Topic: Proof of work - page 2. (Read 394 times)

51% attack only means. essentially transaction spending control/ by going back and make new block submissions with different/less/more transactions than before.

any blocks that try to "change the algo" will be rejected by the full nodes that are sticking to the normal/old algo

to perform a true "algo change" mainly revolves around the main exchanges/merchant nodes accepting the new algo.. . because what they accept, means what other users and pools can then spend through.

if merchants/exchanges are ignoring/rejecting a certain block type they dont like. then the pools and the users transactions within the blocks the pools make that got rejected. wont get to spend their value, they they give up making blocks that wont get spent(recognised my merchants).

so merchants/exchanges have most power in decisions of change

You are right, the miners are the one who controls the networks, doesn't matter if they use Algorithm Mining or Staking, even if there is a miner with more of 51% of the network he can do the 50% attack, and this applies for both structures.

But the control is in different hands, in PoW the miners don't have to be the biggest holders.

I don't think that is a valid statement.

There are degrees of decentralization. It is not just true or false, so there is no such thing as "truly decentralized".

Power will never be equal across all participants in any system, decentralized or not. And while power distribution is a factor, it is not the only factor.

proof of stake is where a person has to have alot of funds on a single address to earn more chances of signing a block. he and he alone has sole control of his stake

..
in bitcoin a solominer does not have to have alot of hardware. as a pool. many users join together. thus its not a solo attempt(unlike PoS) this is where none of the hardware need to be in the same building and none of the hardware needs to be fixed to a single server
its not just about stratums all over the place. but also the freedom of users to 'pool jump' to different pools

in PoS
if a coin was to 'jump' out of a persons utxo.. he has less power. but he has to be the one removing his control as he is the only one able to decrease his 'stake'. thus its very central

in bitcoin users have the asics, and if their chosen pool for the day is acting sketchy. THEY pull their power away from the pool. thus again decentral. the pool cannot force the asics to stay with him. users can pool jump all they like

It's been a long time since I've bothered to look at Proof-of-Stake.  Have there been any good solutions implemented or proposed for the "nothing at stake" problem while maintaining decentralization?

As I understood it, the "nothing at stake" issue was a theoretical attack which took advantage of the fact that users would no longer care about addresses that they were no longer using.
My understanding may have been flawed, and I may have forgotten some of the details, but from what I can recall the attacker might convince a user to provide the private key for such useless addresses.  However, the address WILL have held some amount of coins in the past. If the attacker can gain control over enough such keys, they could effectively gain enough historical "stake" to take control of the chain starting at some historical point in time, and then invalidate the entire current chain?

I think the point you raise about poof of stake and proof of work having a similar challenge is true. Depending on who you ask, both types of security can be described as both decentralised and somewhat centralised.

In terms of proof os work, yes, technically there could be a person/s that may have a bigger control than smaller miners due to their resources but this challenge of some miners having monopoly over the network at any one time is kept under control by introducing several penalties if they were found out. Penalties, include not getting any rewards for their mining, blacklisted and never being able to be part of the security network again, etc.

And, let's remember that consensus from lots of different computers around the world is required to agree on any one transaction, thus limiting the chance of mischief.

I can't find the exact research which concluded this. I think I reached the conclusion after reading this quite a while ago.

https://nakamotoinstitute.org/static/docs/on-stake-and-consensus.pdf

After thinking about it, I realized that selfish mining also results in 1/3 of the network tolerance for Bitcoin.

What is control over the system? In your subsequent replies, you talked about a 51% attack. Let us assume that that is not even the scenario of comparison. Because nobody would attack their own investment, right? (This of course does not discount the external actors).

Lets talk about "control" for now. In a PoW system, there is NOTHING for the miner to control. The miner cannot give himself greater fee or change the economics to benefit himself in subtle ways. Compare this with PoS coins. Most PoS coins have fees paid out to validators/ delegators as a percentage of the transaction fee as well as coinbase tokens. What stops centralized entities from colluding to make it favorable to themselves, like what happened with that 4-Billion dollar ICO?

There actually is something to controlled in PoS, all in the name of governance parameters. It also ensures unlimited, constant income for the topmost people at the expense of its users. In case of PoW, there is no such thing to be controlled.

No matter what "decentralization modelling", the PoS coins come up with, it is simple common sense that those with the most power will inevitably collude. The only solution we have for that has been bitcoin, not only because of Satoshi's PoW brilliance (there are hundreds, if not thousands other PoW coins), but also due to the network effect, time in the wild, robustness and proven ethos of its community as well as developers.

+1

Yeah, what is this about? @ranochigo

Thanks for the great explanation, makes sense to me now.

Where did you get the 1/3 from?

If you introduce concepts which favors those that has the most resources (having more coins, more ASICs), then you reach the same degree of centralization. That argument is valid for both. The argument for PoW and against PoS is that there is a greater opportunity costs for PoW than PoS, in the case of a rogue miner. They stand to lose both the value of their coins, the equipment, the resources spent, etc.

In the case of PoS, they can support multiple forks without losing out. The degree of fault tolerant for PoS is 1/3 of the network going rogue as compared to 1/2 for PoW.

It is not just the power, it is the fact that you don't do anything in a proof of stake algorithm, you just have money and get paid for having money. On top of that the PoS coins usually have terrible distributions where the creators premine the coin or have control over a very large amount of that coin already.

Also as a PoS coin grows the "early adopter" gains more power over the network and could become malicious but in a PoW as the coin grows the "early adopter" just has more money but no power in the network, even if they have hashrate their power decreases as the total hashrate grows.

Probably. But they'd just run multiple nodes; because the minimum is 32 ETH if I remember correctly. Whereas it's safe to assume that the bigger exchanges like Binance hold ETH in the 7-8 digit numbers. Setting a maximum number of ETH per node is probably going to harm the individuals a lot more rather than the exchanges.

I see, point taken. Can't the proof of stake problem be partially addressed by placing a maximum on the amount staked when running a node?

The main gripe is not only that a person that has more coins have more power over the network, but the fact that centralized entities such as cryptocurrency exchanges has suddenly so much power over the network simply because they hold a huge amount of coins of their users.

As with PoW, sure, a person with a lot of money could also have a significant amount of power over the network, but buying a lot of miners is having A LOT more at stake/risk rather than just simply holding coins for staking.

What if they do a 51% attack by having multiple wallets? It would be harder to tell its coming from the same person.

If the counterargument is that the attacker is better off playing by the rules rather than risk bitcoin value dropping to 0 (and therefore losing all his/her resources), well that also applies to proof of stake networks. The person who has 60% eth would rather not cheat the system, else the value of their stake goes to 0. 

This is the reason there is a incentive in place, miners get the coinbase reward for every completed block and thus encourages them to not attempt to cheat the system as it is far more rewarding to simply mine.
Also, an attempt to cheat the system through.a 51% attack would be quickly discovered and the shady chain would be dropped, so someone who invested millions of USD into buying mining hardware to own over half of the hashrate would be quickly discovered should or when they attempt an attack on the network.
The consensus to drop a shady chain is an example of the decentralization of Bitcoin.

One of the arguments against proof of stake is that those with the most stake maintain power over the system (much like our current financial system) and therefore is not "truly" decentralised.

Can't this argument also be applied to proof of work? Those with most wealth can accumulate the most mining hardware and therefore have most control over the system?