Topic: Annual 10% bitcoin dividends if mining were Proof-of-Stake - page 14. (Read 16688 times)

PoW coins are coins because energy (work) is required to remove entropy in order to create them.  PoS shares are shares because there is no energy (work) required to create them (there is no minimum entropy requirement).  

Proof of stake was my main reason to hold Peercoin before I sold it after the run up during Bitcoins last growth spurt because I considered it a true differentiator. However, I tried using it and never received any. Let's just say I'm sufficiently proficient in computer science to follow simple instructions so I was probably going to get "interest" on my coins at some point but there was no way to verify this. If this ever gets implemented for Bitcoin please keep this in mind.

It's not really distribution if it only goes to those already holding stake.

Nonsense.  PoS is predicated on the notion that bitcoins require too much work to create, so you create a bunch of bitshares instead because they are easy to make. 

This is the number 1 argument in favour of PoS: since bitshares are easier to create, PoS enthusiasts claim that we will waste less energy and make the world a better place (which I believe is also untrue). 

distribution...is that the main argument against POS?

OP seems to be implying everyone gets a 10% dividend. 
Wouldn't that be the distribution?

that doesnt make logical sense. more ppl have bought into bitcoin than have mined it. issuance isnt a problem unless you are continually issuing new coins that devalue previously issued coins.

Bitcoin is already a share (in a autonomous company which is really good at storing and transfering value). You don't need PoS to view it as a share, PoS would only make the company more profitable by cutting it expenses.

The same incentitive structure exist wether you call it a coin or a share: shareholders of a PoS blockchain don't want to be dilute more than shareholders of a PoW blockhain want to be dilute .
PoS shareholders have voting rights whereas PoW shareholders have no voting rights (only miners do). And in fiat, well, nobody have voting rights except the Central Bank.

Coin distribution is a problem for PoS, since the distribution mechanism that mining provides is absent.  But PoS communities can partly deal with this by merging with other like-minded PoS communities.  For example, Blackcoin could merge with NXT, which could later merge with MintCoin.  This is more efficient that trading out of one PoS ledger and into another.  

I actually think this is inevitable because it seems there is demand to empirically test the merits of PoS at a larger market cap.  It will be very interesting to watch.    

mining affords consensus, it is not necessarily a matter of security. proof of whatever is necessary for consensus. the mechanism for consensus will most likely be voting. in pow miners have all the votes. their votes are weighted by their share of hashing power. individual miners will delegate their votes (hashing power) to mining pools, which act as representatives for their constituents (the miners) best interests. this is why if you have 51% of the hashing power you effectively control the network.

what a complex topic 



Question:  How does PoS system utilize the "easy to prove, hard to solve" edict of cryptocurrency security?

no shares can't be created out of thin air, at least not with the bitshares DAC concept. The blockchain does not create more shares, it instead destroys transaction fees which in turn acts a stock buy back or dividend if you will for all shareholders. You would never complain about a dividend or a stock buy back, because we understand what gives a stock value and that is the profitability of the company. bitcoin is operating at a loss and as such its equity will reflect that in the future.

if your problem with the pos system is because you do not like that ppl earn capital based on the capital that they already have, what do you think about issuing new forms of capital for which there are varying returns. ppl can exchange these new forms of capital at the market rate given their perceived returns. those that are most informed as is true with any market will earn the most capital in this system. this system rewards accurate information, and the work associated with this system is the accumulation of information not the pointless hashing of alpha-numeric strings.

does this system sound similiar to systems we already have? it is capitalism, it is the free markets.

bitshares bank and exchange leverages the free market consensus to create assets that are market pegged to any real world asset and those that provide the most accurate information to the blockchain through the process of voluntary exchange accumulate the most capital.

is this not the pos implementation you are looking for?

You don't create the same thing: you have either bitcoins or bitshares.  Entropy is the difference.  Here's what I said when Jonald asked what the purpose of the work was a couple posts back:

Paying hundreds millions/billion of dollars to achieve something you can achieve for free is a lot of things, but it's not efficient.

Good point, and at the heart of the matter but that is a big If.

Solar powered mining farms can help provide low cost electricity for BTC.

Hmm... Seems to be related to the "pos scheme still needs a pow issuance mechanism" argument that meni made yesterday in this thread https://bitcointalk.org/index.php?topic=27787.0;all

My point being maybe we need elements of both pos and pow

You are working to remove enough entropy to create a coin.  You express your opinion that the coin is worth looking for by risking your time and resources in trying to find it.  Once the entropy is removed, it is removed forever and you have a bitcoin--similar to how gold ore is dug up, processed, and then turned to gold coins.  It is this physical relationship between energy and entropy that make it difficult for coins to be created.  

PoS is predicated on the idea that mining is wasteful.  In other words, PoS says that it takes too much work to create a bitcoin and that we should create bitshares instead.  But isn't that another way of saying that it should be easier to create shares than coins?  And if it becomes very easy to create more shares, won't more shares be created?  PoS supporters will tell you that this won't happen, but really if consensus if based on stake and shares can be created out of thin air (there's no entropy requirements) how is this really any different than our fiat system?

Assuming a competitive environment, the fees will be stable or decline because alternative DAC with lower fees will always be a threat.
The top management capture value from shareholders because of the agency problem, yes. But in an autonomus corporation there is no executives.
PoW is exactly the same thing than burning $$$ to get BTC.
- it's the people with the more capital who get rewarded (because they can burn the most of it)
- this is capital consuming, and it's become an economics uber-nonsense as soon as there is an more efficient way to achieve the same security level

Imagine a world were company A and company B provide the exact same service for the same price. Company A pays 600 000 000$ (and I am conservative, but it's enough to prove the point) every year for security guards. Company B achieve the same level of security without any expenses. Assuming a competitive environment, which company will survive?

BTC-PoW will soon be in the same situation where the banking system is today: competing with a more efficient alternative. And between two solutions to the same problem, markets make emerge the more efficient one (because efficience = profits, and people are attracted by profits).

the whole world is coordinated through proof of stake consensus. the amount of capital you have is your weighted "vote." those who "vote" in accordance with the future consensus of the rest of the group stand to make more capital. that is to say that those who invest their capital to its most efficient ends will realize a gain on that capital.  those that do not will lose capital. this is the essence of capitalism and the free markets and is why it is the foundation of our economic system.

Peter, true.

However, what is the inherent value in doing work?  What is the inherent value in taking risk? 

Work and risk are valuable in life and business, but this is another context.