all you've managed to do is swap the 'proof of work' system, which prevents gaming of the system, with a system that gives control to whoever can muster the largest resources in terms of IP addresses and virtual nodes.
Having scrapped the whole 'block' system - this 'arms race' would happen at a rapid rate, and even if there were a few competing botnets, control of the network would oscillate between them.
In short - your proposal sounds like a disaster, and suggests you've missed the point of the block system and proof-of-work.
Isn't that how it works anyway though? If an attacker manages to get 50% of the processing power of the network then he could potentially validate an invalid transaction (like creating bitcoins out of thin air).
If anything I would think that my system would be more secure, since an attacker would have to have 2/3 majority, not in terms of processing power but in terms of nodes. This security is inherit in the philosophy of bitcoins, and it depends on the philosophy that there will always be more genuine validators than attacker validators.
Well it's not *quite* how it works anyway.
Yes it's a competition to throw resources at the problem - but the 10minute block system is an elegant way to determine who has contributed resources. The maths does it.
Your method wastes just as many resources - but also wastes bandwidth in determining how many nodes there are at any instant, and what proportion have validated what transactions.
so
a) you haven't solved the wastefulness regarding electricity and hardware-stacking anyway
b) you've introduced more wastefulness in terms of bandwidth.
c) you've thrown away the history and auditing system the whole thing relies on... so once someone has 2/3 majority under your system, they can rewrite not only events from that point onwards, but also the entire history.
d) you now have no mechanism for the currency distribution.
Your reward seems only to be transaction fees - so how did you propose to complete the distribution phase of the currency, which still has many years to run?