3 ms·

Actual question as I’m not too familiar with proof of stake. As described in the article, all that matters is how much is in your wallet... Doesn’t that seem r

Actual question as I’m not too familiar with proof of stake. As described in the article, all that matters is how much is in your wallet... Doesn’t that seem ripe for hyper capitalist abuse? I realize the article is just offering a simplified explanation, but the idea that whoever has the most money directly controls the money supply itself seems... well, not ideal? So could anyone elaborate on what else about proof of stake leads to decentralization and fairness as opposed to just more incentives for centralization?

nullc 6y ago
Proof of Stake doesn't just have a problem with rich get richer effects, it's fundamentally logically unsound and is inherently insecure as a decenteralized consensus mechanism. Schemes which claim to have 'proven' the security of POS do so by assuming that you externally have a secure consensus mechanism (or one in disguise, e.g. a network which delivers all messages in the same order to all users), resulting in a completely tautological "proof". For more info on the unsoundness of POS: https://download.wpsoftware.net/bitcoin/pos.pdf https://download.wpsoftware.net/bitcoin/pos.pdf The reason you see it as part of the plans of some altcoins is that the creators of these coins wrote into their ledgers enormous numbers of coins for themselves, and are now stuck with largely illiquid billion dollar "investments" that they can't substantially sell without collapsing their markets and which aren't earning interest-- using POS gives them an excuse to guarantee themselves a return. The fact that it locks others out of the consensus or undermines the security is just collateral damage. As a bonus it also creates a new avenue to pump their systems vs alternatives which are actually trying to remain secure and decentralized. I expect to see HN and other venues flooded with more anonymously authored articles promoting this stuff in the coming years.
- burlesona 6y ago
  This is helpful, thanks!
shawnz 6y ago
The pro-proof-of-stake argument is that every other system is inherently already like that: For example with proof-of-work, the richest can already afford the most hardware which gets them the most earnings. But actually with proof-of-work it's even worse, because it is a non-linear relationship as to what kind of mining hardware you can afford (richer can afford exponentially more efficient hardware). So proof-of-stake is actually better, because at least it's linear.
- nullc 6y ago
  For proof of work the cost of the hardware is substantially irrelevant, it's eclipsed by energy costs after a month or two of operation. POS proposals all have participatory floors. E.g. the ethereum proposal requires participants lock up about $60,000 worth of ethereum to participate.
  - shawnz 6y ago
    True, but staking pools might help mitigate the latter issue.
    - nullc 6y ago
      That's equivalent to saying that you can invest in a cloud mining operation or pool funds with friends to by a larger mining device than you otherwise would alone-- in both cases you lose control of your influence in the consensus and essentially end up paying someone else to centralize the system more on your behalf.

nullc 6y ago

Proof of Stake doesn't just have a problem with rich get richer effects, it's fundamentally logically unsound and is inherently insecure as a decenteralized consensus mechanism. Schemes which claim to have 'proven' the security of POS do so by assuming that you externally have a secure consensus mechanism (or one in disguise, e.g. a network which delivers all messages in the same order to all users), resulting in a completely tautological "proof". For more info on the unsoundness of POS: https://download.wpsoftware.net/bitcoin/pos.pdf https://download.wpsoftware.net/bitcoin/pos.pdf The reason you see it as part of the plans of some altcoins is that the creators of these coins wrote into their ledgers enormous numbers of coins for themselves, and are now stuck with largely illiquid billion dollar "investments" that they can't substantially sell without collapsing their markets and which aren't earning interest-- using POS gives them an excuse to guarantee themselves a return. The fact that it locks others out of the consensus or undermines the security is just collateral damage. As a bonus it also creates a new avenue to pump their systems vs alternatives which are actually trying to remain secure and decentralized. I expect to see HN and other venues flooded with more anonymously authored articles promoting this stuff in the coming years.

burlesona 6y ago
This is helpful, thanks!

shawnz 6y ago

The pro-proof-of-stake argument is that every other system is inherently already like that: For example with proof-of-work, the richest can already afford the most hardware which gets them the most earnings. But actually with proof-of-work it's even worse, because it is a non-linear relationship as to what kind of mining hardware you can afford (richer can afford exponentially more efficient hardware). So proof-of-stake is actually better, because at least it's linear.

nullc 6y ago
For proof of work the cost of the hardware is substantially irrelevant, it's eclipsed by energy costs after a month or two of operation. POS proposals all have participatory floors. E.g. the ethereum proposal requires participants lock up about $60,000 worth of ethereum to participate.
- shawnz 6y ago
  True, but staking pools might help mitigate the latter issue.
  - nullc 6y ago
    That's equivalent to saying that you can invest in a cloud mining operation or pool funds with friends to by a larger mining device than you otherwise would alone-- in both cases you lose control of your influence in the consensus and essentially end up paying someone else to centralize the system more on your behalf.