Proof of stake coin --- The pros and cons?

[ChuckOne]

So you are saying PoS can have a centralized authority that determines who is being a bad guy. Sounds familiar....

Please point me to my words where I said: "centralized authority".

cheaters and bad guys can be detected and punished.

Clear implication.

Clear implication done wrong.

I said nothing about WHO is gonna detect the bad guys. It will certainly not be a singly authority. That would be against the spirit of cryptocurrencies, right?

[ChuckOne]

Huh? What is the difference in buying mining equipment for X dollars or buying tokens for X dollars?

1) One thing is convenience: regarding PoW, it can be achieved by automatic deployment using scripts/images/magic of computer science.
2) Another thing are the costs: that is a matter of price. So, I see no point in arguing about that. Just because Bitcoin is very expensive right now does not mean that I cannot kill a cheap PoW coin by the method described above.

It would be cheaper and more practical to just buy a bunch of coins than consuming more resources and money than a huge corporation does to keep networked.

"cheaper and more practical" <<< this relates to 2) just depending on the price tag of the mining equipment and the price tag of the coin => so, you cannot generalize it to concepts like PoW or PoS

"practical" <<< this relates to 1) once again: if you manage a server farm, you have tools available to do the dirty work for you; today, it is as easy as clicking on a button

[ChuckOne]

If there are 100 coins in circulation(for example) and only 4 coins staked, that would only require 5 staked coins to perform an attack. That is how a PoS attack would be performed, having over 51% of the staked coins.

That would be a problem for a coin if it:

1) had a high minimum stake age
2) low stake reward
3) bad distribution
4) dishonest miners (ie: stakers)
5) no checkpoint system

Having all of this in one platform is certainly bad luck.

[ChuckOne]

You can stockpile stake blocks and release a re-org at your leisure. This is why PPC uses centralised checkpointing, and also why they use a stake modifier which depends on some subset of the last N PoW blocks, wheras the recent rash of pure PoS coins has simply removed this entirely, hoping no-one would notice.

You can stockpile if the protocol allows it. But when PoS done right, you cannot.

Regarding checkpoints: PoW coins use checkpoints as well.

[ChuckOne]

This is why I'm attempting to make decentralized checkpoints then building pruning off that feature the #1 priority of the Whitecoin community takeover, to finally bring PoS to a level that surpasses Bitcoin in security and decentralization, using multipool tax to fund that goal.

I would love to see that. Have you read http://www.links.org/files/decentralised-currencies.pdf ?

Many of these older posters would love to say that until PoS coins remove checkpoints entirely, or convert to decentralized checkpoints, that they shouldn't even be considered cryptocurrency.  The only problem is, they can't type that since they already know Bitcoin itself is using checkpoints in each update.

The paper mentioned above backs up your claim and leads to the conclusion why we actually do not need PoW.

[MarketNeutral]

MarkM provided some good context to the cons.

When researching PoS, it's best to avoid recent posts in the altcoin subforum. They mostly don't know what they're talking about.

Instead, some of the oldest posts about various PoS protocols as discussed in the bitcoin subforums were explicated in profound detail by the more technically-inclined early programmers and adopters. They really mete out criticism well, but it's over the heads of most pump-and-dump noobs.

This is not really correct.  Most of them now agree that PoS is secure, if not more secure than Bitcoin itself, the only problem is centralized checkpoints.

This is why I'm attempting to make decentralized checkpoints then building pruning off that feature the #1 priority of the Whitecoin community takeover, to finally bring PoS to a level that surpasses Bitcoin in security and decentralization, using multipool tax to fund that goal.

Many of these older posters would love to say that until PoS coins remove checkpoints entirely, or convert to decentralized checkpoints, that they shouldn't even be considered cryptocurrency.  The only problem is, they can't type that since they already know Bitcoin itself is using checkpoints in each update.

But you're correct in some regard, many of these coins just cruise along with centralized checkpoints not even caring about removing them and waiting for someone else to figure it out.

Good on you for the PoS development. Surpassing Bitcoin's security is a worthy and certainly attainable ambition. I wasn't thinking of centralization per se, but I do understand what you mean. I was more thinking of the technical minutiae as analyzed by the code-slinging hardline bitcoin supporters. They bring up great points missed by more casual developers, yet they do tend to be less open-minded to altcoin development. I understand their attitude to some extent, having seen the long-term degradation of the cryptocurrency community with the rise of so many clonecoins and noobs, but I also think they sometimes lose perspective and miss the proverbial forest for the trees.

Any development that further engenders decentralization is a good thing. Keep it up! 

[Anon136]

There are a LOT of advantages to proof of stake.

Harder to 51%
Attacks on network security make other stake owners wealthy at the expense of the attacker.
They can have faster block times.
They dont need to consume a huge amount of energy in order to remain secure.
It becomes possible to layer novel trust based mechanisms ontop of the core.
Possible to make them much more decentralized since it doesn't require special equipment to "mine".

I'm sure there are even more that im not thinking of now.

As for whether they "really work" there were some serious problems with peercoin and its forks. Those types of proof of stake didnt really work. The nxt devs solved all of those problems. Nxt and its forks do work.

[ThePurplePlanet]

The main reason they dont work is unlike bitcoin there is no cost to a double spender known as "nothing at stake". An attacker can keep trying forever to double spend with no cost. In bitcoin you spend electricity so there is a cost to keep trying double spending. In all PoS solutions you keep trying until you get 6 blocks in a row and double spend. All PoS variates suffer. Right now all are artificially protected by checkpointing and very skewed ownership early adopters not attacking but if it is to succeed early adopters need to distribute the coins and it ll make them very vanurable. Be critical people with your money and dont push more newbies in that hole.

[ThePurplePlanet]

NXT is the biggest joke of all. Low quality code. Very insecure and this guy http://87.230.14.1/nxt/nxt.cgi?action=3000&acc=4747512364439223888 mined  23298 out of total 127960 blocks. This is a complete joke premined public ledger luring noobs.

[ChuckOne]

The main reason they dont work is unlike bitcoin there is no cost to a double spender known as "nothing at stake". An attacker can keep trying forever to double spend with no cost.

Is that the definition of double spending? Submit a transaction spending your coins twice to different accounts. << I can do that with every coin.

If you mean selfish mining, that is possible with Bitcoin, too.

Anyway this discussion here is about PoS - pros+cons.

It is not about "Bitcoin against Othercoin".

[ThePurplePlanet]

The main reason they dont work is unlike bitcoin there is no cost to a double spender known as "nothing at stake". An attacker can keep trying forever to double spend with no cost.

Is that the definition of double spending? Submit a transaction spending your coins twice to different accounts. << I can do that with every coin.

If you mean selfish mining, that is possible with Bitcoin, too.

Anyway this discussion here is about PoS - pros+cons.

It is not about "Bitcoin against Othercoin".

Yes that is what a double spending. With bitcoin you can do it after a block is verified but it will cost you 500 million to buy the ASICS and gain 51% of the network. With PoS you can keep trying with no cost until you make. Thats a con and thats why I mentioned it.

[ChuckOne]

Yes that is what a double spending. With bitcoin you can do it after a block is verified but it will cost you 500 million to buy the ASICS and gain 51% of the network. With PoS you can keep trying with no cost until you make. Thats a con and thats why I mentioned it.

Do not confuse PoW with Bitcoin.

I can kill any PoW-Coin and any PoS-Coin if I want to.

It is just a matter of the prize how much it will cost to do so. There is simply no difference in buying stake or buying ASICs as I elaborated already in previous posts.

The advantage of stake is: the network can control it.

[canadacoin147]

When Ghash.io mining power went to 42% in Jan, to me that was the writing on the wall for POW systems. Yes the danger was averted, but it showed that a 51% control was certainly not an impossibility. Add to that excessive consumption of energy, and there are some good reasons for a hybrid POW/POS coin or pure POS coin, with the right variables.

That said, from what I understand, POS coins with no maxium stake limit (like Black) may leave themselves susceptible if a potential attacker sits on them for a long while, then launches an attack when the network usage is low and they control 51% of the coinage. Having some large staked holdings seems to deal with this risk.

[ChuckOne]

Another pro of PoS is that this cannot happen: https://bitcointalk.org/index.php?topic=595877.msg65417a80#new

[Anon136]

The main reason they dont work is unlike bitcoin there is no cost to a double spender known as "nothing at stake". An attacker can keep trying forever to double spend with no cost.

Is that the definition of double spending? Submit a transaction spending your coins twice to different accounts. << I can do that with every coin.

If you mean selfish mining, that is possible with Bitcoin, too.

Anyway this discussion here is about PoS - pros+cons.

It is not about "Bitcoin against Othercoin".

Yes that is what a double spending. With bitcoin you can do it after a block is verified but it will cost you 500 million to buy the ASICS and gain 51% of the network. With PoS you can keep trying with no cost until you make. Thats a con and thats why I mentioned it.

sorry but you don't know what you are talking about. of course you can try to author blocks that you are not elligable to author but what good would that do? the network isnt suddenly going to forget the rules and just allow you to author a block that you are not entitled to author simply because you asked so many times. maybe that would work with peercoin. im not a peercoin expert. but certainly not with nxt.

[Brangdon]

A PoS coin is susceptible to an attack, just like PoW. However, the means of performing the attack would be much simpler. The main weakness comes from most coin holders do not (and will probably never) stake their coins in the long run.

Isn't that problem avoided with leasing? Leasing in NXT is a way to delegate your stake to a pool, which then mines on your behalf and sends you your share of the revenue. You can still spend your coins after you have leased them; the pool benefits according to your current balance so when you spend, the pool's effective stake reduces. Leasing lets you participate in mining without needing to maintain an always-on computer and the necessary bandwidth.

Leasing is similar to how in PoW you can pool your hashing power, with similar benefits and drawbacks. In both systems the pools get to wield a lot of power, which is potentially dangerous, but in both if they abuse that power then people can withdraw from the pool and switch to a different one.

Now that leasing is live, it is a lot easier to stake one's coins and a lot more coins will be staked. I think their system isn't yet perfect - you have to pay a transaction fee to lease which makes it uneconomical for the very poor - but we should end up with most coins getting staked.

[Brangdon]

I think POS promotes spending because of never ending inflation. Especially for most users who cant have computer on 24/7.

NXT has zero inflation. Miners make money from transaction fees alone.

PoS is inherently less inflationary than PoW. This is because mining in PoS does not require expensive hashpower, so miners don't need to be paid as much as in PoW. Bitcoin, for example, will be inflationary until 2140, because of the coins created to pay the miners.

Also, as the block reward diminishes, miners will still need to be paid, so the transaction fees will have to rise, so in the long run PoS can have lower transaction fees than PoW. This trend is obscured in Bitcoin by its increasing market capitalisation. Last time the block reward halved, the miners got fewer coins but they were worth more. We hope market cap will continue to rise for a while, but it won't continue rising forever.

[sdersdf3]

I think POS promotes spending because of never ending inflation. Especially for most users who cant have computer on 24/7.

NXT has zero inflation. Miners make money from transaction fees alone.

Where do those transaction fees come from? The existing supply of coins? There are no new coins created to pay miners?

[HCLivess]

pros:

-network security incentive
-price safety net
-stake returns

cons:

-inertia
-vague market price representation
-hoarding incentive
-sometimes inflation

[Brangdon]

I think POS promotes spending because of never ending inflation. Especially for most users who cant have computer on 24/7.

NXT has zero inflation. Miners make money from transaction fees alone.

Where do those transaction fees come from? The existing supply of coins? There are no new coins created to pay miners?

The transaction fees come from the existing supply of coins. Specifically, they are paid by the account that creates the transaction. No new coins are created to pay miners.