Great post.

Sound logic.

I vote to make it a sticky at the top!

Thanks kodtycoon. Always answering our POS queries.. 

That's a big paper.. lot of work.. took a while to skim it, let alone digest it. A feat like that always deserves .. congratulations!

Here is the EigenTrust++ pdf , which I thought explained a few bits clearer.

http://www.cc.gatech.edu/~lingliu/papers/2012/XinxinFan-EigenTrust++.pdf

1) So with PoI a lower stake can have more importance, how does this affect the 51% attack ? How much stake and importance can you 'theoretically' get away with to have 51% power ?

2) If all the participants in the PoI scheme behaved similarly, this would mean a straight POS system ?

3) NEM's architecture vs NEUCoin's vs NXT ? (These seem the big POS boys) . I was just wondering whether we will ever get a 'definitive' POS algo that works better than all the rest.. ?

Absolutely.

What I am saying is, currently the fees mentality is that everyone should pay the same fee, regardless of the txn amounts. And that maybe percent based fees work better..

If we do a little maths :

Let's say - hypothetically - that the bitcoin network is handling 1000 txn/s. And that all the users pay the same txn fee.

There are  : 60s x 60min x 24hrs x 365days = 31,536,000 seconds in a year

1000 txn/s x 31,536,000 = 31,536,000,000.. so about 31 billion txn/year.

So - if the txn fee is $0.1, 10 cents, we the users will be paying $3.1 billion to the miners. This is also the entire security of the network.  This means that an attacker with access to more than $3.1 billion/year could invest as heavily as the miners and basically, rule the roost.. There are plenty of individuals who are worth more than that alone, let alone corporations.

It's just not that much, and so to keep the network safe, the txn fee would need to go up.

At $1 per txn, you are 'starting' to get somewhere, $31 billion, but it's no good to anyone wanting to buy small 'bar of chocolate' items.

And that's if $31 billion is enough..

In Coins, there is a fee to pay for sending the TXN.

This not only incentivises the miner to add your TXN to a block, and pays for the upkeep of the network (in the long run), but also acts as a DDOS blocking system as SPAM costs money.

In Bitcoin, there is a heated debate going on at the moment about whether the block size should be increased.

With a larger block, there can be more TXN's and so the user thinks he should have cheaper fees per TXN.

This means that a larger block with more TXN's will not 'necessarily' mean that the miner makes more. A block that has twice as many TXN's with half the fee per TXN makes the same. This is not a clear incentive for the miner. I admit that normally more TXN's mean more for the miner but the correlation is not straight forward.

It seems to me this stems form having a 'fixed variable' fee for all. One size fits all.

IF instead the fee was, let's say for simplicity 1%, it would ALWAYS be the case that more TXN's would mean more fees for the miners ? (Assuming the same TXN set for both systems). Then the miners would be happy to have bigger blocks, although you would need some 'mechanism' to contain the pace of growth.

It would also fix coin destruction.. as a miner would obviously take his 1% cut of an aged coin, rather than let it all go back into the mix for ALL the miners to share.

..And micro TXN's are also back on the table.

Thoughts ?

Don't think of it purely in terms of the 'Price'.

Bitcoin's success really has very little to do with that. IMHO.

I 'use' them, for ..err... medical reasons..!

I can transfer value to anyone in the world, without someone telling me whether I'm 'allowed' to or not. None of anyone's business but my own.

The price makes no difference to me. I buy btc - send btc.

I will keep using it. And that's all that matters really.

I think it will be a very long time before the last server is stopped..






 

AArrgghhhh... Stop getting BOND WRONG!..

Sorry.. Force of habit.

If you want your coin to be worthless, switch to POS. By all means.

'Bitcoin does not derive it's value from the fact it solves the problem of distributed consensus.'

Ergo - just because you implement a chain which solves DC, does not mean it has value.

That's what the bitcoin mining is for.. The POW.. Please understand. (POS chains are DACs. POW chains are coins.)

My understanding of it - the problem arises because the signature you send with your txn is actually a script. You could add OP_NOP instructions to the script, keeping it valid, but changing the TXN id (hash of the txn+scriptsig). 

How about this. It requires a double sign.

You construct a txn.

You sign it with your valid scriptsig.

You hash all of that. And sign that hash.

You then send the txn with the HASH signature.

A txn is only valid if it is sent with the hash of itself signed by the sender.

This way you cannot change the scriptsig, as the hash would change.

?

 ..  ..  ..

What's the difference between an ETF and an ETN ?

You could include a hash of the correct scriptsig (only the static bits) that is required in the txn ?

Then, only a scriptsig that hashed to the value AND was correct would be valid.

Ho hum..

Wasn't going to get involved.. but can't help myself..

Neucoin is definitely a professional outfit, and the paper for the POS system used (that I have read fully and been impressed by) shows that a lot of time and effort has gone into coming up with a secure, functioning POS Network. Full marks so far. But I'm afraid that their current pitch COMPLETELY misses the point.

Here is the IMPORTANT BIT..

Ready..

BITCOIN DOES NOT DERIVE IT'S VALUE FROM THE FACT IT SOLVES THE PROBLEM OF DISTRIBUTED CONSENSUS.

One more time.

BITCOIN DOES NOT DERIVE IT'S VALUE FROM THE FACT IT SOLVES THE PROBLEM OF DISTRIBUTED CONSENSUS.

..

Therefore, just because you have a 'coin' that runs on a system that solves the problem of distributed consensus, DOES NOT MEAN IT HAS VALUE. (Whatever koubiac says about capital investment)

POS Chains are DACs. NOT COINS.

POS Chains are wonderful and useful and lots of other things, but one thing they are not is VALUABLE IN AND OF THEMSELVES. (unlike POW coins..)

POS Chains need to serve a purpose that in turn gives the STAKES value. (Like NXT's Asset exchange, Bitshares, etc etc..)

The concept of Inflation in a DAC is a non starter. Sorry. All you do is dilute all the shares. Add nothing of value.  

Their utter dismissal of POW in all it's forms, tells me, that they just don't get it.

Good Luck to them though!  

A POS Block-Chain System shouldn't be calling itself a 'COIN'. They're DACs.

If I may, I think this is the misconception.. And why some people get so upset and irritated by these 'COIN' launches..  (Steady..).

The 'UNIT' running on the POS chain is exactly what the chain says it is,.. a STAKE in the system.

POS Systems should rely on making money through the services they provide. NXT's asset exchange, or BitShares in general both provide a utility to their POS network. And that IS worth something.

NXT's IPO was exactly that. A sale of shares in a fledgling DAC. I don't think of NXT as coins. They're shares.

I had not seen anything like that before. But there hadn't been any pure POS coins until then. Definitely a first for me on both counts.

Congratulations most certainly in order.. 

I'm one of those who thinks there will be a solution to this particular issue..

Let's play. (Hypothetically)

First - What would happen if it were possible to run a heat-efficient bitcoin mining chip on every android/iOS phone made. Not software, ASIC. Built into the phone itself. Would 1-5 billion people mining in a round-robin style p2pool crush the current mining honchos ? (If we assume the chips are the same, the mining powerhouses would need 1-5 billion chips. Seems a lot.. And the chips in your phone update as you buy new phones, of course.)

And..  

HARD FORK Mining Centralisation Fix Idea..

Take elements of p2pool and integrate them directly into the Bitcoin protocol.

On the the NEW chain :

Every block pays out to the last 144 block miners (one day of blocks).

Each miner can set a custom difficulty multiplier. A more difficult block obviously pays out more proportional to the difficulty increase. Incentivise the miners to win 1 block a day, but as difficult a block as they can manage, by increasing there stake in the payouts by 1-2% (Or some small number) if they are at 144x difficulty. (Any more than 144 and they do actually have 51% hash power so no point..)

Just as in p2pool, a miner's block is not worth more, in regards to chain selection, than another block because of the multiplier. That just means they get paid more.

This allows, and incentivises, more miners onto the chain. This is good.

And, as a bonus, the miners going for a harder block once a day, have to be connected to the network, all day. So this is also good for the network.

..Tear down ?
 

OK - feels like we go round in circles..

..

It is definitely NOT time to switch off POW..

Here's why.

Let us 'assume' that it is possible to solve the problem of distributed consensus using a POS chain. OK? Let's take that as a given (whether it is or is not..)

NOW - Here is the thing that some people simply don't understand..

Bitcoin DOES NOT derive it's value from the fact it solves the Distributed Consensus problem.

Bitcoin derives it's value from the energy the miners HAVE TO expend MINING the coins out of pure maths (And thus solving the DC problem one way). This sets a price floor.

POS - has some very useful properties, I love POS, BUT IT IS NOT A REPLACEMENT FOR POW.

Anyone, ANYONE, can copy / set up a POS network with EXACTLY the same features and SECURITY for nothing basically. This means that the POS network will have to value it's coins differently. Value them based on what they pay out, like dividends for a share (STAKE) in a company, for instance.

And actually - if you were to run a Blockchain system for Company governance, POS makes MUCH MORE SENSE than POW. There are definitely times when POS trumps POW, no question. But NOT FOR EVERY TASK.
 
POS vs POW ? They are 2 different animals, that solve a problem, in VERY different ways. They are not just interchangeable..

Don't you see ?

I MEan! - WHAT HAVE THE ROMANS EVER GIVEN US ?!?!

HMMmm !?

...

..my I ask - Who would continue the development ?

I'm all for SOME block size limit.

But 1mb is just tooooo small..

WHEN'S THE HARD FORK!! ? 

I need time to get enough popcorn..

Bring it on.

Hmmm.. Well 'Collector's Items' are a little special.. I agree.

As for the Bitcoin and POS statements, we are simply to early to make any judgement calls about what, quite frankly, the Hell is going on..

I'm referring to a future where crypto is more established and understood.

When I think of mobile phones, TV's, cars, computers,  etc etc.. they all tend to cost pretty much the production cost..  Except when you pay just for the label.. Like apple.. .. ..

Or not ?

For Instance..

The Asset Exchange on NXT is 'almost' separate from the value of NXT itself. It certainly makes users want to choose it, like someone picking the NASDAQ or London Stock Exchange, given it's reputation and standing.

POS Teck has enabled a decentralised secure low-energy-usage exchange  to operate in a way unimagined BB (Before Bitcoin).

That's useful.

Sexxy POS !? I Like..

I AM saying that POS can be incredibly useful. But can it be valuable ?

I don't even know if the value matters, if we can understand just quite how useful it could be..

I'm starting to think that this is the REAL issue..

Whether 'it is' or 'is not' possible to get a secure POS blockchain working, Jhonnyj's argument is 'META' to all that.

He's saying that the price of the coin is fixed at,..'will tend to', what it costs a miner to make it. And in POS, this is always a small number, by design.

And before you jump in and say, 'You need a lot of POS coins to MINE that POS coin!'.., there's seems to be a self-referential issue to that statement that makes it negate-itself.. [Cough] If you see what I mean.. Like a snake eating it's tail..

What I mean is, the security of a POS network is dependant on the trustworthiness of the majority of Stakeholders.

I could run a POS network amongst people I know and trust, the members of my village maybe, and it would probably be MORE secure than any other POS coin out there, for me and my friends... Since it costs nothing 'in the REAL world' to run the network securely, just stake in my virtual coin.

The real 'Benefit' from one POS coin to another might be acceptance, not security. How many people accept a certain POS coin .. ?

There would need to be a way of exchanging all these coins for each other, or fiat,  or whatever, on some mega-exchange, but then, hey presto..

..

Maybe that's what will happen.. We'll just have thousands and thousands of different POS coins.. All exchanging for each other..

Come on CfB..  ..

Do POS coins break the basic Economic tenant that says - 'The value of a good tends to its production cost'.. ?

And

Does it even matter if the Price of a POS coin IS set to it's production cost.. Just need a lot of coins.. ?