Quote from: Peter R on April 27, 2014, 02:37:25 PM

SlipperySlope reported in his PoS alt-coin development thread that a bitcoin core dev said this:

Quote from: SlipperySlope on April 25, 2014, 09:14:18 PM

The problems to address as viewed by a member of the developers email list . . .

Quote

The problem with proof of stake is essentially that there is no cost to
creating a proof-of-stake.

...

The problem is what wrecked Peercoin, which I understand is now
centralized (all blocks are signed by the developers to be valid). ]

I cannot vouch for the accuracy of this information, but it sounds like the fact that shares are free to create caused a problem that forced Peercoin to become centralized around the developers who sign each block to be valid. So in essence, these developers are the "Central Bank of Peercoin."

This is referring to a rather technical problem with PoS. The basis of PoS is that mining a block be expensive, with the cost in coin-days. The problem is that they only pay that cost if their mining attempt is successful, because the transaction that takes away their coin-days is effectively part of the block they mined. This means it is free to mine blocks that aren't included in the block-chain. So a rational miner would mine new blocks for the longest chain, but also mine blocks for shorter chains in the faint hope that the shorter chain somehow becomes the longest and that the miner gets some advantage when it does. And this in turn means that there are a lot of long forks floating around, and the system isn't doing a very good job of establishing consensus.

It's a big problem with PoS, that needs to be solved or else the system isn't viable. However, it's not accurate to say that "shares are free to create". They are only free if they aren't actually created.