e. the greater number of coins), the greater chance of forging the next block and reaping the transaction fees.  There are 1 billion NXT and if you own one, you have one chance in one billion to forge the next block.  It's not exactly done like that but the result is about the same.  Also, if you have a large stake and try to force a fork by not forging a block when you get elected to do so, your forging power drops to zero temporarily which allows others to pickup the slack.  Again, I'm a novice at the exact mechanisms of NXT forging.

To address the possibility of "living off the interest" of your fortune I say…. it's a free country.  Eventually you will die and pass your coins to your heirs and they will spend them, distributing that wealth to the rest of society.  The same thing happens in any capitalist society based on morality.  (no forced distribution of wealth)  Example:  The Kennedys and the Vanderbuilts and the Rockefellers no longer have an amassed fortune.  It has been spent by their heirs and distributed morally (not by force) to society.

Keep in mind that you can  forge even if you don't own currently one and you owned one in the past by starting at the block before selling. Reorganize the chain and attack the coin

The difference with cryptocurrencies is taxing the wealthy and charging a death tax is increasingly difficult to do which isn't a bad thing but combined with a wealth transfer protocol designed to primarily benefit the wealthy this  presents a huge concern.

Sure, some of the initial bag holders will spend all there wealth on hookers, drugs or charity. Perhaps their children will live such an extravagant lifestyle they spend more than the interest made from fees. Some large bag holders would go broke and new ones would replace them. The point is the system will have a heavy bias towards rewarding the already wealthy based upon there circumstance and not necessarily on any risks or efforts they have made.

If Nxt took off and became as big as usd or the euro you would see a much greater amount of income disparity than you do with Bitcoin or even fiat.

Thanks for your explanation. So, essentially, the wealthier you are, the better the chances of becoming even wealthier?

POS has its disadvantage in terms chain security, it is better to keep the PoW.

You really are correct in saying what POS (proof of stake) means.

This would lead to decreased privacy as people would have an incentive not to move coins. It would also make it easy to hide a 51% attack as people could easily hide the fact that they have multiple large addresses.

You need to read up on exactly what a "51% attack" is, how it works and exactly what can and cannot be done with such an attack.

https://bitcoinfoundation.org/2014/06/13/centralized-mining/

Long story short, don't try POS coins.

First thaing that we would have in that option would be massive exploatation by exchanges.
They do hold most of the coins anyways.
But, regarding the price, well POS would make it interesting for investors , but not in the long run

Even if everyone were to get "interest" from their coins they would still hold the same number of coins in terms of a percentage of the total.

so the other big system seems to be ripples how do you all feel about that as being secure.

I recall the UNL seemed a bit centralized, eg you have to be accepted on the UNL to play.

Not really. The rich don't get richer in Nxt. If you own 10% of the coins and someone else owns 0.1%, after both forging for six months you will own 10% and they will own 0.1%. It makes no difference. You only lose if you don't bother to forge at all. Now we have leased forging, there's no reason not to forge.

Lack of hardware costs mean a lower barrier to entry. In both systems you need money to get started. In Bitcoin you spend that money on hardware. In Nxt you spend it on the currency itself. (Or, get a job and asked to be paid in NXT, and raise a stake that way.)

Nxt doesn't use centralised checkpoints. It solve the history attack by not allowing block-chain reorganisations to reach back more than 720 blocks. This is a decentralised solution.

It seems to work. It is the coin with the third biggest market capitalisation so there is plenty of incentive to attack it, yet there has been no successful History attack.

Lack of a decent whitepaper is one of Nxt's biggest PR problems, in my view. There is so much ignorance about how it works, and people confusing it with other PoS schemes and assuming it has features or weaknesses that don't apply. (I suffer from this myself; I don't know it nearly so well as I do Bitcoin.)

However, the current algorithm is published in source-code form. It's not secret. And there is a project to produce a new whitepaper.

If nodes got paid a flat amount, people would create millions of nodes, each forging with a single satoshi.

Airdropping the initial distribution without investors is possible for a new coin, eg with a "spin-off" that bases the initial distribution on Bitcoin balances at some chosen block. That's the only realistic way a Bitcoin replacement can happen.

No PoS, I trust the new owner of Bitcoin - Ghash.io.

http://www.cryptocoinsnews.com/news/bitcoin-mining-pool-ghash-io-ddos-ed-response-51-attack/2014/06/15


Way to cheer me up Gavin! So Bitcoin is a loser?

http://www.mynxt.info/forging_calculator.php

This is incorrect. Lets run through the numbers:

If you are a large stakeholder with 100 million Nxt you will generate 112 Nxt in a year forging. If you have 100 next you would generate 0.11 nxt in a year. 

starting 10.00002% - after 1 year 10.00004%    vs     starting 0.000010% - after 1 year 0.000010011%

So the poor guy gets a 0.000000011% increase in wealth after one year and the rich guy gets a 0.00002% increase.

This may not seem like much but just an example showing you how the wealthy make a greater amount of wealth unlike the false info you are spreading.  In the future with compounding and higher transaction velocity this will have a very profound effect creating great fiscal divide between the haves and have nots.


This doesn't prevent a history attack with Nxt but merely changes the execution strategy of the attacker to execute it within that window.

A year is 24*365=8760 hours. If I put in 100,000,000 NXT and 8760 hours, I get 75,735.24 NXT per year. I have no idea what your figure is, but it's orders of magnitude too small. The return is 0.07573524% pa.

I make it 0.0757352 NXT/year.  The return is 0.0757352% pa, exactly the same (to the precision given). Again I'm not sure where your figure comes from; 112 divided by a million would be 0.000112 NXT, so your poor man is getting roughly 1000 times the return of the rich man. I do wonder if your 0.11 should be 0.112 but losing a significant digit.

I'm not sure what you are doing there. Expressing their wealth as a fraction of the total market cap? Why? My point was, if we consider the ratio between the rich man's wealth and the poor man's, that ratio is not affected by forging. They both make the same percentage return on their capital. If the entire economy consisted of two guys, one with 99% of the coins and the other 1%, after a year of forging the situation would be the same.

The site you linked doesn't take compounding into account, but it doesn't affect this, because they are both at the same rate. It also doesn't take into account the costs of running a forging node, which are fixed and more than a poor person may be able to afford. Leased forging mitigates that. In any case, these are real-world issues of economies of scale that will arise in any currency.