Admittedly I haven't read the whole topic. Buy maybe I can help with some information about
Proof of Stake (PoS) in general or Peercoin in detail.
Forgive me if this is partly redundant. And please correct me if I'm wrong.
Peercoin has a blockchain which allows
Proof of Work (PoW) blocks (that are just like Bitcoin's) and
PoS blocks.
The reward for the PoW blocks is not defined by block height (like it is at Bitcoin: starting with 50 BTC/block and being halved each 210,000 blocks), but by the difficulty of the PoW process.
At Peercoin the PoW reward is calulated as 9999/difficulty
1/4.
As you can derive from the formula, the PoW reward gets halved by a 16-folded difficulty. So the PoW reward decreases gradually if the hashing power of the PoW process grows.
The reward for the PoS blocks is calculated based on coin age. Peercoins that remain unspent in ones wallet gather coin age. Once they are "older" than 30 days they can mint PoS blocks.
Upon successful PoS minting the coins that have been used for PoS minting get rewarded. The reward is roughly 1% per coin year
gloss 1.
The PoW blocks are designed to have an average spacing between 10 minutes and 120 minutes.
The PoS blocks are designed to have an average spacing of 10 minutes.
As you can see, the majority of blocks is PoS:
http://ppc.cryptocoinexplorer.com/chain/PPCoin?count=100&hi=86363.
Although the PoW process is quite energy consuming, the PoS process is very low energy.
I have Peercoin running on a RaspberryPi causing 20% CPU load - and that RaPi is needing roughly 3 Watts (without load 2.5 Watts). So I take part in the PoS process with an extra of 0.5 Watts.
That is why it is often called energy efficient.
And regarding the "unlimited supply" I want to say that for sure there is a theoretically unlimited (in fact by code 2 billion) supply for Peercoins, but effectively it is limited.
- The reward for the PoW blocks gradually decreases.
- The reward for the PoS blocks is roughly 1% per year.
- The transaction fees are destroyed (in difference to e.g. Bitcoin)!
Currently there are more new Peercoins created than destroyed. So we have an inflation. I've calculated that based on a recent 2-week time frame as approximately 6.6% (I've calculated that some days ago; this is likely to decline as it did right from the beginning).
But Peercoin is quite young, and much less used for transactions than Bitcoin.
Where you have several hundred transactions (at average) per block at Bitcoin you have less than 10 (at average) per block at Peercoin. So there is not very much tx fee destroyed at the moment but will be once Peercoin is wider adopted.
The PoW difficulty is still low and thus the reward is still relatively high.
But even now the average block reward (PoW and PoS combined) for Peercoin is less than the reward at Bitcoin. I've calculated that recently as roughly 24 PPC per block (estimate for the blocks
from 84046 to 86061)
And this is going to decline.
So we are far from "unlimited supply"!
Effectively there will be an equilibrium once the created (PoS, PoW) and destroyed (transactions) Peercoins are at more or less the same level. The increase of total supply will at least hugely decline.
The next year there will be roughly 1 million Peercoins created (depending on the PoW hash rate, the PoS minting, the transactions). With a total supply of close to 21 million Peercoins, this is less than 5% and assumably less than Bitcoin's inflation next year.
One last word about the PoS and the inflation that is caused by that.
You need to incentivize people to do any kind of appropriate minting to secure the block chain.
The PoS reward of 1% per year is that incentive for Peercoin's PoS.
For Bitcoin the incentive is (currently, mainly) the coinbase reward of 25 BTC per block.
This coinbase incentive will decline until the main incentive will be gathering the transaction fees. One can doubt that this will enough incentive to operate energy consuming mining devices (they need to pay off!). It will be interesting to see the network's reaction to the drop of the coinbase reward from 25 BTC to 12.25 BTC per block in approximately 2.5 years.
And a rising price of Bitcoin alone might not be sufficient as the maximum number of transactions is limited by maximum block size and the transaction fee is likely to be lowered if the Bitcoin price continues to rise (I remember tx fees of 0.01/kB for BTC!).
So there might be a total amount of tx fee for BTC per block. If this is not enough to incentivize the operation of mining devices, it will become risky...
PoS enables Peercoin to secure the block chain without those energy consuming devices. All you need is some low-energy device to do the PoS minting.
This is why Peercoin has a unique chance to sustain the network security independently from using lots of energy.
Please take this as a start. Gather information. Make up your own mind. Peercoin might be a bit more fascinating than it appears at first sight!
gloss 1Details can be found in the source code:
Here is the coin age that determines when you are eligible to mine a PoS block. This is (coin value) * (days since last tx, capped at 90 days, minus 30 days).
(code slightly simplified, see kernel.cpp)
STAKE_MAX_AGE = 60 * 60 * 24 * 90;
nStakeMinAge = 60 * 60 * 24 * 30;
int64 nTimeWeight = min(nTimeTx - txPrev.nTime, STAKE_MAX_AGE) - nStakeMinAge;
CBigNum bnCoinDayWeight = CBigNum(nValueIn) * nTimeWeight / COIN / (24 * 60 * 60);
The reward is then calculated based on the totally aggregated coin age since the last transaction:
(code simplified, see main.cpp)
nCoinAge = SUM( nValueIn * (nTime - txPrev.nTime) ) / COIN / (24 * 60 * 60);
int64 nSubsidy = nCoinAge * 33 / ( 365 * 33 + 8 ) * CENT;
