You are not interested in a substantive, logical discussion, so I am not responding to this.

Hmmm... No, I don't understand this at all. My views are pretty damn clear, just check my post history. Perhaps it would be better for you to explain. Please use a logical argument to support your view that proof-of-stake has negative properties which are not also present in proof-of-work.

Oh, okay. I agree with you then. I would prefer distribution by a centralized authority such as a government. The centralized authority would use distribution to provide incentives for merchant and consumer adoption. Essentially, you would try to monitor purchases that use bitcoin and then provide temporary "cash back" rewards to merchants that get consumers to make purchases with bitcoin. Merchants would then have an incentive to offer discounts for bitcoin purchases. Funding for the incentives comes from block reward.

I've given up on evangelizing this type of distribution because community resistance to any kind of pre-mine, centralized authority, or subsidization is even stronger than resistance to proof-of-stake.

Will be pretty funny when all these loans go bad.

The incentives of a competitor to sabotage bitcoin are proportional to total market size, not the size of the largest individual txn. With that out of the way, let's return to substantive issues.

1) Proof-of-work distribution can be copied by a proof-of-stake system. Thus any perceived distributional advantages of proof-of-work could also be enjoyed by a proof-of-stake system. This is a non-issue.

2) Proof-of-work is secured through competitive consumption of external resources. External resource consumption requires a net input of resources. This must be supported through fees levied on the user base. The exact level of fees necessary is hard to say. I think a 5% tax on each send is a plausible prediction. This is not compatible with a competitive payment platform. VISA will not need to burn fossil fuels to process each payment, but bitcoin will. This will kill bitcoin.

Proof-of-stake is secured through competitive transfers of internal resources. These transfers are expensive from an individual's perspective and thus effective in securing the system. However, they are just transfers. Transfers do not require external input of resources and thus do not require the imposition of onerous fees. This is compatible with a competitive payment platform.

3) There is never any point at which a proof-of-work currency could be more secure than an otherwise identical proof-of-stake currency. If you assume rational behavior, as soon as the first block is mined proof-of-work currency will necessarily provide inferior security. If you like, I will post a mathematical argument supporting this.

Your argument that proof-of-work enables a jump to a high level of initial security is completely wrong. It is the block reward which does this. Proof-of-work has nothing to do with it. Proof-of-stake can also have block reward.
 

The distribution problem here is extremely trivial. A currency could begin as pure proof-of-work and then progress to proof-of-stake over time.

Nevertheless, these are worthwhile points. Devising an optimal distribution process is quite complex. It requires a lot of data and modeling. Proof-of-work is almost certianly suboptimal, but it is widely accepted. It is probably more practical to just copy proof-of-work and give up on improvements in this area.

Ha, someone will implement my idea eventually. They will just call it their own idea when they do it. That's fine. In true Keynesian spirit, I welcome them.

https://bitcointalk.org/index.php?topic=49683.msg807106#msg807106

I don't think this implementation will come to anything worthwhile, but there is plenty of time for new and better copycats to come on board.

It is up to someone with programming/cryptography skills to implement my solution. I am willing to work with them to improve upon it if desired. I feel that I have done a lot just by putting answers out there for anyone to use. I cannot reasonably do any more than this.

It does solve pretty much everything... It is tiring for me to listen to people fumble around with other solutions as if they were promising in any way.

You have no idea what fees will be, nor is there any way of knowing. It is not a moot point because bitcoin could avoid this issue entirely if it incorporated better design principles.

Fees in excess of those charged by VISA are necessary to maintain bitcoin's current security level.  Of course, fees like this will kill bitcoin. Maintenance of the current security level is not attainable or desirable using the present technology.

The other option is to relax security to economize on verification costs. It is not clear how lax security can get before security problems themselves kill bitcoin.

Bitcoin's survival depends on finding a "sweet spot" where a sufficient level of security is available at txn verification costs considerably lower than VISA's. I highly doubt there is a sweet spot using the current technology.

The technology will have to be reworked to make building a secure blockchain less costly. In particular, there is absolutely no need for hardware to be purchased or electricity to be consumed in significant amounts in order to verify txns. Severe inefficiencies associated with proof-of-work would be obvious to any micro-economic theorist. I'm not claiming to be a special guy. Anyone in my discipline (excluding nutjobs such as Austrian economists), would give the same answers. The fact that we ended up with proof-of-work is due to Satoshi's failure to seek advice from experts outside of computer science and cryptography. It is purely a mistake and should be fixed.

There is no way that bitcoin could survive that long without incorporating proof-of-stake to replace proof-of-work. The scenario where bitcoin grows to become some vast resource consuming monster is not plausible. The solution is on the table, if bitcoin seems workable in the long-run, someone will come along and implement it.

You could be right. I really don't know. Where I live, electricity alone would put me just at the break-even point now. Given additional costs due to cooling and familial harmony, price would have to go up to about $9 for me to turn on the GPUs again.

I thought so too, but some people in the proof-of-stake thread with more experience coding than me (remember I have none) recommend more thorough discussion and the generation of relatively complete design documents.

Given that I know nothing about the computer software development process, I'd say that I should go with their advice for the time being. A bounty might come later.

Because the mechanism against external attacks as you call them also works as a defense against internal attacks. Proof-of-work would be costly and redundant (read uselss).

Useless and costly -> completely discredited

Bump for more votes and/or commentary.

This is true, but that can be applies to any disruptive technological improvement. If we want to make the world a better place, then we have to be willing to change how it operates.


I'll leave this one as an exercise for the reader.


Once you make proof-of-stake the main determinant of blockchain validity, then what is proof-of-work for? True, it taxes the user base to transfer money to AMD/FGPA/ASICs manufacturers and oil companies. I wasn't aware that this was a key objective or source of competitive advantage. Is there some other goal besides this that I haven't cottoned on to?

Don't worry about Solominer causing a sustained difficulty increase. If he keeps growing, the GPU miners will begin to drop out, preventing further rises in difficulty.

I completely agree about the possibility for many additional improvements completely unrelated to proof of stake. I focused on the proof of stake issue because it seems more important to me than any other single issue.

To put together a new project, there has to be a consensus among the design participants about its desired functionality. Obtaining consensus is hard, especially among people who haven't developed mutual trust and understanding. Thus, it seems to me that formation of a plausible groups of core contributors has to begin fairly early on in any group project. Once a group of people can agree on one core goal, there is a basis for negotiation over additional goals.

Okay, I got you. Part of the problem is that I am not at all familiar with coding. I think this seriously limits my ability to make any complete design without substantial help. It also means that I don't even understand the process of making a design very well. I imagined that it was something like scrape together a prototype, find out where it is broken, fix it, find out where it is broken,..., continuing until you are satisfied with the prototype and ready to release it. Apparently more thought goes into the pre-prototyping process than I had imagined.

One thing that would help is if I knew everything that a complete pre-prototype design needs to contain.

Anyone care to make a list for me? I can make a new wiki and gradually try to fill in the necessary details (hopefully with a lot of help).

Your right, that is the main sticking point.

You are misunderstanding shorting, however. To short, you borrow bitcoin from someone else and then sell it for dollars. Selling the BTC for dollars places downward pressure on price, not upward. If the price has fallen when you payback your loan, then you earn a profit (hopefully more than the interest on the loan).

The current place to borrow Bitcion is Bitcoinica. I'm sure there's not enough liquidity there now to make this work (e.g. the starfish would come up too soon). However, if the financial market develops further...