Bitcoin Forum

Hello. Could someone explain or give a link to read about it - why PoS coins are popular and some people say that's the future of cryptocurrency? I understand PoW/PoS hybrid - this is really nice, but just 100%PoS? Why the hell anyone would need this? Why there is this hype about NXT, f.e.?

PoW+PoS or just simple PoS, they all end up being 99% of the time PoS.

The difference is the way the initial coins are spread to the people.
Starting PoW is more fair, some say, especially because pure PoS means that you have to pay for the coins and the devs just cash in.


The future of crypto? I don't agree with that, but it may be related to the fact PoW is expensive as equipment and power, while for PoS you need only your money (and a working wallet).


Hype? Well, some coins do heavy advertising, some don't.. you have to think long term, based on a lot of things (features, devs, community, ...)

Your answer hasn't make it clearer x)
I understand how PoS works, i just don't understand why would anyone buy huge amount of coin just to get some percentage(?)
I'm interested how much of PoS coin you need to have in order to get something in return? If it's like a deposit, and it's impossible to mine a coin, who would sell it to you and how the coin flow works? Any PoS coin should be 100% pre-mined, right? How come it's fair in any way?
You see, all questions. I would appreciate a link or something, i'm sure this subject was discussed before.

for pure PoS coins, you don't necessarily need to pay to the Dev for the coins. There are several examples of coins, where all coins where distributed for free, and dev/dev team were just among the participants of the distribution, e.g.,
KTK: https://bitcointalk.org/index.php?topic=606809.0
PMP: https://bitcointalk.org/index.php?topic=673760.0
Then you have free and fair distribution, answering most of the questions of the OP.

If we assume that all current bitcoin miners hash at 1GH/W, then the whole network uses 340MW, which is a lot.
One of the advantages of PoS is energy efficiency. you don't need to waste so much energy for generating blocks, you only need to have stake (and a Raspberry Pi or regular PC for example).

The difference from a miners perspective is this: When trying to mine bitcoins, you have to buy expensive specialized hardware, which may or may not give you ROI (probably not if you're a hobby miner).
When forging with PoS, I have to buy coins, that then act like "virtual miners". The coins don't degenerate over time.

Difference: The hardware value of PoW miners tend to decrease quite fast, it's hard to sell them at a good price. Whereas I can easily sell my PoS coins again, and they don't necessarily loose value (lately they lost value, but so did bitcoin).

How pure PoS works (I only know Nxt, sorry):
After an open IPO of 1 1/2 months, 1B coins are issued at once to everyone who invested (I consider this fair). Max amount to invest is 1BTC, so that 1 person does not claim most of the coins (make sure to check for sockpuppets as good as possible.) You can't really talk of a pre-mine, since there is no mining at all. Fyi The Nxt dev made a whopping 21BTC (I thought he didn't even keep the money for himself, but not sure).

Someone sells 1M to me at an exchange (maybe because he wants crappy fiat).
Now I have 0.1% of the total supply.
I begin to forge. Each block, I have a chance of 0.1% to generate the block.
When I actually forge a block, I get all transaction fees in this block.
Each Nxt transaction costs 1 Nxt.

Please notice that bitcoin will have to run on tx fees too once all 21M coins are mined.



Why would anyone buy huge amount of coins just to get some percentage?
-> Why wouldn't they? Making money is not such a bad idea. Other question: Why would anyone buy huge amount of miners just to generate some blocks?
To be honest, if you look at Nxt for example, you won't get rich quick. Atm you get around 0,5% profit per year (still more than most banks interest).
This number could increase if there will be more transaction in the future.

There's a decent write-up by mullick on PoS here

https://cryptocointalk.com/topic/700-proof-of-stake-explained-rough-draft/

PoS value after 1 or 2 months is 30% ot the coin value with Pow..
so it could not be a huge investment

Sorry I did not get that?

because they are like giveaway basically, with safe coin generation(pos)

also they are anti-instaming, and their launch is considered somehow safe, or more safe than pow, due to 100% distribution

Thank you all guys for being so helpful, followed your links, understood more about it) Live and learn!

You can mine on POS coins on any computer even raspberry pi but the return are usually very low. Most of the POS coins are pump and dumps which makes you lose money.

Pos has many many vulnerabilities already discussed in this forum, sure it has advantages by blocking the 51% attack, but if the market cap is small then if some1 buys up 51% of the coin supply they can perform the attack easily, so since because of this a few guys will own 51% of the coins in the start era to make sure nobody can aquire more than 51% fast enough.

This makes all POS coins unevenly distributed, and basically a pump and dump because if lets say 10 guys own 51%, then what if the market cap reaches 1 billion $? You bet that all of them will sell it and buy some sports car with it, they dont care about the coin.

So because of this its hard to find a long term POS coin. I think NXT is a good coin, but it needs more features though.

I disagree. Coins with very low marketcap usually  have very low liquidity. You can't "easily" buy 51% if there's ony 1% available on exchanges.


please name one

many newbiew leave pos coin on exchange, and we see what happened with mintpal

same with PoW. This has something to do with newbie behavoiur rather than proof of x

Are you one of the EXO coin stakeholders?
I just guess it from your name,.
If yes, then explain why you didn't like NXT as pure 100% POS, and like PoW/PoS hybrid.

not really, because pos coin on exchange mean that the exchange can earn lot of interest, and control more coins than what they should have , with pow you can't do that

No but you can bribe many of the big stakeholders to sell it to you anonymously and then you can use the network maliciously.

When the exchanges have enough volume to contain 51% of the coins, then just a well placed buy order simultaneously on all exchanges could do the trick.

It would not be profitable, but a government could do it only for the purpose of disrupting the coin.


https://en.bitcoin.it/wiki/Proof_of_Stake

You find many of it there.

Can you outline one specifically? I only saw strengths:

You are talking about two pairs of shoes:
1. newbies loose their PoS coins if an exchange runs away with their funds:

My answer: This has nothing to do with proof of x
It is not a weakness of a ferrari if I don't drive it correctly and crash it into a bridge.
Neither is it a weakness of PoS if users give their coins to strangers on the internet and loose everything.


2. The exchange can stake user deposited coins and get interest, "and control more coins than what they should have"

My answer: The interest may be nice for the exchange, but I don't see the weakness.
The largest exchange of a relatively prominent PoS coin had max. 5% of the total stake. Not enough to do any damage.
Exchanges are for PoS coins what mining pools are for miners: You give your power to potentially sign a block to someone else.
The largest mining pool I saw of BTC produced 51% of all blocks. Enough to destroy the coin.

Explanation from the Bitcoin wiki (excellent resource for everybody, though I've heard that some pages do suffer from some tonal friction, meaning that they are a bit political/opinionated): https://en.bitcoin.it/wiki/Proof_of_Stake (https://en.bitcoin.it/wiki/Proof_of_Stake)

Wikipedia: http://en.wikipedia.org/wiki/Proof-of-stake (http://en.wikipedia.org/wiki/Proof-of-stake)

A nice little video: https://www.youtube.com/watch?v=ASCGQFZgcT8 (https://www.youtube.com/watch?v=ASCGQFZgcT8)


Hope this helps!

They do. What guys on the bitcoin wiki write about PoS is kind of like asking Republicans what they think of Democrats.

sadly i can't find it, but there was a post of a guy, claiming that you don't need high % of interest to do a serious attack, you only need a small amount of the minted coin(not the supply but the coin minted via pos)

yes, that was cynicSOB: https://bitcointalk.org/index.php?topic=897493.0

He was invited to try his attack on Nxt testnet:
https://nxtforum.org/testnet/nxt-security-audit-attack-simulations-on-testnet/

2 months have passed, no successful attack so far.

First he said:

Then he said:

Then:

He would even get a bounty if he could successfully attack Nxt testnet. Nothing happened so far.

I`m not an expert on technical issues but i saw many vulnerabilities.

The most obvious that i can think of is a structural problem. There is no incentive for miners to "mint" or as it is called, because the reward is significantly lower.

While in bitcoin, when the coins will be miner, the miners will then profit from transaction fees which would rise and lower depending on their greed.

In the POS enviroment they will have to leave the minting on thus only the ones with the highest market share can profitably mint, so most of them wont mint it.

See if the POS coin get's distributed evenly then the market will collapse, because if everyone would own almost equal amount of it then since the reward would be so little nobody would mint.

On the other hand in the POW anybody can join the mining game redardless of them owning any bitcoins, they are not required to own anything except mining equipment.

I think this problem will cause many POS coins to be destroyed.

How come that in the PoS coin I know, the active forging stake is almost 50%?
Looks like enough incentive for every second stakeholder to mint.

Keep in mind that the incentive to mine bitcoin is subsidized by currently 10% inflation per year. That will get lower and stop once all coins are mined.

Because now the coins are owned by a few geeks, wait until it spreads out into the mainstream, where people will own less coins (regardless of the price, they might own more wealth, but own less coins / capita since 1 coins would be more valuable) , then people would not care about doing it, or just forget about it, and then the security could be compromized.


Yes and that 10% inflation affects everybody including the miners, so the effect cancels out. If they mint 10% /year then the price of bitcoin relative to other currencies also drops by 10%, so the effect cancels out. Yet this doesnt affect anybody, except investors.

Actually for bitcoin to succeed the inflation has to go down in order for wallstreet to be interested in it, that's the whole point of the deflationary currency.

Imagine what would happen to the number of transactions per day in your scenario: It would go up by magnitudes. This means minting/forging income per owned coin would go up drastically too.

Probably but if many people would own it, then not all of them would put it in forging mode, so less % of them would be staked, which compromize the security of the network.

Also if everyone would forge it then nobody would transact it because they dont have access to the coins if they forge right?

So it seems to me that either way (with many transactions ->big reward ->causing many people to forge but less people to spend-> less transactions) we are back to square 1.

And it only takes a few hours or days of imbalance, where enough security would be compromized to destroy the network.

So i`m skeptical about it.

We were discussing other stuff: The incentive to help secure the network (=generate blocks)
You said the incentive in PoS coins is too low, and this is a vulnerability.
I said that bitcoin will face the same problem once inflation stops, and that in the real world it is not a problem: Prominent PoS coins have 40-50% of stake actively forging/minting.

Which point would you attack?

I would say this is highly speculative. How many is "not all"? And how/at which point would this compromise security? Since the coin would be widely distributed, it's even harder to do 51% attacks.


No, you can still transfer you coins freely, even if forging/minting.



True, but there are ways to make even 51% attacks impossible.  
This outlines the idea a bit (the text under the video): http://prisonorfreedom.com/what-is-transparent-forging-in-nextcoin-nxt/

this is good.

No, it's just pure coincidence, i didn't even know any exo coin existed. I'll educate myself about this coin, just in case)

Thanks everybody for the discussion! Understood a lot. Seems that 100% PoS is just not for me, but good luck to it anyways.