Topic: The Deathblow to Proof of Stake - page 7. (Read 7929 times)

PoS is not the problem here, ignorance and incompetence is. This is all a result of MintPal leaving 30% of all VRC in existence in one of their hot wallets when they are supposedly making use of cold storage methods. It's also ignorance by the part of the VRC community for leaving that number of coins in one exchange, but it's not their fault this happened.

The key point is that PoS is not at fault here. The direct equivalent of this happening in PoW would be 30% of the network hash rate leaving their pools and mining at GHash.io, thus pushing the hash-rate over 51%. Let's not forget that GHash.io was on the brink of having 50% of the network hash-rate around 2 weeks ago so no one can say PoW is full-proof from attacks either.

Another thread about the dangers of POS, what is this?  about the 5th or 6th thread? All i see so far is talk, if POS is so bad then why doesn't someone attack NXT?  Time to nut up or shut up.

A single point of failure
Mintpal was compromised. The attacker gained 30% of the total supply of Vericoin in the attack. Which in turn, led the Vericoin development team to do something unprecedented in cryptocurrency history. They created a mandatory rollback.

What is a rollback?
A rollback goes back in time from blockheight 100 to blockheight 75. When a rollback is performed, all transactions after a certain point in the blockchain are effectively destroyed. If Bob bought a casacius coin from Sally for 1000 vericoin, Bob would now get the 1000 vericoin back while Sally has nothing. All transactions after blockheight 75 would no longer exist.

The necessity of the rollback
In every single instance of any exchange or service getting hacked, there has never been a rollback implementation. For Vericoin, this was actually very necessary. Vericoin creates it's new blocks by using proof of stake. When the attacker gained 30% of the coins in one go, they effectively gained 30% of the hashing power. You can see how dangerous this is. All it would take is an additional 21% to effectively completely own the network. If Vericoin used a proof of work system, the only danger would be the market price plummeting from the sell off, but the network itself would never be in danger.

The unprecedented solution
A rollback is terrible. Every single cryptocurrency relies on the public blockchain ledger. It is the holy grail of the entire currency. Once something is written to it and not orphaned, it's set in stone. When the team decided to initiate the rollback, they decided to use the nuclear option. They broke the entire foundation of crypto and set a new norm where it will be ok to undo transactions if the are large enough. Instead of the developers only being developers, they've now taken the option to also be the federal reserve and the police.

Proof of Stake's flaws
Vericoin only had the nuclear option available because of proof of stake. When an attacker gains coins in a proof of stake currency, they not only gain money, they gain network control. Vericoin was between a rock and a hard place. They either let the attacker have 30% of the total staking power, or set the precedent of rolling back. The reason they took the rollback option was because they could. (for now)

Impossible to rollback when big
Vericoin is so new that there is not a lot of merchant support. If it was as widely used as Bitcoin with 1000's of transactions a day and tons of merchant support, a rollback would kill the currency. Merchants would of shipped products with no payments and people wouldn't of been payed. Hypothetically, if any proof of stake currency did become as big as Bitcoin and was compromised just like now with 30% of the total coin supply taken, the currency would effectively not be able to rollback and allow a malicious entity to control the network. A large hack would become a death blow creating uncertainty in the integrity of the network.

TLDR

• None of yesterdays events were Vericoins fault.
• Proof of Stake is not feasible: in a large attack, the attacker gains crypto and network control.
• When a single entity fails (an exchange) no currency should ever undo their mistakes by wiping it from the chain.
• If a proof of stake currency ever becomes huge, it would not be able to rollback and would have to allow a malicious entity to have network control.