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Help with Proof of Work vs Proof of Steak*?

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bitabite

Though my understanding of POS is not very technical, it's been starting to warm up on me (cool me down?). After all, why would banks and governments want to lose money minting their own money?
Someone posted Gavin Andresen's Devcore devcore talk on youtube the other day and I'd love it if someone could explain to me what he's getting at there. Is he hinting at something technical or intuitive?
POW is intuitive in that it just makes sense that the person running down the hall faster than everyone else gets to pass their note along. Heck, we could prove who ran the fastest down the hallway and got there first. There is proof. That's the gist I got from him, but no more. Anyone got something more detailed on why POS isn't theoretically sound?

If you'd rather read his words...

if you think about it, I wonder if there are other uses for old, unspent bitcoins. I think this is an area that’s pretty much unexplored. We might be able to leverage them for more denial of service attack prevention on the bitcoin network. you could imagine before you’re able to join the network, you have to prove that you have some unspent bitcoins. You don’t have to spend them, you just have to prove that they’re kind of sitting there, kind of as a security deposit, um, the proof of stake folks think it might be a good idea to use this as ah, for determining the best chain, to get consensus on kind of what the ledger history is. so far, we’re pretty sure that’s a really bad idea, and when i say we, i mean the people who hang out in the bitcoinwizards irc chat channel.
it looks like theoretically, as long as everything’s on the chain and you’re looking at chain history to determine what should be the best chain, bad things will happen. umm, we have a really good anchor in bitcoin with our proof of work, which proves that some real-world thing happened.. umm.. and which gives you a real world cost that kind of gets injected into the system, magically, via this proof of work, um, ….. if you think about identity, ..

*The steak was Clickbait

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  • Bernhard

    banks always printing money, thats the way they got rid of her debt

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  • sile16

    It was kind of a two sided comment. On the one hand he says that we may be able to do something useful with unspent bitcoins, he then references proof of stake as an example use of this concept. But then he essentially goes on to say that he thinks using purely proof of stake as a consensus mechanism would end in "bad things would happen". So, I think the idea he is contemplating is using proof of stake (unspent bitcoin) in some kind of hybrid way with the current proof of work. Saying maybe miners/full nodes/etc need to hold a nominal amount of bitcoin as an additional security precaution / protection of the network as it makes it more costly to do something bad on a large scale.

    That is my best interpretation of his argument. His main actual argument around POW/POS (in this video) is that it's a tangible thing in the real world that gets reflected into the block chain. This is true and based on our current history of crypto currency POW definitely is "safer".

    That being said I personally have made the decision after many hours of reading and research is that there is a practical solution to make POS work. This is why i'm an advocate for both NXT and Bitshares. One of the arguments against proof of stake is that a new client connecting to the network could be fooled by a false chain IF enough of the initial keys were obtained by a bad guy. However, we can actually do this same attack in bitcoin as well. The consensus is actually determined by the longest chain, so at the beginning of bitcoin it had a difficulty of 1. This means that with a $580 antminer s4, I have enough hashing power to generate 512 blocks per second, so I can match the current block height with only 11.4 minutes of mining, since i'm doing this where I control the nodes I can forge the time so it looks like this happened over a long period of time to maintain the difficult of 1.

    Now, actually this won't fool a new client because the bitcoin client contains blockchain checkpoints!! This brings us to another POS arugment in where there are centralized checkpoints, this was true for a time with peercoin but both nxt and bitshares use a checkpoint in updated code periodically, like every couple months (just like bitcoin), plus a dynamic checkpoint mechanism which doesn't rely on any centralized server. So, while yes proof of stake may be harder to get right I do think it's possible to get it to production stage..... only time will tell though.

    --Matt

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