Topic: Annual 10% bitcoin dividends if mining were Proof-of-Stake - page 9. (Read 16688 times)
Does proof of work have to be limited to computer calculations?
How would a hybrid pos/pow work? 50/50 or something thereof? Do any altcoins already have this feature developed?
I think they both have something to offer to the network. More "work" and more incentive to create a node.
I think they both have something to offer to the network. More "work" and more incentive to create a node.
1. I believe that blockchain "spin-offs" are an excellent tool to facilitate experimentation with new cryptocurrency features.
I mostly agree. Especially as I think real PoS are still too immature to incorporate into the Bitcoin protocol today. Even though I've been advocating PoS in principle, I'd argue against that step until PoS is better understood.That said, I think network effects make it almost impossible for altcoins to succeed again Bitcoin. Even if we agreed PoS was better than PoW, I expect getting from here to there will be extremely difficult.
Brangdon, what SlipperySlope is proposing is an alt-coin. The only way to turn bitcoin into a proof-of-stake network is to create a spin-off or fork (i.e., an "alt-coin") and try to legitimize it with your influence and economic power.
SlipperySlope's project development thread for Bitcoin-PoS is in the Alt-coin Section for a reason: https://bitcointalksearch.org/topic/ai-coin-development-diary-584719
1. I believe that blockchain "spin-offs" are an excellent tool to facilitate experimentation with new cryptocurrency features.
I mostly agree. Especially as I think real PoS are still too immature to incorporate into the Bitcoin protocol today. Even though I've been advocating PoS in principle, I'd argue against that step until PoS is better understood.That said, I think network effects make it almost impossible for altcoins to succeed again Bitcoin. Even if we agreed PoS was better than PoW, I expect getting from here to there will be extremely difficult.
legendary
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2. I am saddened that some of the posters that I follow and respect believe that it would be superior if money was created without any work or cost. In my opinion, the issuance of money is too important to trust to humans, even ourselves.
While I'm not sure I agree 100% with your philosophical position,
I think bitcoin is still too young and unstable to abandon
PoW while keeping it psychologically appealing.
Nice read Brangdon, thanks for that. Makes me more in favor of PoS now.
Bitcoin block rewards are quickly dwindling. Could it be that it was intentionally designed to be more energy-efficient in the steady state when the initial distribution is completed?
i'm not so sure anyone could have predicted that ASIC's would have come into play and we would be running the kind of energy that we are running to find Bitcoin blocks. So, no, I don't think that could have been assumed.
From a simplified, possible world, business case such as this example, it is clear to me that a very large opportunity exists to disrupt the disrupter. The challenge is to create an invulnerable Bitcoin Core Proof-of-Stake.
I agree with you completely. With all due respect to the PoS innovators like Peercoin and Nxt, seamlessly converting the Bitcoin brand and blockchain to PoS would be far superior to adopting an altcoin. I find it ironic that Peter is arguing so strongly in favor of the seemingly inferior PoW system, when he is the one who recently proposed the perfect solution for shifting from one blockchain to another.
I should make my position clear:
1. I believe that blockchain "spin-offs" are an excellent tool to facilitate experimentation with new cryptocurrency features. They award all current bitcoin users with a percentage of any pre-mine equal to the their holdings of the unspent outputs in the blockchain at a pre-defined point in time. Current users can "claim" their pre-mine in a decentralized and trustless manner using their bitcoin ECDSA private keys.
SlipperySlope's proposal to create a proof-of-stake spin-off is an example of the general spin-off methodology. I would like to see the process of creating spin-offs made as easy and transparent as possible, and I intend to assist SlipperySlope by working towards this goal.
Here is the "spin-off" thread: https://bitcointalksearch.org/topic/spin-offs-bootstrap-an-altcoin-with-a-btc-blockchain-based-initial-distribution-563972 . And here is a complimentary proposal for a Turing-complete spin-off: https://bitcointalksearch.org/topic/rfc-aethereum-a-turing-complete-coin-distributed-as-per-bitcoins-blockchain-563925 .
2. I am saddened that some of the posters that I follow and respect believe that it would be superior if money was created without work or cost. In my opinion, the issuance of money is too important to trust to humans, even ourselves. I hope readers will go back and read Risto's and Adrian's posts in this thread, as they both explain using different words why coins must come into existence through work, and why this is preferable to shares issued freely based on the consent of stake holders.
Once again, I support SlipperySlope's PoS spin-off experiment, for I've been promoting spin-offs since April 9. It will put the fear of god into PoS alt-coins with less-efficient initial coin-distributions, and then it will succeed or fail based on its own merits while piggybacking bitcoin users by default.
Question for SlipperySlope: Will the initial distribution of wealth in Bitcoin-PoS be exactly as per the unspent outputs in the bitcoin blockchain at a certain point in time in the future, or will you consider redistribution of wealth if you find popular support for it?
Bitcoin block rewards are quickly dwindling. Could it be that it was intentionally designed to be more energy-efficient in the steady state when the initial distribution is completed?
What is the reason that the new coins should be given in proportion to existing coins, iff the holder also does some work?
If the work done is equivalent for 1 and 10,000 coin holder, should the reward not be also?
If the work done is equivalent for 1 and 10,000 coin holder, should the reward not be also?
Good point, actually every node (Stake) is doing the same work. But the reward is not based on the work done, the reward goes to the rich.
The reward should go to those who do the work most effectively.
For me it comes down to the simple fact that PoS rewards those who already hold the most wealth--they no longer even need to work for it.
It rewards everyone who participates in proportion to their holdings. Everyone gets 10%. They do need to work for it, though: they need to validate transactions. Only people who operate full mining nodes get the dividend. Coins held in cold storage get nothing.Quote
I think this creates more opportunities for rent-seeking and less impetus for innovation.
I don't see why you think that.See the point you make in bold. rent-seeking is how you get income without working. (They don't work the computer program does the work)
Bitcoin favours efficiency. Our current system favours debt and consumption.
PoW is not efficient; that's the point. It favours a never-ending arms race of escalating consumption of computing resources, presided over by an elite with the capital to buy it and the expertise to run it.It is actually the other way around. PoS is more energy efficient at maintaining a cryptocurrency. It is not efficient at allocating capital in the economy as a whole. Capital is used to fulfill need, currency is the conduit. If you can fulfill need by not working and just holding currency then capital from the economy will accumulate in hoards of revenue generating currency.
And those who need to use currency will do what those who have hoards of it what.
Competition in PoW insurers those who make the currency have to spend it into the economy.
What is the reason that the new coins should be given in proportion to existing coins, iff the holder also does some work?
If the work done is equivalent for 1 and 10,000 coin holder, should the reward not be also?
If the work done is equivalent for 1 and 10,000 coin holder, should the reward not be also?
For me it comes down to the simple fact that PoS rewards those who already hold the most wealth--they no longer even need to work for it.
It rewards everyone who participates in proportion to their holdings. Everyone gets 10%. They do need to work for it, though: they need to validate transactions. Only people who operate full mining nodes get the dividend. Coins held in cold storage get nothing.Quote
I think this creates more opportunities for rent-seeking and less impetus for innovation.
I don't see why you think that.Quote
With PoS, consensus is formed by those holding stake. In other words, those who already have the most also get to make the rules.
With PoW, those who can afford the best mining rigs get to make the rules. Either way it is the richest sector. I think if anything, the barrier to entry is lower with PoS, since you can start smaller. You don't need as much computing power to make a contribution.(This wasn't always the case. You used to be able to mine Bitcoin on a desktop computer; and that was a good thing. PoS will return us to those days, now long gone. PoW was also necessary as a way of distributing coins, to help boot-strap crypto-currencies. However, we are now past the boost-strapping stage.)
Quote
Look at who accrues the new coins in your 10% dividend model: they accrue to the largest stake holders! It's no longer a coin-distributoin mechanism--it is a way for those with first access to new money to benefit un-proportionately. Sounds a bit like the Fed.
Not at all. Everyone who participates gets 10%, no matter how small their stake. It is still a coin-distribution mechanism. That you say it isn't, makes me wonder if you understand it. It will distribute coins more widely, since mining is so much easier. Everyone can benefit; it's not reserved for the people with warehouses full of ASICs or with the technical knowledge to run them.Quote
PoS supporters appeal to idea of the "greater good" (less electricity consumed).
Why is consuming less electricity a bad thing? You keep talking about work, as if it were noble. Miners still have to do work in PoS; they still have to validate transactions. That's good, productive work. Solving arbitrary hashes is wasteful work. It's like paying people to dig holes and then fill them in again. The only thing it achieves is network security, which can be achieved equally well without it.Quote
1. For the greater good, we must stop this wasteful bitcoin mining and we will all be richer!
2. For the greater good, we must create more coins so that we can direct them towards important projects that the free-market neglects!
3. For the greater good, we must incentive spending to keep the people employed!
4. For the greater good, we must create more coins so that we can lend them to people to stimulate the economy!
The first point is evidentially true. Other things being equal, less waste is good. The later points don't follow from the first point. Points 2, 3 and 4 could equally happen in a PoW system. They aren't problems specific to PoS. I think your reasoning here is very unsound. You are inventing policies and attributing them to PoS, and then using them to attack it.2. For the greater good, we must create more coins so that we can direct them towards important projects that the free-market neglects!
3. For the greater good, we must incentive spending to keep the people employed!
4. For the greater good, we must create more coins so that we can lend them to people to stimulate the economy!
Quote
Bitcoin favours efficiency. Our current system favours debt and consumption.
PoW is not efficient; that's the point. It favours a never-ending arms race of escalating consumption of computing resources, presided over by an elite with the capital to buy it and the expertise to run it. I find it ironic that Peter is arguing so strongly in favor of the seemingly inferior PoW system, when he is the one who recently proposed the perfect solution for shifting from one blockchain to another.
The adoption of Bitcoin is apparently mathematically chaotic in the sense that certain small changes to the present situation lead to large and unexpected consequences. There is simply no precedent for Bitcoin, and therefore we depend upon argued imagination.
Sorry - I read the 1st post and then skipped the last 9 pages.
Shouldn't PPC have been the one end-all to be all had proof of stake had been successfull wouldn't the mass majority of miners simply convert to PPC and hold a portion of it to roll over with POS?
"makes me dream of folks out there who have 10,000,000 PPC and recieve a cool million PPC each year to live off of
"no one likely has 10M PPC. there are on just over 20M PPC and the less being made than BTC or LTC.
However PPC is looking like it will go >$100 within a year
POS make the whole system more closed to outside people: Early adopter not only benefit on the price appreciation, but also gain in dividends. This will cause less and less people joining this system
An important part of a distributed system is to continuously give the new comers incentive to join the network, thus new comers with newer technology/better service can re-balance the whole mining picture and take over the throne. For example, deepbit's leadership were replaced by BTCguild, then Ghash.IO and discuss fish, etc... This will make sure the system is enough decentralized and there is always healthy competition to make the network strong and fresh. Miners seek profit, but also have the voting rights, this is a very important aspect
But in POS system miners would lose the incentive due to losing of voting rights. What they do is just make the early adopters rich, and if there is a situation need a protocol level change, they don't have voting rights, they will abandon this closed system
In PoW system, the decision making rights is always stay with the current most actively working miners, that is the best way to distribute the decision making power, although there is certain risk of 51% attack. But the 51% attack is not a big problem, because ultimately is the majority of bitcoin miners decide which chain they select to work on, not existing bitcoin holders, this is a key difference (You can buy lots of coins using printed fiat money thus gaining more stake, but you can't buy a farm with huge amount of hashing power since those guys who are capable of making hashing machines will inform others at the first place)
An important part of a distributed system is to continuously give the new comers incentive to join the network, thus new comers with newer technology/better service can re-balance the whole mining picture and take over the throne. For example, deepbit's leadership were replaced by BTCguild, then Ghash.IO and discuss fish, etc... This will make sure the system is enough decentralized and there is always healthy competition to make the network strong and fresh. Miners seek profit, but also have the voting rights, this is a very important aspect
But in POS system miners would lose the incentive due to losing of voting rights. What they do is just make the early adopters rich, and if there is a situation need a protocol level change, they don't have voting rights, they will abandon this closed system
In PoW system, the decision making rights is always stay with the current most actively working miners, that is the best way to distribute the decision making power, although there is certain risk of 51% attack. But the 51% attack is not a big problem, because ultimately is the majority of bitcoin miners decide which chain they select to work on, not existing bitcoin holders, this is a key difference (You can buy lots of coins using printed fiat money thus gaining more stake, but you can't buy a farm with huge amount of hashing power since those guys who are capable of making hashing machines will inform others at the first place)
a hybrid pow+pos system would seem to answer many of these issues. Also people with pos nly wtill need to spend some coins for goods and services.
Do you think mining is that open in the asic world. The rate of redundant hardware is scarey.
A good problem solving technique is to first solve a simpler problem.
May I suggest setting aside the issue of new coin rewards,
and simply focus on how to achieve consensus
between nodes without PoW.
It quickly becomes clear that if solvable, it is non-trivial.
The core developers stated that no one has achieved
this so far.
This is what Meni said too -- you still need PoW as
issuance mechanism.
We are talking about a node creating a new block
and the rest of the network accepting it.
I think it may be possible with some kind of cryptographic
handshake between nodes, but my ideas on this are
vague at best.
EDIT: If you want to simplify the problem even further, assume all nodes trust each other and are honest.
May I suggest setting aside the issue of new coin rewards,
and simply focus on how to achieve consensus
between nodes without PoW.
It quickly becomes clear that if solvable, it is non-trivial.
The core developers stated that no one has achieved
this so far.
This is what Meni said too -- you still need PoW as
issuance mechanism.
We are talking about a node creating a new block
and the rest of the network accepting it.
I think it may be possible with some kind of cryptographic
handshake between nodes, but my ideas on this are
vague at best.
EDIT: If you want to simplify the problem even further, assume all nodes trust each other and are honest.
I created the Bitcoin Proof-of-Stake Project thread . . . https://bitcointalksearch.org/topic/m.6397403.
Your advice is excellent I believe regarding solving the simplest problem first.
legendary
Activity: 1302
Merit: 1008
Core dev leaves me neg feedback #abuse #political
A good problem solving technique is to first solve a simpler problem.
May I suggest setting aside the issue of new coin rewards,
and simply focus on how to achieve consensus
between nodes without PoW.
It quickly becomes clear that if solvable, it is non-trivial.
The core developers stated that no one has achieved
this so far.
This is what Meni said too -- you still need PoW as
issuance mechanism.
We are talking about a node creating a new block
and the rest of the network accepting it.
I think it may be possible with some kind of cryptographic
handshake between nodes, but my ideas on this are
vague at best.
EDIT: If you want to simplify the problem even further, assume all nodes trust each other and are honest.
May I suggest setting aside the issue of new coin rewards,
and simply focus on how to achieve consensus
between nodes without PoW.
It quickly becomes clear that if solvable, it is non-trivial.
The core developers stated that no one has achieved
this so far.
This is what Meni said too -- you still need PoW as
issuance mechanism.
We are talking about a node creating a new block
and the rest of the network accepting it.
I think it may be possible with some kind of cryptographic
handshake between nodes, but my ideas on this are
vague at best.
EDIT: If you want to simplify the problem even further, assume all nodes trust each other and are honest.
In pure PoS, coins are not generated. For example Bitshares will have a fixe initial supply of 4 millions shares, and the network will to PAY transaction fees to holder by DESTROYING shares (5%/yr), the money supply will decline over time. PoS coins are truly deflationnist, Bitcoin is inflationnist despite everyone are saying (until 2140).
If you compare the features of Bitcoin vs Bitshare, you cannot come to the conclusion that the price will not be affected:
- Bitcoin increase it money supply by 10% each year
- Bitshare will decrease it money supply by 5% each year
Everything else being equal, prices will reflect that huge difference of returns.
You are reasoning based on a false premise: coins are not generated in PoS. Peercoin is not representative at all.
NXT doesn't generate new coins (and doesn't pay dividends).
Bitshare doesn't generate new coins AND pay dividends with the transaction fees (by destroying shares/coins which is equivalent of a shares buyback).
If you compare the features of Bitcoin vs Bitshare, you cannot come to the conclusion that the price will not be affected:
- Bitcoin increase it money supply by 10% each year
- Bitshare will decrease it money supply by 5% each year
Everything else being equal, prices will reflect that huge difference of returns.
You are reasoning based on a false premise: coins are not generated in PoS. Peercoin is not representative at all.
NXT doesn't generate new coins (and doesn't pay dividends).
Bitshare doesn't generate new coins AND pay dividends with the transaction fees (by destroying shares/coins which is equivalent of a shares buyback).
Please focus this conversation for my purposes. I would like to define the problem to be solved as the simplest modification to Bitcoin that enables the riddance of wasteful PoW using efficient PoS.
I desire the result to become the Bitcoin brand by virtue of recognized lowest vulnerability and broad acceptance. Within the framework of PoS, I want to keep every other aspect of Satoshi's social contract with users that binds today's Bitcoin core developers. There is more freedom with respect to mining pools, which I now believe can replace the stratum protocol with something else that has full nodes as clients and fairly pays daily bitcoin dividends at the 10% annual rate. Bitcoin core developers do not, as a whole, maintain mining pool software and there are fewer obstacles for radical change.
For the record, the main reason I like PoS (although I'm at the current time not in favour of incorporating it in Bitcoin, although this can change later) is that it gives an incentive to run full nodes. In the current system people are not rewarded for running full nodes while running full nodes is indeed very important to the distributed nature of Bitcoin. I'm not interested at all in reducing wastefulness. There are millions of things in the world I consider highly wasteful and the energy spend to secure the most important social network the world has ever seen is not amoung them.
Thanks for taking a stab to analyzing the problem. Before proposing a solutions one should identify the problem.
First off one does not just get Bitcoin, one gets the economic synergy an Utopia it enables. (Utopia as in pain and suffering is the conduit for change not Utopia where there is no pain and suffering.)
If you get Bitcoin and you get the economic theories of Ludwig von Mises and Murray Rothbard, we can agree on the problems.
If you are at odds with the ideas of Ludwig von Mises and Murray Rothbard, we should agree to disagree, as that is an ideological debate and unrelated to Bitcoin.
Observation
1) energy + ingenuity is a replacement for labour.
2) harnessing energy and industrialization has created enormous wealth.
3) harnessing energy and industrialization has destroyed enormous natural capital.
4) we need balance between natural capital and subjective wealth or self destruction.
5) Bitcoin's exponential growth and energy consumption under certain assumptions seems will contribute to 3 above.
I will limit my problem identification and solution to the OP in an attempt to modify Bitcoin to address the problem he is technically capable of solving. There are other assumptions I believe more flexible that may result in the desired outcome.
Assumptions
Lets assume energy time and intelligence is the primary commodity in an economy, and for the sake of resources lets assume Adam Smith was correct (in that land will accumulate in the hands of the most competent - I favor Marx's evolution of ideas on the topic but will ignore them for now.) With the 4 ingredients (time, intellect, energy and land) you can produce everything we have in the world today and will need in the future.
Problem
how do we best allocate those resources for maximum benefits without compromising our natural capital.
Bitcoin enables an untested solutions but if it scales at in the future like it has in the past it is fair to assume the energy used would scale at the same rate. (Arguing this is also mute as this problem will for arguments sake assume that it does, although it most probably won't - but if it does it is a low risk experiment as the OP has time knowledge and resources to do it.)
TL;DR
So the problem here is effective allocation of energy and securing the Bitcoin network so Bitcoin can used the free market to efficiency optimize the 4 economic ingredients for maximum benefits. ( nether I no anyone can answer this)
But assuming it is a problem lets say 0.1% of all energy available in the economy should be used to secure the exchange network that keeps everyone honest. Lets also assume we want another 0.15% of the global economy to distributed the network for resilience. And PoS isn't the solution because it runs counter to Austrian economic equilibrium.
One could:
1) Reward those who run a full node with 1 Proof-of-Storage coin (infinite supply) for every active block added to the blockchain.
2) Destroy 1 Proof-of-Storage coin for every Gigahash/s per block mined (pay 1 PoSt to participate in current round)
The result is a market will emerge to specialize is storage, the storage would grow exponentially ultimately providing a limit to the energy invested in hashing.
Market forces would encourage nodes the transaction fees could be modeled mathematically on the percent of transaction fees as a function of the number of transaction and block size. As the storage size requirements grow for a node Proof-of-Storage coin becomes more expensive and mining slows as the network grows.
The results is every node is responsible for allowing a % of total hashing power. Nodes are limited by Moore's law until 0.15% of all Bitcoin economy is invested in securing a node.
It does not change the price any way, other things being equal. Proof: If we assume that at present supply = demand, which means that newly mined coins must be exactly absorbed by somebody. Mining cost = price, so all of the new demand is "burnt" as expenses. In the PoS case, same amount of coins is generated, but it is doled out to existing holders, inflating the money supply. New demand must buy the coins from them. By buying the same number of coins, it is able to keep their price stable. Net difference is that previous owners get the money.
In pure PoS, coins are not generated. For example Bitshares will have a fixe initial supply of 4 millions shares, and the network will to PAY transaction fees to holder by DESTROYING shares (5%/yr), the money supply will decline over time. PoS coins are truly deflationnist, Bitcoin is inflationnist despite everyone are saying (until 2140).If you compare the features of Bitcoin vs Bitshare, you cannot come to the conclusion that the price will not be affected:
- Bitcoin increase it money supply by 10% each year
- Bitshare will decrease it money supply by 5% each year
Everything else being equal, prices will reflect that huge difference of returns.
With PoS, new coins are a bonus that are just created without paying anything (or at least full price). If we simplify the case and move the Bitcoin decimal place 3 points, calling the resulting unit "bitcoin", and the process "proof-of-stake", have we fooled anyone? No. This is 1000-fold inflation, and its effect is that the price of the new bitcoin is only 1/1000 of the old.
I don't see at all compelling the idea of valuing something that has a built-in inflation which is not based on some useful work. Owning currency is useful work, but the hoarders should be compensated by opportunities to invest their coins, loan at interest, or declining general price level, not gimmicks such as increase in the account balance without work or risk.
You are reasoning based on a false premise: coins are not generated in PoS. Peercoin is not representative at all.I don't see at all compelling the idea of valuing something that has a built-in inflation which is not based on some useful work. Owning currency is useful work, but the hoarders should be compensated by opportunities to invest their coins, loan at interest, or declining general price level, not gimmicks such as increase in the account balance without work or risk.
NXT doesn't generate new coins (and doesn't pay dividends).
Bitshare doesn't generate new coins AND pay dividends with the transaction fees (by destroying shares/coins which is equivalent of a shares buyback).
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