Which Proof of Stake System is the Most Viable

[clout]

There has been a lot of discussion lately on whether or not proof of stake is a feasible substitute for proof of work. I have come to believe that it is a necessary progression of the crypto currency space toward consensus systems that do not involve arbitrary work and artificially valuable resources. Proof of stake, as I see it, is a step in that direction. Of all the proof of stake coins/projects, I found three thoroughly documented approaches to solving issues associated with distributed consensus - PeerCoin, Nxt, and Bitshares. Each project has its on merits as well as shortcomings. I put it to the community to vote and discuss on which approach has the best promise.

The relevant white papers are as follows:

• Peercoin - http://www.peercoin.net/assets/paper/peercoin-paper.pdf

Abstract:

A peer-to-peer crypto-currency design derived from Satoshi Nakamoto’s Bitcoin.
Proof-of-stake replaces proof-of-work to provide most of the network security.
Under this hybrid design proof-of-work mainly provides initial minting and is
largely non-essential in the long run. Security level of the network is not
dependent on energy consumption in the long term thus providing an energyefficient
and more cost-competitive peer-to-peer crypto-currency. Proof-of-stake
is based on coin age and generated by each node via a hashing scheme bearing
similarity to Bitcoin’s but over limited search space. Block chain history and
transaction settlement are further protected by a centrally broadcasted checkpoint
mechanism.

• Nxt - http://wiki.nxtcrypto.org/wiki/Whitepaper:Nxt

Abstract:

Bitcoin has proven that a peer-to-peer electronic cash system can indeed work and fulfill payments processing without requiring trust or a central mint. However, bitcoin has several shortcomings that prevent it from becoming the basis of an electronic economy. In order for an entire electronic economy to be based on a peer-to-peer solution, it must be able to do the following:
Process thousands of transactions, quickly
Provide a means for generating income
Practical means for adding new features
Be able to run on mobile devices
NXT satisfies all these requirements and additionally eliminates the Ghash arms race that bitcoin's proof of work requires. NXT is based on 100% proof-of-stake and this required an initial distribution to be made. While many are not comfortable with the specific initial distribution of the genesis block, when asked: "How would you solve problem with scam accusations according to "unfair" distribution NXT to 73 big stakeholders?", BCNext answered: "This problem can not be solved. Even if we had a million stakeholders the rest seven billion people would call this unfair. A world with the money can not be perfect".[1]
The fundamental improvement of NXT is Transparent Forging. This is the key innovation of NXT that allows it to process thousands of transactions per second.

• Bitshares  (DPoS - http://bitshares.org/delegated-proof-of-stake/)

Dpos Abstract:

This paper introduces a new implementation of proof of stake that can validate transactions in seconds while providing greater security in a shorter period of time than all existing proof of stake systems. In the time it takes Bitcoin to produce a single block a DPOS system can have your transaction verified by 20% of the shareholders and by the time Bitcoin claims the transaction is almost irreversible (6 blocks, 1 hour) your transaction under DPOS has been verified by 100% of the shareholders through their delegates.

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[franky1]

answer: none

if a certain mining script was any better then the other due to efficiency, then giv it enough time and greedy miners will pile on so many rigs to get the biggest slice of the reward pie. and others will do the same to compete until its no longer efficient.

no matter what th 'puzzle' is to get a reward, people will buy as much equipment as they can to compete. so changing bitcoin with an aim of efficiency is only going to last a few weeks before the competition meets or exceeds the old mining protocols.

so the big picture is that it wont change a thing

[Anextech]

Peercoin POS is interesting as it still allows people who want more coins to contribute more hast that cost money to get coins

[franky1]

answer: none
if a certain mining script was any better then the other due to efficiency, then giv it enough time and greedy miners will pile on so many rigs to get the biggest slice of the reward pie. and others will do the same to compete until its no longer efficient.
no matter what th 'puzzle' is to get a reward, people will buy as much equipment as they can to compete. so changing bitcoin with an aim of efficiency is only going to last a few weeks before the competition meets or exceeds the old mining protocols.
so the big picture is that it wont change a thing

You have no idea what proof-of-stake is.

you have no idea that in the grand scheme of things it doesnt really matter.. be honest what will the differences actually achieve, dont think of the narrow minded problem, think global and long term

[jonald_fyookball]

Thanks clout.  Very good topic and
thanks for providing the links so
we can compare the 3 systems.
 
Here's just my 2 cents on the
matter:

I think the most important things
are how are new blocks formed,
and how is consensus achieved.
(Minting is a distant second,
and I didn't delve into that).

I'll give my summary of each
system and my conclusions to follow.

1. Peercoin:

- Instead of using the longest
chain method, they use the
chain with the longest "coin days"
of the transactions in the blocks
in the chain.

An interesting proposal, seems to work
in theory because someone
with a large wallet who sends
themselves coins goes back to
0 coin days, and thus cannot
be easily manipulated.

However, in practice is currently
relying on checkpointing... and
the whitepaper admits it
may not even work as well
as Bitcoin to prevent a 51%
attack.

2. Nxt

This uses a semi-random
deterministic protocol to
decide what node forges
the next block.

While this sounds quite neutral
and fair, the downside is this:

Up to 720 recent blocks can be "re-organized" by the network in case of problems,
so a transaction is considered irreversible after 721 confirmations. Transactions that have been confirmed 1440 times are considered permanent

.

with 60-second blocks, 1440 minutes = 24 hours to fully confirm.  Not great.
If this could be improved, it would be excellent.

3. Bitshares:

Uses a "delegated proof of stake" protocol,
which is similar to the Ripple consensus algorithm
(basically a club of trusted nodes) except you
use your shares in the coin to vote for what
nodes you trust ("delegation").

The positive side of this system is faster
confirmation, but its more centralized.

They make the point that Bitcoin isn't really
that distributed due to mining pools, and
other proof of stake systems aren't really
that distributed due to people not running
full nodes...

Conclusion:

(these are just my initial OPINIONS,
which always subject to revision):

Bronze Medal:  Bitshares.

I like the Bitshares solution the least out
of all 3.  It seems far too centralized
and dependent on people rather than math,
although it still seems like it could work.


Silver Medal:  Nxt

Currently, it takes way too long to fully
confirm transactions,  but has some powerful
principles behind it, very well documented,
with smart people...and probably further
research could be done to improve confirmation
time.

Gold Medal:  Peercoin

I like this solution the most because
it is the simplest.  Simple solutions
are usually the best, which is why
proof-of-work and longest chain has
stood the test of time.

It would be nice to see if Peercoin
would work without checkpointing.

-----

There you go.  Will be interesting
to see what other folks think.

[clout]

i messed up the link to the other half of the bitshares solution which is transactions as proof of stake. i think the tapos paper is probably the best of all the ones that i posted. it seems to solve all the problems that peercoin has and at a much lower cost given that peercoin is a hybrid that still issues coins to miners. the network is secured by coin days destroyed as with peercoin but instead of requiring individuals to volunteer there stake to the network and expose their private key, tapos simply uses the coin days destroyed from transactions. this shifts proof of stake from being a manual process to an automatic process. additionally, each transaction includes the hash of a recent block so as to make attacking the network by way of a secret chain unfeasible. since with pos systems the coin days destroys determine confirmation, someone with a secret chain could not leverage the coin days destroyed of the public chain. tapos uses proof of work mining only to produce blocks, not for network security. the difficulty of mining a block is inversely correlated to the coin days destroyed in that block, thereby preventing denial of service. although bitshares gets rid of the mining aspect from the original tapos paper with the delegate model, i do believe that tapos is still the underlying consensus mechanism.

[benjyz]

here are some other relevant links:

first suggestion: https://bitcointalk.org/index.php?topic=27787.0
Wiki Page: https://en.bitcoin.it/wiki/Proof_of_Stake
Proof of Activity: https://bitcointalk.org/index.php?topic=102355.0

[Brangdon]

additionally, each transaction includes the hash of a recent block so as to make attacking the network by way of a secret chain unfeasible.

I like that idea. Does it mean transactions run a risk of picking the wrong recent block? As I understand it transactions can only be included in block-chains that contain the block they nominated, so if they nominated a block that gets orphaned, they will never be accepted into the main block-chain and the transaction itself becomes orphaned too.

This feels like it could have potential for double-spends worse than in Bitcoin. In Bitcoin, when the block-chain forks, both forks can contain the same transactions so most transactions are unaffected by a fork. In TaPoS, as I understand it, a fork means a lot of transactions will be reverted, and will have to be re-broadcast with a new nominated block. If the sender does nothing, the receiver will never get paid, so double-spending becomes the default result of a fork rather than something that only happens if a sender is actively criminal.

To avoid nominating a wrong block, a transaction would like to nominate a really old block, ideally the genesis block, so it can be included in either/both sides of the fork. Presumably the protocol disallows that by enforcing "recent". If so, does that mean that transactions expire? If "recent" means within 5 blocks, a transaction that fails to be included for 6 blocks can never be accepted. Transactions seem to be in a bit of a bind. They want to nominate a young block to minimise their risk of expiring, and an old block to minimise their risk of being discarded by a fork.

Is there anything to stop the same transaction (ie, same inputs/outputs) being issued multiple times, each time nominating a different block, to minimise the chances of it being orphaned? At most one of the versions will be accepted into the longest chain, so it would seem to be free. If so, isn't that the rational thing for a client to do (supposing it genuinely wants its transactions to be executed), and doesn't it make the "Transactions as Proof of Stake" thing pointless? Every transaction will vote for every block, just in case that block wins.

Is there a thread where these issues are discussed? I'm probably mis-understanding or re-inventing wheels.

[AnonyMint]

The poll lacks a choice for "no proof-of-stake system will win".

Proof-of-stake will never remain decentralized:

https://bitcointalk.org/index.php?topic=558316.msg6501774#msg6501774

Send all proof-of-stake currencies to the trashcan.

[jonald_fyookball]

The poll lacks a choice for "no proof-of-stake system will win".

Proof-of-stake will never remain decentralized:

https://bitcointalk.org/index.php?topic=558316.msg6501774#msg6501774

Send all proof-of-stake currencies to the trashcan.

Note: this poster is a troll who knowingly
tried to spread misinformation and FUD about
Bitcoin for months.

So take anything he says with a grain of salt.

Interesting that Dark Wallet just debuted.  So much
For all the "bitcoin is doomed because it will
Never be anonymous" fear-mongering.

[sockpuppet_5]

I've heard that PeerCoin's version of POS is more vulnerable because it calculates the size of the stake using the number of days the coins have been held. This supposedly makes it more vulnerable to attack, but I can't find the post where this was discussed. come-from-beyond mentioned it on the NXT forum (I think).

I love them all. POW is doomed eventually, but it might be a few years off yet.

[xiaozhubao]

Nxt (Transparent forging), in my opinion.

[jubalix]

answer: none

if a certain mining script was any better then the other due to efficiency, then giv it enough time and greedy miners will pile on so many rigs to get the biggest slice of the reward pie. and others will do the same to compete until its no longer efficient.

no matter what th 'puzzle' is to get a reward, people will buy as much equipment as they can to compete. so changing bitcoin with an aim of efficiency is only going to last a few weeks before the competition meets or exceeds the old mining protocols.

so the big picture is that it wont change a thing

uhhh, you don't buy mining hardware for pos

[valarmg]

How did you forget to include Blackcoin?

Edit: Ah, misread. You are talking about systems rather than coins. I guess Blackcoin is a variation on the Peercoin system, just with pure PoS, faster transaction times, and lower fees.

[benjyz]

As DPOS refers to Ripple consensus, here is a link:
http://bitcoin.stackexchange.com/questions/10180/what-are-the-pros-and-cons-of-ripples-consensus-as-compared-with-bitcoins-proo

[cryptohunter]

Thanks clout.  Very good topic and
thanks for providing the links so
we can compare the 3 systems.
 
Here's just my 2 cents on the
matter:

I think the most important things
are how are new blocks formed,
and how is consensus achieved.
(Minting is a distant second,
and I didn't delve into that).

I'll give my summary of each
system and my conclusions to follow.

1. Peercoin:

- Instead of using the longest
chain method, they use the
chain with the longest "coin days"
of the transactions in the blocks
in the chain.

An interesting proposal, seems to work
in theory because someone
with a large wallet who sends
themselves coins goes back to
0 coin days, and thus cannot
be easily manipulated.

However, in practice is currently
relying on checkpointing... and
the whitepaper admits it
may not even work as well
as Bitcoin to prevent a 51%
attack.

2. Nxt

This uses a semi-random
deterministic protocol to
decide what node forges
the next block.

While this sounds quite neutral
and fair, the downside is this:

Up to 720 recent blocks can be "re-organized" by the network in case of problems,
so a transaction is considered irreversible after 721 confirmations. Transactions that have been confirmed 1440 times are considered permanent

.

with 60-second blocks, 1440 minutes = 24 hours to fully confirm.  Not great.
If this could be improved, it would be excellent.

3. Bitshares:

Uses a "delegated proof of stake" protocol,
which is similar to the Ripple consensus algorithm
(basically a club of trusted nodes) except you
use your shares in the coin to vote for what
nodes you trust ("delegation").

The positive side of this system is faster
confirmation, but its more centralized.

They make the point that Bitcoin isn't really
that distributed due to mining pools, and
other proof of stake systems aren't really
that distributed due to people not running
full nodes...

Conclusion:

(these are just my initial OPINIONS,
which always subject to revision):

Bronze Medal:  Bitshares.

I like the Bitshares solution the least out
of all 3.  It seems far too centralized
and dependent on people rather than math,
although it still seems like it could work.


Silver Medal:  Nxt

Currently, it takes way too long to fully
confirm transactions,  but has some powerful
principles behind it, very well documented,
with smart people...and probably further
research could be done to improve confirmation
time.

Gold Medal:  Peercoin

I like this solution the most because
it is the simplest.  Simple solutions
are usually the best, which is why
proof-of-work and longest chain has
stood the test of time.

It would be nice to see if Peercoin
would work without checkpointing.

-----

There you go.  Will be interesting
to see what other folks think.

interesting and educational post.

[Lauda]

How can you claim that it doesn't matter if you don't even know what it is?

The only good thing in his post is the answer: none. From what OP listen, I wouldn't chose any of them. Also, yes he doesn't seem to know what POS is.

[AnonyMint]

The poll lacks a choice for "no proof-of-stake system will win".

Proof-of-stake will never remain decentralized:

https://bitcointalk.org/index.php?topic=558316.msg6501774#msg6501774

Send all proof-of-stake currencies to the trashcan.

Note: this poster is a troll who knowingly
tried to spread misinformation and FUD about
Bitcoin for months.

So take anything he says with a grain of salt.

Interesting that Dark Wallet just debuted.  So much
For all the "bitcoin is doomed because it will
Never be anonymous" fear-mongering.

You can listen to someone with a low IQ or someone with a high IQ and 30 years programming experience and multi-million user commercial software accomplishments.

In short, he has no fucking clue.

[clout]

I don't think you understand the economics well enough to be an authoritative voice. Dan Larimer certainly has a high iq. I go to the most prestigious college in the world. I too have a high iq. I don't know why you are trying to make it about intellectual capacity when that misses the point. Bitcoin is an expression of decentralized consensus. Capitalism is the same type of decentralized consensus through a resource-democracy. If you have missed the parallelism between pow, pos, and all other resource democracies you cannot speak intelligently about cryptocurrencies and their viability. I really wish you would add to the discussion instead of bashing things that you do not understand.

[jonald_fyookball]

The poll lacks a choice for "no proof-of-stake system will win".

Proof-of-stake will never remain decentralized:

https://bitcointalk.org/index.php?topic=558316.msg6501774#msg6501774

Send all proof-of-stake currencies to the trashcan.

Note: this poster is a troll who knowingly
tried to spread misinformation and FUD about
Bitcoin for months.

So take anything he says with a grain of salt.

Interesting that Dark Wallet just debuted.  So much
For all the "bitcoin is doomed because it will
Never be anonymous" fear-mongering.

You can listen to someone with a low IQ or someone with a high IQ and 30 years programming experience and multi-million user commercial software accomplishments.

In short, he has no fucking clue.

Classic ad hominem attack instead of facing the facts.  For the record, I also have a high iq but i feel no need to use fancy words or brag about my accomplishments.  You may indeed know more about math or cryptography than I do, but I still see right through your agenda.  Still think bitcoin will fail due to widespread theft and clawbacks?

I'm not saying I'm pro PoS, just saying that you are not to be taken seriously on any topic.