Why isn't proof of stake more widely supported?

[lonelyminer (Peter Šurda)]

And the current proof-of-work system isn't a tragedy of the commons, it's actually the reverse of same.  I was thinking along these lines early on, and made some of those same very arguments about a year ago, but I accept my error now.

There are two distinct problems:

• After crossing 50%, a miner gains over-proportionate (from practical point of view, full) control of the network. Below 50% the relationship between control and share is linear.
• Transaction fees are per transaction, but mining costs are (mostly) per block. If we eliminate the block size limit, all other things being equal, transaction fees will therefore equilibrate below the marginal cost of mining.

These are both issues that need to be investigated. Maybe there already are phenomena that will compensate for this. Maybe PoS is not an appropriate way of countering either of them. But we need to understand them.

[istar]

Anyway, I've made these kind of arguments many times over the past two years, quite literally on both sides of this issue.  What it all comes down to is that PoS doesn't offer an advantage over PoW, but attempts to solve a presumed future problem that I (no longer) agree exists.  I also do see potential problems in it's practical implementations, although those may not be insurmountable.  However, the very biggest problem with PoS is that a major entity could literally come in and buy it out and become a new central bank, as the requirement for having more than the processing power of the whole of the honest network no longer applies to a PoS miner with a large enough of a stake.  Your not going to solve a problem here.

Just in case anyone missed it.

D&T did a good job debunking this here: https://bitcointalk.org/index.php?topic=68213.msg799136#msg799136
It is also discussed in the proof of stake wiki as the "Monopoly problem"

Main Point: A dominant investment gives you absolute control over either system.  PoS requires a much larger investment to obtain control, PoW requires a smaller investment.

If you have additional questions, I am happy to answer them.

There is a huge difference.

In a Pos only, once a miner gets more coins than any other miner it could get very difficult for other miners to compete if there is not enough coins to get or when one miner get hold of 51% of the coins, it will be impossible for other miners to even out the power.
With the Pow other miners can add (from the outside) and regain a power balance.

In a Pow, there is allways the possibility for a power battle creating a balance of power.

I´m all for moving to a 50/50...I´m against a Pos only.

But there are to many good points with a Pos system to be ignored.
 
A Pos means that the value of coins increase since they now also are the tokens that hold the right to mine more coins.
Thus the value of Bitcoins would increase with a Pos.

[cunicula]

I´m all for moving to a 50/50...I´m against a Pos only.

Your argument is correct, but I don't think it raises an important concern. However, I agree with you about not supporting pure PoS. As described in the wiki, my proposal is not practical as a pure PoS system (only as a mixed system). I prefer an 80/20 or 95/5 mix, favoring stake.

[Technomage]

I think that there is definitely potential in PoS-based solutions. However, I don't think Bitcoin should in any way be mixed into this, that is a definite no. We're talking about a radical change and as it is now, there is no problem whatsoever with proof of work. There might be a problem in 5-10 years but that is then, not now.

The only solution is to test PoS-based models in alt chains and if proof of work proves to be problematic in the long run, then Bitcoin could try to make that change. Definitely not now though.

I like the discussion about this and we definitely need competing solutions that use PoS. For Bitcoin it's simple: if it's not broken, don't fix it. Currently proof of work is doing more than fine. Bitcoin is not about to do a massive change simply because something might cause issues in 5+ years.

If this proves to be Bitcoin's doom in the future and some other cryptocurrency does it right, then so be it. It's technological evolution.

It's also important to take into account the fact that it's completely possible that there are other solutions for the problems that might arise from proof of work as it is now. There is plenty of time to work on this and applying a proof of stake solution right now would be ridiculous.

[DeathAndTaxes]

Since my post was linked to I would like to clarify a few things.

1) A Pure PoS system is unviable IMHO.  Having 51% of coins ensures you never will lose control.  Having 51% of hashing power ensures control today but doesn't guarantee it in the future.

2) I think there is some value to a hybrid system.  It gains efficiency over a pure PoW system. 
If we imagine all methods of hashing they would be on a scale like this

negligible capital cost                                   extreme capital cost
<------------------------------------------------------>
extreme operating cost                                 negigible operating cost

moving further to the right is better for defenders.  For a given TH/s of hashing power the network is stronger because the cost of defense is lower and the cost of an attack is higher.

A hybrid system moves the network to the right.  Likely limits need to be put into place so that the work portion of proof of work is still significant.  Alternative you could have a system where each block requires both a proof of work and proof of stake signature.   The theory is interesting.  My interest in it is improving the efficiency of securing the blockchain.

3)
That being said I have no interest in forking Bitcoin.  I think any experimenting especially for something this radical needs to be done in alt-chains.  Even if a hybrid system is shown to be an improvement I doubt Bitcoin will ever be forked (or that the hybrid fork will become dominant).  A hybrid system could be viable as a replacement and/or competitor to Bitcoin is development stagnates.

 

[cbeast]

I am completely for the PoW and find the "ownership" model of finance just as reprehensible as it is in goverment. I understand we are looking to fix a problem that some people believe may exist someday. Some folks claim that the fee incentive may not be enough to keep people mining. I just don't see that as an issue that cannot be met by competition. This whole "tragedy of the commons" myth may seem problematic when it comes to finite natural resources, but there is no limit to the resourcefulness of man's technology.

[LoupGaroux]

Seems to me that POS replaces a threat from a pool with threat from an exchange. Instead of the potential coming from active mining, it comes from accumulation. Realistically the largest stake would be a single massive exchange, holding massive deposits at the time the POS is checked for every transaction.

Potential threat is replaced by a different threat is all.

[MoonShadow]

Main Point: A dominant investment gives you absolute control over either system.

This is a false dictonomy.  I did not claim that absolute control was the result, nor is it necessary.  A dominant investment does grant the investor the power to undermine the network with less than 50% of the processing power.

 PoS requires a much larger investment to obtain control, PoW requires a smaller investment.

This is based upon what?  For a PoW miner to gain majority control over the network right now would require significantly more processing power than is available to all of the top 50 unclassified supercomputers on Earth, while a PoS system based upon the current Bitcoin economy would take no more than the current Market Cap of $46 million in order to gain a solid majority stake.

[DeathAndTaxes]

This is based upon what?  For a PoW miner to gain majority control over the network right now would require significantly more processing power than is available to all of the top 50 unclassified supercomputers on Earth, while a PoS system based upon the current Bitcoin economy would take no more than the current Market Cap of $46 million in order to gain a solid majority stake.

What the frak do super computers have to do with it?  In related news ferrari's suck.  I can't get more than 2 bags of mulch in a ferrari.  No possible way landscapping companies can be profitable.  I mean a major project would require more ferraris than the entire annual production.

Network is ~10TH/S.

At $1 per MH 10TH = $10 mil.

Using ASIC and a $2M NRE one could bring that cost down to <$0.50 per MH.  So taking over entire network would be closer to ~$7M vs $26M for 51% of coins.  Of course trying to buy 51% of coins would cause the price to skyrocket, while buying 51% of the network causes the price to plummet.

BTW I don't like the idea of a pure PofS only model.  Imagine a hybrid where control of network requires 51% of hashing power and stake.  Cost to attacker is now more like ~$50M+.

[dcc4e]

Seems to me that POS replaces a threat from a pool with threat from an exchange. Instead of the potential coming from active mining, it comes from accumulation. Realistically the largest stake would be a single massive exchange, holding massive deposits at the time the POS is checked for every transaction.

Exchanges would probably offer interest to deposits.  Accumulation would be limited to whatever the spread is between deposit interest and mining reward.

[MoonShadow]

Network is ~10TH/S.

At $1 per MH 10TH = $10 mil.

Using ASIC and a $2M NRE one could bring that cost down to <$0.50 per MH.  So taking over entire network would be closer to ~$7M vs $26M for 51% of coins.  Of course trying to buy 51% of coins would cause the price to skyrocket, while buying 51% of the network causes the price to plummet.

If that were anywhere close to the reality, mining would be insanely profitable right now and we'd have dozens of well heeled players trying to jump into the game.  The fact that it is not so is evidence enough that your assumptions are wrong.  Even if ASIC mining drives mining costs down to less than 50 cents per MH, the end result is that the total hashing power of the PoW network increases to match or exceed the value of the network, not that the cost of overtaking the network goes down.

[Rassah]

There's already a proof-of-stake currency out there. The Federal Reserve has the most USD, thus the most stake, and is the only one able to print more USD.

EDIT: Just remembered, the other big issue is that with PoW there is no limit to the work. Competing entities can build miners until the sun explodes, or we run out of resources, and always maintain a 50/50 split. With PoS the limit is the amount of currency in circulation, and as soon as you buy out a piece owned by the other competitor, their only option is to buy that money back from you. PoS is a zero-sum competition.

Finally, why are all the options pro or neutral regarding PoS, and no options for "I don't think PoS is a good system" or at least "I think PoW is better than PoS?" Your "I don't understand how proof of stake would work?" option is a very thinly veiled passive-agressive option at best, implying that if you think it's crap, you just "don't understand."

[cunicula]

If that were anywhere close to the reality, mining would be insanely profitable right now and we'd have dozens of well heeled players trying to jump into the game.  The fact that it is not so is evidence enough that your assumptions are wrong.

It would be provided the status quo held. You just have to take the leap of faith a plunk down the $7 million or so. It is quite risky to gamble that much on bitcoin. That is what is holding would-be monopolists back. We already have some rapidly growing botnet/rogue miners who may be looking to make a play like this. It may come sooner than you think.

The end result is that the total hashing power of the PoW network increases to match or exceed the value of the network, not that the cost of overtaking the network goes down.

Should i take this to mean that the market value of bitcoin mining-specific tools will likely exceed the value of all the bitcoin to be mined? I'll leave that one as an exercise for the reader.

[cunicula]

Seems to me that POS replaces a threat from a pool with threat from an exchange. Instead of the potential coming from active mining, it comes from accumulation. Realistically the largest stake would be a single massive exchange, holding massive deposits at the time the POS is checked for every transaction.

Exchanges would probably offer interest to deposits.  Accumulation would be limited to whatever the spread is between deposit interest and mining reward.

Pretty clever. Hope you stick around and post more. You will raise the mean IQ here substantially.

[cbeast]

Seems to me that POS replaces a threat from a pool with threat from an exchange. Instead of the potential coming from active mining, it comes from accumulation. Realistically the largest stake would be a single massive exchange, holding massive deposits at the time the POS is checked for every transaction.

Exchanges would probably offer interest to deposits.  Accumulation would be limited to whatever the spread is between deposit interest and mining reward.

Interest? Just make sure you have a way to deposit funds without actually signing away the private key or we will see another Ted Williams shenanigan.

[Boussac]

I will not vote in a poll where the options are phrased with bias like
" I don't think there is any problem with bitcoin. Thus proof of stake is not necessary."

People may think there are problems with bitcoin (no such thing as a perfect solution) but proof of stake is a dangerous concept already widely in use with fiat currencies (as pointed out by Rassah before).

[cunicula]

Bump for more votes and/or commentary.

[cunicula]

Bump for more votes and/or commentary.

Start a bounty to get this coded. It's been thoroughly discussed, let's see it in action.

I thought so too, but some people in the proof-of-stake thread with more experience coding than me (remember I have none) recommend more thorough discussion and the generation of relatively complete design documents.

Given that I know nothing about the computer software development process, I'd say that I should go with their advice for the time being. A bounty might come later.

[pastory99]

Bump for more votes and/or commentary.

Start a bounty to get this coded. It's been thoroughly discussed, let's see it in action.

That would be very interesting and nice to see!

[Rassah]

Wasn't SolidCoin a Proof-of-Stake chain, where a few trusted miners started out with 10,000,000 coins each to make sure the "benevolent stakeholders" were the only ones able to mine/sign transactions?