Topic: The role of exchanges and payment processors in proof-of-stake/importance? (Read 408 times)
April 11, 2015, 06:05:57 AM
Exchanges can Stake but most often they may agree not to Stake and not harm their own markets because if you are an exchange, it is better to have markets that are performing well.
April 11, 2015, 05:53:56 AM
I guess there is no stopping them staking, but I believe NEM has an agreement with Polo not to harvest.
April 11, 2015, 02:16:54 AM
I'm surprised that this hasn't been brought up before but wouldn't exchanges hold a disproportionate amount of power in a proof-of-stake model? When Mt. Gox shut down in 2014, it had almost 1 million coins at the time. Even back in 2011 when the number of bitcoins was at 5 million, Mt. Gox still had control of ~500,000 BTC and possibly more.
And how about NEM's proof-of-importance? In July 2011, Mt. Gox was handling over 80% of Bitcoin transactions. In 2013, this number was 70%. How would this impact Mt. Gox's proof-of-importance score? What about transaction processors such as BitPay which accept coins to dump in exchange for fiat? If it becomes the case that most merchants use BitPay or a BitPay-esque service to process NEM transactions, wouldn't the payment processor get a disproportionately high PoI score?
If you look at many recent proof-of-stake coins, typically the biggest wallets are owned by exchanges. NEM has a massive wallet owned by Poloniex. Qora had two massive wallets owned by Bter and Poloniex. I don't know about other PoS coins but I'd imagine the situation is similar.
So while the risk of two, three, or four mining pools colluding in order to launch a 51% attack might not exist with PoS and its variant PoI, wouldn't the risk merely be transferred to exchanges and payment processors instead?
And how about NEM's proof-of-importance? In July 2011, Mt. Gox was handling over 80% of Bitcoin transactions. In 2013, this number was 70%. How would this impact Mt. Gox's proof-of-importance score? What about transaction processors such as BitPay which accept coins to dump in exchange for fiat? If it becomes the case that most merchants use BitPay or a BitPay-esque service to process NEM transactions, wouldn't the payment processor get a disproportionately high PoI score?
If you look at many recent proof-of-stake coins, typically the biggest wallets are owned by exchanges. NEM has a massive wallet owned by Poloniex. Qora had two massive wallets owned by Bter and Poloniex. I don't know about other PoS coins but I'd imagine the situation is similar.
So while the risk of two, three, or four mining pools colluding in order to launch a 51% attack might not exist with PoS and its variant PoI, wouldn't the risk merely be transferred to exchanges and payment processors instead?
Jump to: