
Proof of Stake - jarsin
http://avc.com/2016/11/proof-of-stake/
======
cocktailpeanuts
Is it just me or does all this "Blockchain doesn't have to be Bitcoin"
ideology sound like "Uber is worth billion dollars. Let's build an Uber for
X"?

Even before Bitcoin there were tons of attempts at implementing
cryptocurrency, and none of them worked. It was Bitcoin that hit the jackpot
for some reason, just like how human beings beat all the odds to become the
top of the food chain on earth.

I am not saying it's impossible, I just don't like how all this movement is
driven by VCs, just like how all the "Uber for X" companies were driven by
VCs, powered by naive entrepreneurs who thought just copycatting a successful
model to a different domain would make them rich.

I just think in most cases these copycat projects have no soul and that's why
they fail, just like Uber for X companies never become Uber.

~~~
pmorici
It think one of the issues at the core is that all these copy cats have a
company or group of people behind them who stand to benefit if their block-
chain gets traction. Because there is a lot of value if someone can control
the block chain you see all these people trying. Bitcoin's creator on the
other hand released their idea into the world and then disappeared. If it is
eventually successful they don't stand to benefit any more than any other
early adopter.

It kind of reminds me of the early days of the Internet when you didn't get
"Internet" you got AOL, or CompuServe, or whatever. All these companies wanted
to control the network you connected into with their own branding. Eventually
those companies all died and everyone realized that an open Internet with no
one company controlling it at the core was the way things would go.

~~~
lsc
>It kind of reminds me of the early days of the Internet when you didn't get
"Internet" you got AOL, or CompuServe, or whatever. All these companies wanted
to control the network you connected into with their own branding. Eventually
those companies all died and everyone realized that an open Internet with no
one company controlling it at the core was the way things would go.

But aren't we moving back that direction? Now your local business doesn't have
a website, they have a facebook.

Turns out? people like walled gardens just fine, it's just that it's not as
easy as it looks to build a walled garden _and_ a last mile transport network.

~~~
cocktailpeanuts
I think there's a distinction. Facebook/Google/etc are built on top of the
Internet, which is an open platform.

These companies we're talking about are basically trying to "become the
Internet" (not something that builds on top of the Internet)

~~~
aidenn0
AOL, Compuserve &c. were built on top of the CCITT standards (V.21 &c.), and
the PSTN, which was a fairly open platform post 1968.

~~~
cocktailpeanuts
I think you misunderstood what i said.

~~~
aidenn0
Possibly. Where you trying to indicate a difference between AOL/Compuserve/etc
and Facebook/Google/etc? If so, what was it?

~~~
lsc
I think that most people think that starting a walled garden is easier when
it's connected to an internet that everyone is always connected to.

The internet is different from the PSTN network that connected you to
CompuServe because if Facebook controlled your last mile the way AOL did,
you'd need to coordinate with Facebook when you wanted to upgrade to the
latest DSL or cable or what have you. The idea here is that once we got DSL
and other "run gigabit ethernet over a series of rusty coat hangers that we
have twisted together" level technologies, (I think it's fucking amazing that
DSL works at all) in one location, one technology is going to work way better
than others, and those other technologies might work way better in other
locations. In walla walla you might get twice the speed on compuserve, while
in San Jose, AOL might give you 4x the speed, if AOL and CompuServe ran their
own networks. (to torture the metaphor)

Of course, if you made the last mile technologies like DSL and Cable switch
the endpoints of their connections as quickly as you can switch endpoints on a
PSTN, sure, that would have solved the problem, too. But... really, that's
kind of what the internet does.

I think this is why walled gardens that include the last mile keep failing;
the last mile is largely hard based on physical geography, and the walled
gardens are hard based on your preferences, which often don't match up with
your geography.

I think that's why walled gardens are doing so much better now than they were
in the '90s; these days, one set of companies focuses on the last mile, (and
everyone has, comparatively speaking, astoundingly good last-mile access) and
then a completely different set of companies can set up walled gardens to
cater to various preferences, and the people that like that walled garden
don't have to share a geography.

------
TD-Linux
Sadly, this article is mostly just a link to the Ethereum FAQ.

It should be noted that every Proof of Stake altcoin has eventually collapsed,
and there are arguments that this is inevitable:
[https://download.wpsoftware.net/bitcoin/pos.pdf](https://download.wpsoftware.net/bitcoin/pos.pdf)

~~~
Animats
It's not that distributed consensus is hard. It's that _anonymous_ consensus
is hard. Common stock has distributed consensus via voting based on share
ownership. That's proof-of-stake.

The real problem here, as with spam, is the ability to generate large numbers
of anonymous identities cheaply. Zuckerberg figured this out a long time ago;
hence Facebook's "real names" policy.

~~~
TD-Linux
That's partly the case, though note that in terms of Bitcoin, stock would be
considered to be centralized, not distributed, as the exchange determines
ordering of transactions. It's not really proof of stake because it doesn't
have the problem that proof of stake is trying to solve in the first place.

~~~
kevinpet
Stock is centralized, but not in that way.

There is no single ordering of transactions. Exchanges (which are distinct
entities, i.e. decentralized) are legally required to report their trades, but
the order actually happens at independent places.

What is centralized is the record of ownership of the shares. All publicly
tradable shares in the US are in a technical sense owned by Cede & Co., a
partnership related to the DTCC. When shares change hands, all that happens is
an entry in the database at the DTC.

Since we're talking about the blockchain, it's interesting to know how this
system is secured. The mechanism is that both parties report the expected
transactions to DTCC, which ensures they match before the money changes hands.
The trade that happens during market hours is only the agreement to trade, and
the actual delivery happens three days later.

------
Rauchg
My gut tells me the opposite. Here are some unscientific reasons why.

Proof of stake: the mechanism to secure the coins, uses the coins it's trying
to secure. Circular.

Proof of work is simpler to describe and implement, which is attractive.
Joining, then leaving, then joining and catching up is easy. Blockchain reorgs
are easy.

Compare the length of Bitcoin's whitepaper and any PoS whitepaper, or the
cited link even.

It'd be interesting for the author to share his intuitions for why it might be
better.

~~~
splintercell
>Proof of stake: the mechanism to secure the coins, uses the coins it's trying
to secure. Circular.

I think the term you're looking for is 'bootstrapping'. Once we have enough
cryptocurrency via PoW, we can (and only then) implement PoS.

~~~
Taek
No, it's not that simple. After you switch to a PoS system you still have all
the problems. For example, who is allowed to vote is decided by who is
currently voting.

For example, PoS is typically signature based. What's to stop me from making
more signatures after the fact? And how can a newbie tell which signatures I
made first?

These are hard problems, and they aren't the only ones, and solving the
bootstrapping issue alone is not sufficient.

------
ars
Are there any "Proof of storage" blockchains?

This would force people to have physical objects (RAM or HDD) to mine, but
doesn't consume the massive amounts of energy that POW mining consumes.

(i.e. you only need the storage to mine a block, not longterm)

The way I'm envisioning it each "tick" randomly X blocks are picked, and the
more storage you have the more likely it is you will be picked (potentially
more than once).

~~~
corv
How would you prove having storage?

Seems it would use a lot of bandwidth or computation when calculating hashes.

~~~
ars
I don't know.

I was thinking something like write a bunch of random numbers to disk, and
prove that you have the ability to retrieve any of them at will.

This is obviously not a complete solution. I was asking if anyone knew of any
such system.

A positive, not negative, feature of the system is you must be able to rewrite
all the storage each time. So the faster your can write the more blocks you
win, but also the more storage you have the more blocks you win (and it's a
tradeoff between them).

~~~
corv
I'm not aware of any Proof-of-Storage systems but Storj and similar projects
are combining blockchain cryptocurrency with p2p storage.

It's an interesting idea.

~~~
Taek
Happy to jump in as the founder of one of these, Sia. We build consensus using
proof of work, and then we throw some smart contracts on top of the consensus
system to build a secure marketplace for cloud storage.

The result so far has been really potent. On the Sia network today, raw
storage (pre-redundancy) costs about $0.30 per TB. Performed intelligently,
you only need about 2x redundancy, putting the total cost at less than 1/10th
of Amazon glacier.

I project that as the network grows, demand will catch up to supply more and
the price will settle closer to $2 / TB / Mo for raw storage.

I can answer any questions.

------
kwikiel
Actually proof of stake can by hybrid one: You will need both mining power and
staking. By having 2x coins you will have 4x voting power.

That way you will reduce waste on mining while still having security coming
from it.

~~~
Taek
That's a naive solution that has dramatic centralizing effects. By owning more
coins, you are stronger than the competition. The miner with the most coins
will out compete the rest, and you will be left with one miner.

This problem has been very well studied and there are not any simple solutions
available. Many academics believe that it's fundamentally impossible.

------
lowglow
Open for critique, but just by going off of this article:

With "Proof of <wildcard>" you're essentially abstracting out how a community
participates.

Proof of Work exists to demonstrate good will by saying "This person works to
participate and add value in the community" There is a buy-in a degree removed
from the coin.

Proof of Stake sounds like it just removes the work someone must do from the
system and says "If they have money, they can buy in to the community without
work".

It's like saying: Instead of people putting in the work to contribute to the
community through effort the community finds valuable (i.e. Proof of Work,
e.g. Karma), we're going to let people just buy karma and trust that they have
the community's best interest in mind.

While this gives _anyone_ the ability to buy into the community and
participate in the consensus, this sounds like the opposite of what I want in
a community, because these people don't have to work to demonstrate their
value to the community that exists.

Another issue is this doesn't encourage liquidity, it encourages people to
hoard their coins/currency to participate. This might drive the price of the
coin up I guess.

Ethereum doesn't have a 'set amount' that will ever be released like bitcoin.
They'll release coins indefinitely. Does this mean you'll have to participate
in purchasing coins indefinitely to continue to participate to have a larger
voice as the value of your coins gets diluted?

There might also be the problem of who controls the coins might always
maintain a majority, since the tokens/coins are just issued, there is no real
work required to obtain them. That's a little weird and totalitarian and not
utilitarian.

~~~
ikeboy
Proof of work demonstrates that a certain amount of work was done, which cost
a certain amount of money to produce. It's burning money to get currency,
nothing more.

~~~
Spivak
It also helps facilitate transactions, ensures the security and integrity of a
network of mutually distrustful agents, and establishes a price floor for the
currency loosely based on the price of electricity.

~~~
ikeboy
"establishes a price floor for the currency loosely based on the price of
electricity."

You have causality backwards: the difficult changes based on the price of the
currency. If the price goes down, people will simply mine less.

------
zitterbewegung
As I attempt to understand the block chain as a tool I'm struggling to see an
application useful other than bitcoin. Anyone have a example?

~~~
Taek
Sure. For Sia we've used smart contracts to build a secure marketplace for
cloud storage. Basically, we use the blockchain to create a contract between a
host and a renter saying that the host will store X data for Y amount of time.
The renter pays immediately, but the host only received the payment after Y
time and only if the host can prove cryptographically that they still have the
data.

You can combine this with encryption and erasure coding to create a near-
perfect marketplace for cloud storage that's very competitive, private and
secure, and extremely reliable.

Here's a good place to get started for more technical information:

[http://forum.sia.tech/topic/107/interesting-
threads](http://forum.sia.tech/topic/107/interesting-threads)

Our network today sells storage for less than 1/10th the cost of Amazon S3.

------
wegi
Proof of Stake is not free of fault. First and foremost it gives an inherent
incentive for hoarding, which is the death of every currency.

------
kristianp
I'd like to point out Peercoin, which has been running since 2012. It's a
hybrid POS/POW currency.

[http://www.coindesk.com/how-peercoin-got-a-boost-from-
bitcoi...](http://www.coindesk.com/how-peercoin-got-a-boost-from-bitcoins-
halving/)

------
chm
There are many questions yet to be answered wrt PoS, but one that I have yet
to hear a good explanation for is the initial coin distribution. A blockchain
would be mined for a set period of time, and then PoS turned on. A great
advantage of PoW is its simplicity. Want some coins? Work.

------
SkyMarshal
_> Mining works. It has validated blockchain technology and allowed it to be
commercialized._

Well, it works at small scale, hasn't been validated at large scale yet. The
entire Bitcoin community is undergoing a schism right now over a disagreement
related to mining.

~~~
JauntyHatAngle
No it isn't, its undergoing a schism related to protocol.

The mining part has worked fine.

~~~
Taek
Well, you are not wrong about the schism, the schism is indeed about the
protocol and not about the mining.

But I don't think you'll find many of the developers agreeing with the idea
that the mining has worked just fine. It's horribly centralized, and while it
gets better and gets worse, at its best it's "jeez this is really centralized
and I don't feel comfortable at all" and at it's worst it's "only two entities
who happen to be in the same legal jurisdiction need to collaborate to do a
51% attack on the network, oh yeah and they are already collaborating in other
nontrivial ways".

Miner centralization is still a huge issue for Bitcoin.

~~~
JauntyHatAngle
>Miner centralization is still a huge issue for Bitcoin.

That's a fair call, there is a little too much faith in the large pools being
"rational" participants.

------
bernardlunn
Proof Of Stake tackles scale and cost. Perhaps Lightning Network or Open
Transactions are better approaches?

------
abrkn
There is nothing at stake. That's the problem.

