Topic: Updated: Proof-of-Stake interest is safe and does not act as inflation. - page 3. (Read 4165 times)

I'm interested in this topic as well. I never really understood proof-of-stake.

I'm interested in this topic as well. I never really understood proof-of-stake.

What about this:
- Referenced Wikipedia article: http://en.wikipedia.org/wiki/Peercoin

There maybe some specific implementations that operate the way you suggest. But, proof of stake itself does not needs to be any different, inflation/deflation wise, from proof of work.

"Peercoin is designed so that it will theoretically experience a steady 1% "decentralized" inflation per year (inflation for each user is proportional to the number of coins they have), yielding an unlimited number of coins. This is a combined result of the proof-of-stake minting process, and scaling of mining difficulty with popularity.[1] Although Peercoin technically has a cap of 2 billion coins, it is only for consistency checking, and the cap is unlikely to be reached for the foreseeable future. If the cap were to be reached, it could easily be raised, hence for all practical purposes Peercoin can be considered to have inflation of 1% per year, with a limitless money supply."

Are you sure that's all? From what I understand that is only part of proof-of-stake's function. Yes you sign the block with existing coins, but you also get a percentage of new coins based on the coin age. For example: isn't there a 1% return on aged coins with PPC? And how about Philosopherstone (PHS) with a 50% annual interest paid based on the proof-of-work system?

Proof of stake has nothing to do with creating more coins, you use existing coins to sign the block.

Reading through this thread it becomes stunningly apparent that most of you have not done any sort of in-depth research into the mechanics behind Peercoin, and rather are relying on the BTC-e trollbox for information. Please read the thoughts of PPC developer Sunny King into why PPC has been designed the way it has been.

As well, because it bothers me to continually read the same tired arguments, you should NOT be thinking of 1% PoS rewards in the same way as fiat inflation.

Let's say in society I'm holding $100. Let's also say that there is $1000 total in the country held by 10 people including yourself (the money supply). Everyone has $100 in this scenario.

Traditional 1% inflation is if the Government prints an extra $10. Now, I only have $100 out of $1010 total, meaning my relative purchasing power has decreased. This makes me unhappy as a holder of the currency, and is the lens that many of you are thinking of the mechanics of the coin.

With Peercoin, EVERYONE GETS the 1%, assuming you choose to secure the network with PoS minting. Your relative purchasing power has not changed. Everyone has the chance to hold $101 / $1010 (10% of the money supply) so to speak, which is no different than $10 / $1000.

The only difference is that this 1% PoS reward mechanism secures the network, and is offset by transaction fees. It is a useful form of work.

Peercoin's PoS is a decentralized increase in the money supply based on the amount of coins you own. It is not bad at all. It is possible to increase the money supply and sill not have inflation. It is exactly the same as if you were to add more decimal places onto the end of Bitcoin. You have more tradeable units but the value stays the same. With Peercoin, you mint more coins, so your value stays the same because you have received more coins.  It is decentralized inflation, which is different than traditional inflation. It is not a top down approach, it is a bottom up approach that is distributed fairly.

The 1% PoS minting is like a gradual stock split.

The .01 tx fee works like a super-mini reverse stock split.

Peercoin has both of these features.

"Peercoin is designed so that it will theoretically experience a steady 1% "decentralized" inflation per year (inflation for each user is proportional to the number of coins they have), yielding an unlimited number of coins. This is a combined result of the proof-of-stake minting process, and scaling of mining difficulty with popularity.[1] Although Peercoin technically has a cap of 2 billion coins, it is only for consistency checking, and the cap is unlikely to be reached for the foreseeable future. If the cap were to be reached, it could easily be raised, hence for all practical purposes Peercoin can be considered to have inflation of 1% per year, with a limitless money supply."

"Myth: Bitcoin mining is a waste of energy and harmful for ecology. Answer: No more so than the wastefulness of mining gold out of the ground, melting it down and shaping it into bars, and then putting it back underground again. Not to mention the building of big fancy buildings, the waste of energy printing and minting all the various fiat currencies, the transportation thereof in armored cars by no less than two security guards for each who could probably be doing something more productive, etc. As far as mediums of exchange go, Bitcoin is actually quite economical of resources, compared to others."