Proof-of-stake is more decentralized, efficient and secure than PoW- white paper

[koubiac]

neucoin.org/en/whitepaper

Facts:

• PoW mining is an incredibly inefficient way of processing transactions. Bitcoin miners earn roughly $1 million per day for processing just 100,000 transactions - $10 each.
• An oligopoly of corporate miners has taken control of the Bitcoin network - decentralization is gone.
• Bitcoin holders are reluctant to debate competitive alternatives to PoW such as PoS and trusted nodes (like Ripple, despite its nearly $1B market cap).

Myth: there is “nothing at stake” in PoS, or in other words, since PoS mining doesn’t consume outside resources, it’s costless for attackers to keep trying to modify transaction history until they succeed. The truth is that PoS security does have a cost: the capital cost of acquiring and holding coins. And the actual probabilities of “until they succeed” have never been mathematically analyzed.

Folklore: Poelstra’s paper Distributed Consensus from Proof of Stake is Impossible. The author even admits in his own conclusion: “there is no rigorous argument that it is impossible to obtain a distributed consensus without provably consuming some resource outside the system.”

The NeuCoin Project’s 39-page white paper mathematically demonstrates how PoS can maintain consensus and defeat all attack vectors - including grinding, history revision and pre-programmed attacks. Bounties for anyone who points out flaws in the paper.

[herzmeister]

So instead a cartel of miners you'll get a cartel of crypto-banks and exchanges with lots of coins in their cold wallets for which they'll additionally earn interest, without having to reinvest in new generation hardware. MtGox would have dominated a PoS-version of Bitcoin quite exclusively back then.

Not that I know of any better solution, concentration of wealth and power seems to be a general problem inherent in capitalism, or possibly even any imaginable form of human society.

[Kazimir]

You don't get it. Bitcoin mining is supposed to be inefficient. There in lies the very core of its trustworthiness.

See Andreas Antonopoulos explain this very clearly in a few minutes.

[Come-from-Beyond]

MtGox would have dominated a PoS-version of Bitcoin quite exclusively back then.

Centralized exchanges is so 2014...

[koubiac]

Debate going on right now on on reddit:
Jeff Garzik arguing against PoS

http://www.reddit.com/r/Bitcoin/comments/30t3k4/proofofstake_is_more_decentralized_efficient_and/

[Come-from-Beyond]

You don't get it. Bitcoin mining is supposed to be inefficient. There in lies the very core of its trustworthiness.

Who supposed that? Satoshi? No, he was making excuses on that part telling that mining will migrate to cold countries and will be used for heating. So, if the creator didn't suppose mining to be inefficient, then maybe PoW-evangelists are just biased because of holding a lot of BTC?

[Come-from-Beyond]

Debate going on right now on on reddit:
Jeff Garzik arguing against PoS

http://www.reddit.com/r/Bitcoin/comments/30t3k4/proofofstake_is_more_decentralized_efficient_and/

Who will pay attention to words of someone who vouches for centralization by endorsing FinCEN regulation and launching a project that will allow USA govt to control Bitcoin satellite traffic?

[DannyHamilton]

- snip -
I just don't think Satoshi expected people to build multi million dollar mines.

Interesting.

Let's see what Satoshi himself had to say about that:

(Emphasis in bold added by me)

- snip -
I anticipate there will never be more than 100K nodes, probably less.  It will reach an equilibrium where it's not worth it for more nodes to join in.  The rest will be lightweight clients, which could be millions.

At equilibrium size, many nodes will be server farms with one or two network nodes that feed the rest of the farm over a LAN.

- snip -
If the network becomes very large, like over 100,000 nodes, this is what we'll use to allow common users to do transactions without being full blown nodes.  At that stage, most users should start running client-only software and only the specialist server farms keep running full network nodes, kind of like how the usenet network has consolidated.
- snip -

The current system where every user is a network node is not the intended configuration for large scale.  That would be like every Usenet user runs their own NNTP server.  The design supports letting users just be users.  The more burden it is to run a node, the fewer nodes there will be.  Those few nodes will be big server farms.  The rest will be client nodes that only do transactions and don't generate.
- snip -

[manselr]

You don't get it. Bitcoin mining is supposed to be inefficient. There in lies the very core of its trustworthiness.

See Andreas Antonopoulos explain this very clearly in a few minutes.

This. For some reason people can't get their heads around the fact the difficulty levels are good and it's what makes the network bulletproof. I would rather trust POW than POS distribution..

[jonald_fyookball]

I've skimmed over the paper.

I don't quite understand the
claims of reducing the effectiveness of grinding attacks .

To quote the paper:

The first step of the grinding attack is for the attacker to generate blocks in order to gain
in sequence over and eventually control the stake modifier. This step takes time and causes the
attacker to accumulate a signicant lag behind the main chain. The process of gaining control of the
stake modifier is very technical, dicult to express and dificult to follow.
But the details do not matter. The only important takeaway is that
the process takes a significant amount of time (at least hundreds of minutes).

Why does this process have to take "at least hundreds of minutes" when the block time
of this coin is 1 minute?  The paper says its very technical and it doesn't matter
but I think it does matter since its at the heart of the matter here.

They should be able to explain in plain English and clear terms why
their design would necessitate a long lag in creating a false chain.

They seem to be saying that there is some kind of prohibition:

During the first 200 minutes (the first modifier interval) of the attack, the attacker
cannot grind through stake modifiers. He must use the stake modifier that was seeded
from blocks from the main chain over the preceding selection interval (1.6 day, or ∼ 2250
minutes).

But none of these time intervals happen in real time or matter to the attacker
in a PoS.  They can all be spoofed...You can always broadcast a false chain
and that has always been the problem with PoS.

(Only PoW is resistant to time manipulations because it takes real time
to do the work.)

Can someone explain to me what is really new here?

[BusyBeaverHP]

I have an un-addressed concern regarding PoS, and it's not consensus nor any kind of attack vector, it's a question of economic incentives to distribute the coins.

With PoS, coins are created by owning coins. If I owned 51% of the coins, where is the incentivization for me to distribute the coins in a fair manner, instead of sleeping on top of my loot like Smaug while all the suckers spend their money? Over time, I would actually own more of the PoS coin economy by just passively printing money, while everyone else spends it, by virtue of inflation.

This isn't a hypothetical problem, it's real because exchanges essentially are printing their own money with PoS coins in this case. Just-Dice is a pretty good example of this.

In PoW, the miners' hands are forced to give up the coins by means of competition and resource expenditure, thus a good portion of the coinbase reward are sold on the open market and there lies forced incentivization of distribution.
With PoS, what is the incentivization to distribute the coinbase?

The pre-mine in many PoS systems today (I'm looking at you, NXT), is ludicrous and consists of a bunch of early adopters hustling unwitting newcomers into accepting Bitcoin 2.0. Printing money with zero work is no better than the Federal Reserve we strive to avoid.

[Come-from-Beyond]

Printing money with zero work is no better than the Federal Reserve we strive to avoid.

Created a strawman and successfully defeated it. Well done!

[theskillzdatklls]

imo a hybrid of pos pow is the best way to do this. dashcoin kind of accomplishes this feat. but the market will decide in the end what it wants.

[Kazimir]

You don't get it. Bitcoin mining is supposed to be inefficient. There in lies the very core of its trustworthiness.

Who supposed that? Satoshi? No, he was making excuses on that part telling that mining will migrate to cold countries and will be used for heating. So, if the creator didn't suppose mining to be inefficient, then maybe PoW-evangelists are just biased because of holding a lot of BTC?

It doesn't matter who supposed it. Did you check the video excerpt I mentioned? Highly recommended, Andreas explains it very well.

Anyone still saying "altcoin X or hashing algorithm Y is better because it's more efficient" doesn't understand the delicate equilibrium between security and value of the network.

[BusyBeaverHP]

Printing money with zero work is no better than the Federal Reserve we strive to avoid.

Created a strawman and successfully defeated it. Well done!

Yep, and yet my concerns are still unanswered by you, an NXT supporter. 

I-... I'm sorry, am I using NXT as ad hominen now? Please point out more of my debate fallacies o wise one.

[saddampbuh]

you left out the most important thing

pow = forever downward pressure on price if new fiat doesn't keep up with coin generation
pos = new fiat goes to making my coins more valuable and soon 1 btc = $10000

[Amph]

you left out the most important thing

pow = forever downward pressure on price if new fiat doesn't keep up with coin generation
pos = new fiat goes to making my coins more valuable and soon 1 btc = $10000

you forgot that in pow, there is the halving, which will lead at the end to an increase in price because of less supply and more demand

in pos no one will buy anymore because he/she can generate coins without any effort, free money for them

[Come-from-Beyond]

It doesn't matter who supposed it. Did you check the video excerpt I mentioned? Highly recommended, Andreas explains it very well.

I tried, but his spoken English was too hard for me.

[Come-from-Beyond]

Yep, and yet my concerns are still unanswered by you, an NXT supporter. 

I-... I'm sorry, am I using NXT as ad hominen now? Please point out more of my debate fallacies o wise one.

No other fallacies were spotted. You were right, after 200 years of forging a Nxt whale would double his stake.

[saddampbuh]

you forgot that in pow, there is the halving, which will lead at the end to an increase in price because of less supply and more demand

in pos no one will buy anymore because he/she can generate coins without any effort, free money for them

i didn't forget halvings i just don't want to wait years for coin generation to be low enough that it doesnt hurt the price anymore and when that happens we get bigger risk of 51% as many miners switch off machines

of course someone will buy, the same who are buying now except they will be buying from our hoarded coins + 1% interest instead of miners who dump at any price