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Sadly, this article is mostly just a link to the Ethereum FAQ. It should be noted that every Proof of Stake altcoin has eventually collapsed, and there are arg

Sadly, this article is mostly just a link to the Ethereum FAQ. It should be noted that every Proof of Stake altcoin has eventually collapsed, and there are arguments that this is inevitable: https://download.wpsoftware.net/bitcoin/pos.pdf https://download.wpsoftware.net/bitcoin/pos.pdf

Animats 10y ago
It's not that distributed consensus is hard. It's that anonymous consensus is hard. Common stock has distributed consensus via voting based on share ownership. That's proof-of-stake. The real problem here, as with spam, is the ability to generate large numbers of anonymous identities cheaply. Zuckerberg figured this out a long time ago; hence Facebook's "real names" policy.
- TD-Linux 10y ago
  That's partly the case, though note that in terms of Bitcoin, stock would be considered to be centralized, not distributed, as the exchange determines ordering of transactions. It's not really proof of stake because it doesn't have the problem that proof of stake is trying to solve in the first place.
  - kevinpet 10y ago
    Stock is centralized, but not in that way. There is no single ordering of transactions. Exchanges (which are distinct entities, i.e. decentralized) are legally required to report their trades, but the order actually happens at independent places. What is centralized is the record of ownership of the shares. All publicly tradable shares in the US are in a technical sense owned by Cede & Co., a partnership related to the DTCC. When shares change hands, all that happens is an entry in the database at the DTC. Since we're talking about the blockchain, it's interesting to know how this system is secured. The mechanism is that both parties report the expected transactions to DTCC, which ensures they match before the money changes hands. The trade that happens during market hours is only the agreement to trade, and the actual delivery happens three days later.
  - zby 10y ago
    The voting consensus is not about recording transactions (that is buying selling shares) - it is about governing the company by the people holding the shares.
- wyager 10y ago
  No, you've misclassified the problem. Decentralized consensus is hard. Decentralized is a stricter criterion than distributed. Decentralized means there is no central authority. Facebook "solves" this by having a centralized identity registrar, which wouldn't work for Bitcoin, because that would inherently give control of the network to whoever owns the registrar. In cryptocurrencies this is called the "sybil attack problem".
  - zby 10y ago
    There is no one definition of the difference between decentralized and distributed - everyone has his own. This is a huge problem when talking about this stuff.
- zby 10y ago
  Strictly speaking the requirement is not really about anonymity - it is about the system being open to join by anyone without any precondition. Is this equivalent?
  - Animats 10y ago
    It's the ability to create arbitrarily many "anyones" that's the problem. "One fake account, one vote" is what kills reputation systems.
rocqua 10y ago
A short summary of the argument as I understand it: With proof of work, you can only mine on any one block. You make sure this is the last block in the chain because otherwise you'd need to mine 2 blocks in a row to convince everyone. This ensures it is really hard to rewrite history. With proof of stake, nothing is preventing you from 'mining' on multiple base blocks on the same time. Anytime you spend a coin and get the goods, you might as well try and see if you can 'mine' 2 new blocks to erase your transaction.
- jbpetersen 10y ago
  This is known as the "nothing at stake" problem and is solved at this point: just require a deposit for mining and treat it as a bounty for proving someone tried to mine on more than one continuation of the PoS blockchain. The kicker is part of the deposit is burned to avoid shenanigans of someone claiming the bounty on theirself and not having to suffer any consequences.
  - nullc 10y ago
    The above paper discusses that 'solution' (it isn't one.). The system remains circular, and participants can still grind for alternative histories which grant them more control over time.
  - rocqua 10y ago
    How would anyone get such a proof? Seems like mining would need to be collaborative, with no possibility of choosing the collaborators.
Mtinie 10y ago
Peercoin is still running strong. It doesn't have a huge base of adoption, but it hasn't collapsed, either.

Animats 10y ago

It's not that distributed consensus is hard. It's that anonymous consensus is hard. Common stock has distributed consensus via voting based on share ownership. That's proof-of-stake. The real problem here, as with spam, is the ability to generate large numbers of anonymous identities cheaply. Zuckerberg figured this out a long time ago; hence Facebook's "real names" policy.

TD-Linux 10y ago
That's partly the case, though note that in terms of Bitcoin, stock would be considered to be centralized, not distributed, as the exchange determines ordering of transactions. It's not really proof of stake because it doesn't have the problem that proof of stake is trying to solve in the first place.
- kevinpet 10y ago
  Stock is centralized, but not in that way. There is no single ordering of transactions. Exchanges (which are distinct entities, i.e. decentralized) are legally required to report their trades, but the order actually happens at independent places. What is centralized is the record of ownership of the shares. All publicly tradable shares in the US are in a technical sense owned by Cede & Co., a partnership related to the DTCC. When shares change hands, all that happens is an entry in the database at the DTC. Since we're talking about the blockchain, it's interesting to know how this system is secured. The mechanism is that both parties report the expected transactions to DTCC, which ensures they match before the money changes hands. The trade that happens during market hours is only the agreement to trade, and the actual delivery happens three days later.
- zby 10y ago
  The voting consensus is not about recording transactions (that is buying selling shares) - it is about governing the company by the people holding the shares.
wyager 10y ago
No, you've misclassified the problem. Decentralized consensus is hard. Decentralized is a stricter criterion than distributed. Decentralized means there is no central authority. Facebook "solves" this by having a centralized identity registrar, which wouldn't work for Bitcoin, because that would inherently give control of the network to whoever owns the registrar. In cryptocurrencies this is called the "sybil attack problem".
- zby 10y ago
  There is no one definition of the difference between decentralized and distributed - everyone has his own. This is a huge problem when talking about this stuff.
zby 10y ago
Strictly speaking the requirement is not really about anonymity - it is about the system being open to join by anyone without any precondition. Is this equivalent?
- Animats 10y ago
  It's the ability to create arbitrarily many "anyones" that's the problem. "One fake account, one vote" is what kills reputation systems.

rocqua 10y ago

A short summary of the argument as I understand it: With proof of work, you can only mine on any one block. You make sure this is the last block in the chain because otherwise you'd need to mine 2 blocks in a row to convince everyone. This ensures it is really hard to rewrite history. With proof of stake, nothing is preventing you from 'mining' on multiple base blocks on the same time. Anytime you spend a coin and get the goods, you might as well try and see if you can 'mine' 2 new blocks to erase your transaction.

jbpetersen 10y ago
This is known as the "nothing at stake" problem and is solved at this point: just require a deposit for mining and treat it as a bounty for proving someone tried to mine on more than one continuation of the PoS blockchain. The kicker is part of the deposit is burned to avoid shenanigans of someone claiming the bounty on theirself and not having to suffer any consequences.
- nullc 10y ago
  The above paper discusses that 'solution' (it isn't one.). The system remains circular, and participants can still grind for alternative histories which grant them more control over time.
- rocqua 10y ago
  How would anyone get such a proof? Seems like mining would need to be collaborative, with no possibility of choosing the collaborators.

Mtinie 10y ago

Peercoin is still running strong. It doesn't have a huge base of adoption, but it hasn't collapsed, either.