clout and Voluntold, you need to study the three validity tests for the Byzantine Generals Problem and understand at a very deep level what proof-of-work solves. It is not possible to just centralize a subset of the system, because the security and game theory of the system is pre-imageable and manipulable from that subset, thus there is no subset (it is not containable). mining pools are centralizedThe word 'reputation' in this context means any attribute you want to associate with a node in the network. Proof-of-work avoids the need for any persistent attributes, thus centralization does not need to be contained in a subset, because there isn't any centralization subset because there is no attribute that has to be validated. mining pool are beholden to reputationThink about the Byzantine problem in another abstract way. There can't exist a tally of votes without agreeing who will validate and count the votes (unless perhaps using some group signature algorithm, however these are always two-steps and thus are subject to denial-of-service). Yet who ever is trusted to count the votes, can now game the entire system. if a delegate does not include all valid votes (transactions) then they are immediately fired, as the client for users that are online will automatically switch to a down vote for that delegate. those that are currently transacting (voting) will remove the delegate from his position. since delegates are paid and can immediately be voted out there is a substantial financial disincentive to not include all valid transactions in a block (not count all the votes) Any reputation attribute metastasizes to centralized game theory. sure you can say that, but within dpos unlike pow there is a limit to how centralized the system can be. with bitcoin all you need are two mining pools to collude for them to have control of the network. in dpos you need to control half the delegates or half the stake to control the network. i do not see centralization being more of a problem in dpos as opposed to pow. in fact the converse is true.
now lets get to your point about game theory. please explain to me with pow or with dpos where it is in anyone's best interest to attack the network.Sorry. End of story. High IQ abstraction complete. ...delegates have a simple job and can be fired on command if they do not perform their duties...
No they can't be fired in all possible game theory scenarios. Devil is the details. I could spend my entire life doing adhoc analysis of every new N.A.O.D. there is no difference between the centralization of bitcoin mining and the centralization of dpos except that dpos leverages that centralization for faster block times and confirmations. it also allows for scalability that bitcoin cannot achieve with its current design since all the computational resources of the network are being used for mining rather than transaction processing. |
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the big problem here is: shares, assets, instruments are legal terms. but we're not talking about transactions within jurisdictions, but in cyberspace. that is a HUGE difference, and very few people understand this. which is quite amazing really, because it should be obvious that these terms just don't apply in the same way. so bitshares don't have the legal system under them, which makes them ineffective. the same applies to pretty much all non-ecash efforts.
This is exactly how I've felt when reading all protoshares/invictus/etc stuff in the past. I mean, anything can happen, and it's possible they could make some of this stuff work, but why rely on colored coins when you can rely on authoritarianism and men with guns. this doesn't rely on colored coins... |
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right now we are using shares in a decentralized company as currency because they are a good medium of exchange simply by virtue of their digital nature. the point of bitcoin (the network) is to provide a better a currency, so shouldn't these decentralized companies do just that? currencies that are not beholden to inflation or price instability. essentially they are financial instruments of the clients choosing. this is what bitshares x (the decentralized autonomous bank and exchange) allows. individuals can use this bank to acquire assets that maintain the purchasing power of any asset that you can think of. the bank holds at least 200% reserve for all the debt that it issues, so there is no possibility of default. everything within the system is collateralized and accounted for with the bank's shares. as the banks market cap increases it can issue more debt, but it can only do so in accordance with rule that debt can only be issued with 200% collateralization.
the big problem here is: shares, assets, instruments are legal terms. but we're not talking about transactions within jurisdictions, but in cyberspace. that is a HUGE difference, and very few people understand this. which is quite amazing really, because it should be obvious that these terms just don't apply in the same way. so bitshares don't have the legal system under them, which makes them ineffective. the same applies to pretty much all non-ecash efforts. shares, assets etc. are not legal terms they are economic terms that have nothing to do with governments or jurisdictions except that governments attempt to regulate their exchange. these terms do not apply in the same way because the legal ramifications do not apply, but the economic consequences do. this is why bitshares is better than bitcoin and all 2nd generation crypto systems, because it is supported by sound economics. also what is a non-ecash effort? |
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the very point of dpos is to centralize for the purpose of specialization, which allows for faster block times and confirmations and also allows for scalability on the level of visa's 10,000 tps payment processor. the system is still decentralized in that there is no one point of failure and there is no one point of control. delegates have a simple job and can be fired on command if they do not perform their duties. consensus on a whole is reach by each individual stake holder, whereas in pow only hashing shares contribute to network consensus.
What makes you so technically qualified?
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Basically the world is in an economic mess because because the people who control the economy are ignorant and still believe in fanciful theories from the 18th and 19th centuries
LOL. The mess originated when they threw the said theories and common sense out of the window. (Almost as hilarious as saying that something with an IPO is a coin and not a share..  ) That opinion has it's basis in a basic misunderstanding of historical facts. The truth is that reduced economic regulation due to the adoption of policies such as those outlined von Mises in the last decades has resulted in the top 2% of the population owning 80% of the wealth. This is what caused the current economic problems. That is what happens when you adopt policies such as those championed by Austrian economists. Corporate profits have never been higher, but that money has to come form somewhere and that somewhere is our pockets. That is why the middle class is gone and people have less access to money than ever before. That is oligarchy. That's what type of political economy we have. you are misinformed. the reason for the stratification of wealth stems from technological unemployment and the fact that our economy redistributes wealth disproportionately through employment as opposed to capital ownership. as the barriers to capital ownership are alleviated through technological advancements in financial exchange this gap will lesson as more individuals privately own the means of production and the profits there in are equitably divided. you do not really understand bitcoins place in our economic development if you do not understand that phenomenon. and you certainly do not understand economics and collective decision making if you do not believe in capitalism and the free exchange of capital. |
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How does that help when the other 100 super nodes are controlling what blocks are formed. This is not a distributed consensus that I'm satisfied with.
I think you misunderstand that consensus still comes from everyone on the network. The reason there are delegates is because specialization and centralization lead to greater efficiency as we can see given that block production goes from 10min with bitcoin mining (dpow) to 10-30sec with dpos. Think of it through the lens of more traditional governing structures. we could have a fully democratic government in the united states but that would be terribly inefficient since it would take way to long to collect the votes of all citizens on any given issue. not to mention not everyone knows enough or cares enough about each issue, so we would never be able to get 100% of ppl to vote any way. These are the problems that plague peercoin. as the dpos whitepaper elucidates: Peercoin is a hybrid coin and is thus partial centralized by the proof of work. Like Bitcoin it also has mining pools. Compared to Bitcoin the Peercoin is certainly more decentralized; however, because proof of stake mining requires users to keep their computers on and wallets unlocked, only a small percentage of the shareholders participate in any kind of mining. peercoin has the same centralization as bitcoin due to pow mining pools (dpow) and it has low participation rates in pos mining which causes it to be to inefficient to provide security/consensus to the network. this is the underlying reason for this hybrid model, proof of stake mining essentially constitutes a fully democratic governing structure that requires human participation. just as with any democracy the incentives are not there to have 100% participation. furthermore the incentives are even more skewed in this model because people can make disproportionately more with pow mining than with pow stake mining (i believe at the current rate inflation it is something like 9:1) . the problem with the representative democracy is that we vote every four years so the representatives are not directly accountable to their constituents. of course if you want to get reelected then you will attempt to act in your constituents best interests, but there lies another problem in the fact that the representatives job is so complicated and misunderstood by people that they do not always know if a representative has fully acted in their best interests. in delegated proof of stake you vote for your own representative (it is important to understand that this still use transactions as proof of stake - you cast your vote through transactions). if your representative is in the top 100 delegates that means that he is one of the top 100 most trusted nodes on the network. the delegates job is simple, he must produce blocks in a timely manner and include all valid transactions in those blocks. if a delegate does not do these things everyone on the network can easily detect that the representatives is not acting in everyones best interest. the client will automatically adjust your vote setting to another more trustworthy delegate. you do not necessarily have to vote ( make a transaction) to change the delegates status. assuming that this is a healthy network and there are several hundred transactions per block if the delegate does not do his job those transactions will automatically have down votes for this delegate so that he is effectively fired on the spot. dpos puts together the best aspects of decentralization (collectivism) with the best aspects of centralization (specialization). decentralization for the purpose of decentralization is not a way to organize society or a network. the truth is that an organization is most decentralized when there are few if any barriers to access for all positions that govern it. competition decides whether or not someone holds a position. the delegates term in dpos is limited not by arbitrary term limits but by his own conduct and whether or not that conduct serves that better good. |
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- The reward distribution algorithm does not have to be strictly in proportion to the offered bitcoin stake, rather it could and should be distributed in part to the super peers in return for substantial bandwidth and data security costs that they incur. Full node operators should receive sufficient reward to accommodate their expenses validating and replicating the blockchain, whose transactions grow at 3.2x annually, far in excess of Moore's Law cost reductions. The remaining large portion of the block creation reward, I propose to distribute in a manner which disproportionately rewards smaller stake holders, and perhaps somehow those wallet-owners not running full-nodes. The manner of distribution should should somehow dispel "the rich get richer".
Why is there a need to inflate the number of currency units by giving them to existing holders? (I know the question is fundamental but still warrants to be answered.) there isn't, that causes unecessary network bloat. instead you burn the transaction fees, which acts as an implicit dividend or increase of stake for all stakeholders. |
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the manual process is choosing your delegate, although this can be automated so that the client simply choose one of the delegates with the best reputation. the real automation lies in using transaction as proof of stake, because it does not require that someone volunteer their stake and private key.
i think the voting process should be automated within the client, because the job that these delegates have to do is very simple - produce a block when it is your turn, include all confirmed transactions. this is not something that many would be diligent in observing, but is easily detectable by the client.
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Who chooses the 100 nodes
each transaction has an implicit proof of stake and therefore an implicit vote towards the security of the network. everyone in the network votes for there own delegates. this is a process that is automated in the client but is easily manually adjusted. essentially the most reliable nodes will be voted to the top 100 and if they ever fail to do their job (fail to produce a block when it is their turn or do not include all confirmed transaction in their produced block) the are immediately fired since the client registers such actions and can switch votes or vote against a delegate. |
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also transactions as proof of stake (tapos) is different than delegated proof of stake (dpos) although dpos uses the same consensus of proof of stake through coin days destroy from transactions.
esssentially using transaction as proof of stake allows you to come to consensus through pos and block production can be determined in any fashion you see fit. the original tapos paper uses mining for block production, but dpos makes block production faster
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can someone please explain to me why using transactions as proof of stake does not work to solve the problems that you are attempting to address
Coin age as I describe it above is a to-myself transaction. If this is not what you mean, then please clarify. you destroy coin age through transactions. it doesnt have to be to yourself. peer coin uses the "to-myself transaction" as proof of stake substitute to mining. this however, is a manual process whereas using coin age (or days) from transaction is essentially automatic. |
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can someone please explain to me why using transactions as proof of stake does not work to solve the problems that you are attempting to address
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The problems to address as viewed by a member of the developers email list . . . The problem with proof of stake is essentially that there is no cost to creating a proof-of-stake. So there are two problems here: One is that stake voters are free to vote for multiple chains, and since only one will be the "real" chain, i.e. the one with the longest proof of stake, the extra votes will simply go away. So there is no cost to voting for multiple blocks. (A way to discourage this might be to use a signature scheme where signing multiple signatures with the same key causes the key to be revealed. But it is not clear what should be done after the fact, since there is no consensus on which blocks exist or are 'valid' for the proof of stake to fall back on.) Another problem is that the stake voters are chosen 'randomly' but deterministic ally by the content of earlier blocks. This gives a voter to grind through blocks until he finds one which will give him more votes in the future than he otherwise should get. Then the proof of stake becomes a proof-of-work, but one that discourages consensus since all voters will want to do this. The problem is what wrecked Peercoin, which I understand is now centralized (all blocks are signed by the developers to be valid). It is also a problem with NXT, as of the last time any of us at #bitcoin-wizards looked at their code. I talk about this a bit in Section 5 of my document on ASICs and proof of work: https://download.wpsoftware.net/bitcoin/asic-faq.pdfA goal of proof-of-stake is that it should be easy and cheap to create a history, at least relative to proof-of-work. Perhaps people want this for environmental reasons or some sort of "the people should own the means of production" mentality. But this makes it easy to overwrite history. As I described above, an attempt to force all participants to participate in such fraud (thereby making it unfeasible) by, say, having each block voted on by several random participants, doesn't work because the random selection can always be gamed. There have been fun conversations on #bitcoin-wizards about getting random numbers from the sun, or cosmic radiation, or pulsars, since these numbers would be both random and verifiable by many parties. Certainly this would require expensive equipment for all verifying parties, which intuitively is bad for Bitcoin because people verify transactions for free and we want this to be as cheap and easy as possible. (To the best of my knowledge nobody has suggested choosing stake voters from such random numbers, though there have been many ideas and I might've missed it. Pulsars are nice because they give us a clock which everyone within several light years can agree on, which is good for e.g. sharing the Bitcoin blockchain with Martians. This is almost always a more popular discussion topic than PoS.) It's also unclear that PoS can be equitable anyway, since selecting voters based on "stake" seems to favor the very rich disproportionately. transactions as proof of stake solves these issues. proof of work mining is still used to produce blocks randomly, but proof of stake ( coin days destroyed from transactions) is used for consensus. http://the-iland.net/static/downloads/TransactionsAsProofOfStake.pdf |
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i messed up the link to the other half of the bitshares solution which is transactions as proof of stake. i think the tapos paper is probably the best of all the ones that i posted. it seems to solve all the problems that peercoin has and at a much lower cost given that peercoin is a hybrid that still issues coins to miners. the network is secured by coin days destroyed as with peercoin but instead of requiring individuals to volunteer there stake to the network and expose their private key, tapos simply uses the coin days destroyed from transactions. this shifts proof of stake from being a manual process to an automatic process. additionally, each transaction includes the hash of a recent block so as to make attacking the network by way of a secret chain unfeasible. since with pos systems the coin days destroys determine confirmation, someone with a secret chain could not leverage the coin days destroyed of the public chain. tapos uses proof of work mining only to produce blocks, not for network security. the difficulty of mining a block is inversely correlated to the coin days destroyed in that block, thereby preventing denial of service. although bitshares gets rid of the mining aspect from the original tapos paper with the delegate model, i do believe that tapos is still the underlying consensus mechanism.
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There has been a lot of discussion lately on whether or not proof of stake is a feasible substitute for proof of work. I have come to believe that it is a necessary progression of the crypto currency space toward consensus systems that do not involve arbitrary work and artificially valuable resources. Proof of stake, as I see it, is a step in that direction. Of all the proof of stake coins/projects, I found three thoroughly documented approaches to solving issues associated with distributed consensus - PeerCoin, Nxt, and Bitshares. Each project has its on merits as well as shortcomings. I put it to the community to vote and discuss on which approach has the best promise.
The relevant white papers are as follows:
Abstract: A peer-to-peer crypto-currency design derived from Satoshi Nakamoto’s Bitcoin.
Proof-of-stake replaces proof-of-work to provide most of the network security.
Under this hybrid design proof-of-work mainly provides initial minting and is
largely non-essential in the long run. Security level of the network is not
dependent on energy consumption in the long term thus providing an energyefficient
and more cost-competitive peer-to-peer crypto-currency. Proof-of-stake
is based on coin age and generated by each node via a hashing scheme bearing
similarity to Bitcoin’s but over limited search space. Block chain history and
transaction settlement are further protected by a centrally broadcasted checkpoint
mechanism. Abstract: Bitcoin has proven that a peer-to-peer electronic cash system can indeed work and fulfill payments processing without requiring trust or a central mint. However, bitcoin has several shortcomings that prevent it from becoming the basis of an electronic economy. In order for an entire electronic economy to be based on a peer-to-peer solution, it must be able to do the following:
Process thousands of transactions, quickly
Provide a means for generating income
Practical means for adding new features
Be able to run on mobile devices
NXT satisfies all these requirements and additionally eliminates the Ghash arms race that bitcoin's proof of work requires. NXT is based on 100% proof-of-stake and this required an initial distribution to be made. While many are not comfortable with the specific initial distribution of the genesis block, when asked: "How would you solve problem with scam accusations according to "unfair" distribution NXT to 73 big stakeholders?", BCNext answered: "This problem can not be solved. Even if we had a million stakeholders the rest seven billion people would call this unfair. A world with the money can not be perfect".[1]
The fundamental improvement of NXT is Transparent Forging. This is the key innovation of NXT that allows it to process thousands of transactions per second. Dpos Abstract: This paper introduces a new implementation of proof of stake that can validate transactions in seconds while providing greater security in a shorter period of time than all existing proof of stake systems. In the time it takes Bitcoin to produce a single block a DPOS system can have your transaction verified by 20% of the shareholders and by the time Bitcoin claims the transaction is almost irreversible (6 blocks, 1 hour) your transaction under DPOS has been verified by 100% of the shareholders through their delegates. [/list] |
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No pun intended, but you are embarking upon a slippery slope.
Please leave Bitcoin the way it is- we don't need no stinkin' 10% annual inflation. To put it into perspective the US dollar currently inflates at around 1% annually.. 10% is just a ridiculous number.
You get it upside down. Currently, Bitcoin money supply inflate +10% a year. Fixed money supply + X% dividends equal X% deflation a year. PoW is inflationnist, PoS is deflationnist. Good point. However, the 10% a year number will slowly decrease to 0% over time. I see no mention in the proposal to allow for a slow decrease in the dividend percentage to mimic the future rate of minting. Also, I see the bigger problem being people losing trust in Bitcoin (which I just edited into my previous post- see above). for the remainder of your life bitcoin will be inflationary, it is absurd for you to support it just because there is a fixed supply at a very arbitrary point in the future. would you support us inflation just because the government says, in 125 years we will stop printing more usd? we are making the proposal that you do not have to pay a 10% dividend at all. dividends are paid for by transaction fees which are burned. bitcoin is not the end all and be all of the crypto currency space. it is just the beginning. so many ppl talk about not trying to reinvent the wheel, but that logic is antithetical to the bitcoin/crypto currency movement. the idea is to reinvent everything that needs to be reinvented. in this case that includes bitcoin. |
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Interesting stuff. I wish the altcoin forum structure would be such that good posts are highlighted. How does this approach tie in with the following statement? The future of currency is not shares in decentralized companies such as Bitcoin, but instead in assets issued by these companies that have the price stability of the dollar, gold, or silver.
right now we are using shares in a decentralized company as currency because they are a good medium of exchange simply by virtue of their digital nature. the point of bitcoin (the network) is to provide a better a currency, so shouldn't these decentralized companies do just that? currencies that are not beholden to inflation or price instability. essentially they are financial instruments of the clients choosing. this is what bitshares x (the decentralized autonomous bank and exchange) allows. individuals can use this bank to acquire assets that maintain the purchasing power of any asset that you can think of. the bank holds at least 200% reserve for all the debt that it issues, so there is no possibility of default. everything within the system is collateralized and accounted for with the bank's shares. as the banks market cap increases it can issue more debt, but it can only do so in accordance with rule that debt can only be issued with 200% collateralization. |
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no shares can't be created out of thin air
Nonsense. PoS is predicated on the notion that bitcoins require too much work to create, so you create a bunch of bit shares instead because they are easy to make. This is the number 1 argument in favour of PoS: since bit shares are easier to create, PoS enthusiasts claim that we will waste less energy and make the world a better place (which I believe is also untrue). no its not, you're making assumptions that are not true. pos and pow are not predicated on coin distribution, they are predicated on consensus. you don't even understand the technology, how then can we argue the economics of it? |
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Hmm... Seems to be related to the "pos scheme still needs a pow issuance mechanism" argument
Coin distribution is a problem for PoS, since the distribution mechanism that mining provides is absent. But PoS communities can partly deal with this by merging with other like-minded PoS communities. For example, Blackcoin could merge with NXT, which could later merge with MintCoin. This is more efficient that trading out of one PoS ledger and into another. I actually think this is inevitable because it seems there is demand to empirically test the merits of PoS at a larger market cap. It will be very interesting to watch. that doesnt make logical sense. more ppl have bought into bitcoin than have mined it. issuance isnt a problem unless you are continually issuing new coins that devalue previously issued coins. |
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what a complex topic  PoS rewards rent-seeking; PoW rewards efficient work.
Paying hundreds millions/billion of dollars to achieve something you can achieve for free is a lot of things, but it's not efficient. Question: How does PoS system utilize the "easy to prove, hard to solve" edict of cryptocurrency security? mining affords consensus, it is not necessarily a matter of security. proof of whatever is necessary for consensus. the mechanism for consensus will most likely be voting. in pow miners have all the votes. their votes are weighted by their share of hashing power. individual miners will delegate their votes (hashing power) to mining pools, which act as representatives for their constituents (the miners) best interests. this is why if you have 51% of the hashing power you effectively control the network. |
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