Topic: Can someone explain to me how PoS works? - page 3. (Read 2940 times)

Quote from: achimsmile on May 08, 2015, 05:10:07 AM

If the coin rise steady in price

This is the problematic assumption.
In a currency with a fixed percentage of inflation, the demand has to increase forever in order to keep the price steady or rising, which is not possible on a large timescale.

Though I recently didn't followed DNotes and I think it is still PoW only coin, what can you tell about it as example for steady growth? Of course it is nearly impossible to preddict what will happen in 1-3 or even 10 years, but I think that every coin who has active development and community has a good chance for steady rise in price.

Very little. Are you trying to link the presence of inflation as the source of steady growth? If not, why try to link the two?

Daedelus

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Quote from: Daedelus on May 08, 2015, 05:18:39 AM

If the coin rise steady in price

This is the problematic assumption.
In a currency with a fixed percentage of inflation, the demand has to increase forever in order to keep the price steady or rising, which is not possible on a large timescale.

You're wasting your breath Cheesy

My last try:

Assume 2 coins, one with and one without inflation. They grow at the same rate, G. The inflation rate is I.

Coin1 growth over time t = G
Coin2 growth over time t = G - I

Unless inflation, I = 0, all else being the same, one Coin2 will have less value (lower purchasing power) than Coin1. You might have more Coin2's than Coin1's, but each Coin2 buys less as it has been eroded by inflation.

Eroded how? Both coins started with zero value and have grown in value by the same growth, G. But Coin2's supply, S, is now higher by inflation in the coin of I. So

Value of Coin1 = G/S
Value of Coin2 = G/(S+I)

Unless inflation I = 0, the vlaue of Coin2 will be lower >>> it has been eroded.

Inflation = New coins out of thin air << Crypto
Interest = Share of return from charges of another product i.e. mortgage, loan, credit card << traditional banking

We are firmly planted in the former, inflation camp. Btw, deflation isn't good either but my comments now are limited to addressing the belief that inflation = profit. Which is a marketing tool against the ignorant.

spartak_t

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Nxt has had zero inflation since inception and has never caused the blockchain to just stuck.

NXT PoS system is kinda different. I do like it, but I also think that there is nothing wrong in earning few extra coins while holding.

spartak_t

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Quote from: achimsmile on May 08, 2015, 05:10:07 AM

If the coin rise steady in price

This is the problematic assumption.
In a currency with a fixed percentage of inflation, the demand has to increase forever in order to keep the price steady or rising, which is not possible on a large timescale.

Though I recently didn't followed DNotes and I think it is still PoW only coin, what can you tell about it as example for steady growth? Of course it is nearly impossible to preddict what will happen in 1-3 or even 10 years, but I think that every coin who has active development and community has a good chance for steady rise in price.

Daedelus

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And please stop comparing PoS with inflation. Do you know what happens with a blockchain if there is no PoW or PoS? It will just stuck. Purpose of PoS is not only securing the network, but keeping it alive at low costs as well.

Nxt has had zero inflation since inception and has never caused the blockchain to just stuck.

achimsmile

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Quote from: Viper1 on May 08, 2015, 03:25:46 AM

If the coin rise steady in price

This is the problematic assumption.
In a currency with a fixed percentage of inflation, the demand has to increase forever in order to keep the price steady or rising, which is not possible on a large timescale.

spartak_t

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Let's say you have 100k coins from a coin which worth 10k satoshi and it has 3% PoS interest (call it inflation if you wish.. no matter how wrong it is). This is equal to 10 BTC or ~$2370 (based on current Bitcoin price). This is about ~$70 annual profit. If the coin rise steady in price (while it have active development and adoption) let's say 5%/month your "investment" (some people think that trading or holding cryptocurrencies is not exactly investment) will grow with 60% each year. What if Bitcoin doubles it's price in 2016 after it halves? In the end that means you will make like $400-500/month while holding. Is that bad profit? Of course this is something which sounds like a scenario from science fiction, but I strongly believe that it can be achieved.

And please stop comparing PoS with inflation. Do you know what happens with a blockchain if there is no PoW or PoS? It will just stuck. Purpose of PoS is not only securing the network, but keeping it alive at low costs as well.

Troonetpt

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Quote from: spartak_t on May 07, 2015, 10:15:32 AM

Quote from: spartak_t on May 07, 2015, 06:09:28 AM

Coins are not exactly countries so I think that there is nothing wrong with interest/inflation as long as the price of the coin itself is steady and growing.

Here is the killer. What if it isn't growing? See my comments above. If it is steady and growing, why have inflation at all? It only counteracts any growth by spreading it more thinly over a higher number of coins.

Interest/Inflation != growing value. More coins != more value. That is just the false link that marketers want you to make when they use the term 'interest' in place of 'inflation'.

PoS is not only about inflation, but securing the network as well.

It's not only about securing the network but also about the loss of coins over time whether them simply being lost in some wallet (like the guy that threw away a hard drive he had that had something like $4m worth of bitcoins on it) or someone accidentally burning some. Beyond that, as adoption of a coin grows, you'd also want to have more in the system. Frankly, the whole "inflation" thing people have against reasonable % POS coins is just a load of crap.

The key point is nobody pay the interest, not just the inflation problem.
And which lead two problem:
1. It like a perpetual motion machine.
2. It's unfair.

Troonetpt

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Quote from: Troonetpt on May 07, 2015, 04:39:28 AM

NXT and Qora don't have interest, they only earn transaction fee. It more like all bitcoin was mined and the miner will only earn transaction fee.
Interest is totally wrong, the infinite amount coins make is worthless.

I think you are wrong. If a coin is with let's say 20M in supply and interest is 3%/year only about 610k coins/year will be created. This is like holding your savings in bank + faster and more secured network.

NO, Interest is absolutely wrong.
You save your money in the bank, the bank will pay your interest, why?
Because the bank use your money to loan other people with high interest.
But a coin with interest, can you tell me who pay the interest?
The answer is nobody. That's why is wrong.

Viper1

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Quote from: spartak_t on May 07, 2015, 10:15:32 AM

Quote from: Muhammed Zakir on May 07, 2015, 02:03:51 AM

Coins are not exactly countries so I think that there is nothing wrong with interest/inflation as long as the price of the coin itself is steady and growing.

Here is the killer. What if it isn't growing? See my comments above. If it is steady and growing, why have inflation at all? It only counteracts any growth by spreading it more thinly over a higher number of coins.

Interest/Inflation != growing value. More coins != more value. That is just the false link that marketers want you to make when they use the term 'interest' in place of 'inflation'.

PoS is not only about inflation, but securing the network as well.

It's not only about securing the network but also about the loss of coins over time whether them simply being lost in some wallet (like the guy that threw away a hard drive he had that had something like $4m worth of bitcoins on it) or someone accidentally burning some. Beyond that, as adoption of a coin grows, you'd also want to have more in the system. Frankly, the whole "inflation" thing people have against reasonable % POS coins is just a load of crap.

achimsmile

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Learn basic.

https://bitcoin.it/wiki/Proof_of_Stake

http://bitcoin.stackexchange.com/questions/20007/how-does-proof-of-stake-mining-work

Skunk Fu: Hey, can you explain to me what democrats are?
You: Sure, take a look at www.republicans-are-cool.com/democrats-suck

Seems legit.

spartak_t

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Quote from: Daedelus on May 07, 2015, 02:04:53 PM

Not sure how this relates to what I said... but from the second paragraph it seems you think more coins = profit?

I basically mean that imho PoS can't be really compared with inflation. With that said - more coins are indeed more profit as long as the coin is stable (in price).

Sonny91BE

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http://nxt.org/about/proof-of-stake/

A good read !

Hope you enjoy it as much as I did !

Daedelus

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Merit: 500

Quote from: spartak_t on May 07, 2015, 10:15:32 AM

Coins are not exactly countries so I think that there is nothing wrong with interest/inflation as long as the price of the coin itself is steady and growing.

Here is the killer. What if it isn't growing? See my comments above. If it is steady and growing, why have inflation at all? It only counteracts any growth by spreading it more thinly over a higher number of coins.

Interest/Inflation != growing value. More coins != more value. That is just the false link that marketers want you to make when they use the term 'interest' in place of 'inflation'.

PoS is not only about inflation, but securing the network as well. I think that if a coin's community (developer/s inculded) are working hard on it's technology (and above all - it's adoption), people will be more keen to keep their coins in the wallets, which can help for several things:
- faster and more secured network
- small sell pressure on exchanges (coin can rise in price more easily)

I see nothing wrong to have some profit while supporting the coin (by holding it and not dumping it).

This of course is situation explained in some romantic way of thinking. In real cryptocurrencies life it is extremely difficult to achieve, but I think it's possible.

Not sure how this relates to what I said... but from the second paragraph it seems you think more coins = profit?

spartak_t

legendary

Activity: 1960

Merit: 1176

@FAILCommunity

Coins are not exactly countries so I think that there is nothing wrong with interest/inflation as long as the price of the coin itself is steady and growing.

Here is the killer. What if it isn't growing? See my comments above. If it is steady and growing, why have inflation at all? It only counteracts any growth by spreading it more thinly over a higher number of coins.

Interest/Inflation != growing value. More coins != more value. That is just the false link that marketers want you to make when they use the term 'interest' in place of 'inflation'.

PoS is not only about inflation, but securing the network as well. I think that if a coin's community (developer/s inculded) are working hard on it's technology (and above all - it's adoption), people will be more keen to keep their coins in the wallets, which can help for several things:
- faster and more secured network
- small sell pressure on exchanges (coin can rise in price more easily)

I see nothing wrong to have some profit while supporting the coin (by holding it and not dumping it).

This of course is situation explained in some romantic way of thinking. In real cryptocurrencies life it is extremely difficult to achieve, but I think it's possible.

Daedelus

hero member

Activity: 574

Merit: 500