I've been predicting this for the past month, the whole mine and dump concept is purely driven by greed and wasn't sustainable. Miners are running out of buyers who always end up holding a bag, there is no profit for the vast majority of altcoin buyers. You're right as POW main purpose was to sustain the network and provide some kind of sustainable rewards to miners, it wasnt meant for mine-dump get rich quick which is what it turned into.
This is why i think POS has a brighter future than POW.
Is there a better way to do it? If it's the way mentioned above can you explain a little more?
Thank you
I think what Sunny King did with the POS scheme was very important, but in the end it focuses again on the mining aspect and how to keep the miners from selling their coins, by providing often unsustainable rewards.
Still it is very important to understand the paper that inspired the POS idea:
http://www.links.org/files/decentralised-currencies.pdfIn short: If you have a checkpointing system you don't need a lot of power to make the bitcoin protocol work.
So one could completely throw out the POW aspect or at least reduce it back to the point where the wallets of the core network nodes mine some coins to keep the system going.
I would maybe care less about the mining aspect, if the mining pools would support the primary network operation, but they don't and there is no reason to believe that they will in the future.
It is not possible any more to run a reliable network with big mining pools constantly interfering with the network operation and having malfunctioning pools completely paralyzing a network for days without the operators taking any responsibility.
Maybe cutting out the mining aspect would also cure the problem of the valuation of the coins.
Currently there are two concepts intermingled: On the one hand the valuation of the coins that is related to the electricity cost to produce them and the valuation of the coin network, the services, and the business model.
The value of a coin can be inflated by a lot of mining power on the network, making it more expensive to produce the coins.
This is a kind of measure of popularity of the coin, but in the end this popularity has to be payed for.
So now essentially the investors in the coins are paying for a mining service that gets more and more expensive and also is more and more disruptive to the networks, instead of supporting the development of services, marketing and other aspects of a coin.
It is like paying more and more for a utility and the service worsens to a point where it starts to disrupt the whole business.
It's like to pay a gang of bullies to beat you up every day. It does not make sense.
Today from the cost perspective it does not take much to operate a global network of core network nodes to support a coin network. On the other hand one can drive a coin network with a couple of GPUs or even CPUs in the cloud in a reliable way.
Would this still be decentralised?
We already see Scrypt ASIC prototypes today in the 5 - 10 GH/s range on the pools. This is also a kind of centralization that happened for bitcoin. I think the value of the bitcoin system lies in the reliability of the system due to the distributed nature.
In the end everyone can now create a coin network and I think it will not be considered as currency in the future, but rather as a cheap way to build a global transaction network for businesses, and cut out systems like visa and mastercard.
In a sense a transition form the walled Unix systems to the open Linux.
Titan
