Quote from: kokojie on December 18, 2014, 03:30:37 AM

FYI there is a better way, it's called Proof of Stake mining, it's working for a variety of altcoins, they have all avoided the inevitable downfall of PoW systems (expensive + low security).

Correct me if I am wrong, but Proof of Stake mining puts all of the emphasis on the Bitcoins you hold rather than the hashing power, right? So even if I have 100 TH/s it won't mean anything at all if I don't ALSO own a significant amount of Bitcoin. Is that right?

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With Proof of Stake, the resource that's compared is the amount of Bitcoin a miner holds - someone holding 1% of the Bitcoin can mine 1% of the "Proof of Stake blocks"

If so it's a HORRIBLE idea because it creates unnecessary cost barriers to getting into Bitcoin mining. Right now you can buy mining hardware and start earning Bitcoin even in areas where it's nearly impossible to purchase Bitcoin thus allowing it to become established in new areas, but if you have to actually own Bitcoin first that scenario becomes impossible. It also significantly slows reinvestment possibilities. Right now, for example, I can immediately reinvest my earnings into new mining hardware which helps to expand the network. If I also had to maintain significant stores of Bitcoin it would slow the expansion of the network. People already established would have no trouble, but people just getting into it would find it impossible to compete.

Although I can see a benefit in preventing a single monopoly, technically, if only the wealthiest of people have the rights to minted coins it will in a round about way encourage the formation of monopolist groups. It would very likely mean that cloud mining solutions would be the ONLY way to mine since these companies would likely hold coin of their own which would very likely lead to large numbers of people giving way too much power over the network away to a central authority. (although, to be fair, with electricity costs it's likely to move in that direction anyway)

This also raises the question of what such a change would mean for current miners. I don't think many people would be happy if their ROI expectations were completely destroyed by a protocol change. If the people whose hardware supports the network back out due to a lack of ability to recoup investments due to a lack of assets that would lead to major disruptions in the integrity of the network. Even if the proposed changes leads to a fair balance between small and large miners with proportional holdings of small and large Bitcoin this would still present a problem for those who don't have any holdings when such a change goes into effect. Overnight their investments would become completely meaningless and, like I said, those without the ability to obtain more would be barred from participating. Even in scenarios where you can mine without assets if preference is given to those with assets it would still significantly alter the way rewards are calculated and from there it becomes less about being rewarded for maintaining the hardware that processes transactions and more to do with being rewarded for being wealthy.

I can really only think of one long term benefit to such a scenario: Increasing the number of people with holdings decreases the sell pressure while increasing scarcity which would drive the price up. In theory that increase in price could help to offset some of the problems I mentioned, but I am still against any protocol change that introduces barriers to the average person getting involved. I myself obtained my first Bitcoin from mining hardware I purchased with fiat because at the time I couldn't purchase Bitcoin anywhere locally and neither Western Union or MoneyGram would allow me to send money to other countries (MoneyGram banned me for life for trying, believe it or not) and I would never have been able to have anything to do with Bitcoin if those barriers existed and I wouldn't be a strong supporter of Bitcoin today.