Quote from: iruu on May 21, 2014, 03:09:51 AM

Proof of work is significantly inferior than proof of stake, for several reasons.
1. Centralization. Just look at the distribution of hash power. The problem is that mining has almost infinite economies of scale, logically leading to complete centralization eventually, ie. one mining actor. Had a powerful state wanted to destroy bitcoin, raiding a few mining farms is already trivial and cheap. The security of bitcoin depends on lack of political will.

There are no economies of scale in PoS. There can be in some PoS implementations, but it's not characteristic of all PoS.

Thanks for your reply iruu!
The very real problem you outline of centralization of miners is exactly the same or worse in a proof of stake system. If miners can work together to become a nefarious majority, so can forgers. In fact logistically it would be much easier for the forgers but that is a moot point: proof of stake offers nothing new here.

Quote

2. Low and very expensive security. The miner doesn't have any economic interest in the currency per se, only in daily miners' revenue (new coins + fees). If at some point expected return on capital from acting against currency is higher than expected future miners' revenue, rational miner will become hostile.
This is a much more serious problem if it's possible to rent vast amount of hash power, because then the costs for the attacker are drastically smaller.

Thus, on a perfect market with renting, the price for control of pow coin for time t is just a tiny bit more expensive than half of miners' revenue in time t. Hard to say what's the time required to significantly profit from damage, probably by using derivatives on coin's price. A day?

In comparison, attacking Proof of Stake currency requires losing the value of >50% of coin's market cap, which is a much bigger number than half of daily mining reveneus. PoS currency is much, much safer.

Of course it is possible to rent hashpower or stake at cost. We all know that cost and so bury our TXs under an appropriate number of blocks. These are valuable resources so a market exists for them. I fail to see the difference between hashpower and stake in that regard. Remember also that the >50% attack is not >50% of all the hashing power (or stake) in the world, but only >50% of the current network rate. For a PoS coin this is much lower than half of market cap.

Perhaps you have some kind of proof of burn system in mind with this requiring losing stake? If you wish to claim PoS is much much safer against 51% attack you need to outline an algorithm that closes the new holes introduced by PoS (deep chain re-orgs with old keys, resusing stake, good solution to choosing which stake gets which block) but also come up with some reason it is better (none is offered).

Quote

Proof of stake is a system for achieving consensus as to the state of balances. A proof of stake currency can have PoW method of distribution which plays no other role. Or any other method.

Good point! However, how do you intend to incentivise forgers if not with coinbase rewards and fees? If you remove this "interest payment", do you think folks will still be interested? I don't.