proofofstake.com

Thoughts about Proof of Stake coins (NovaCoin,PPCoin) I've done a little bit of research into these coins because the basic goal is pretty neat: Long-term they aim to be energy enefficient, meaning less power consumption to secure the network. While this might not seem like a very important goal, if you think about bitcoin becoming mainstream and generating a trillion dollar market cap, with billions of dollars in fees, the cost of the bitcoin network becomes roughly equal to the cost of electricity in relation to fees (meaning mining would cause a significant increase in power consumption world wide, making electricity more expensive and slowing down the economy). The way proof of stake solves this is by "burning" coin days to mine a proof of stake block. While I'm not entirely sure how this would work (would you need lots of coins to mine PoS, would you donate coins to a pool with others to mine PoS?) what this means is that the cost of a 51% attack is roughly equal to half of the coin stake that's being donated to secure the network, offsetting the cost of hardware/electricity to the value of the coin itself. The problem with PoS is the question of how do you distribute the innitial amount of coins in the network? While both NVC and PPC promiss about 1% inflation per year as your "reward" for mining you can't start at 0 coins because you can't generate 1% of 0. So the way NVC and PPC solved this is by distributing an initial base of coins through traditional proof of work mining. Except instead of using a planed, known release schedule like BTC/LTC, they released coins as a function of hashing power where more hashing power = less coins per block. Bassically when there were only one or two miners during the first couple days of the release they were generating thousands of times as many coins amoung themselves as later miners would get. This is different from BTC/LTC because no matter how many people are mining, the block reward for BTC/LTC remains the s

Thoughts about Proof of Stake coins (NovaCoin,PPCoin) I've done a little bit of research into these coins because the basic goal is pretty neat: Long-term they aim to be energy enefficient, meaning less power consumption to secure the network. While this might not seem like a very important goal, if you think about bitcoin becoming mainstream and generating a trillion dollar market cap, with billions of dollars in fees, the cost of the bitcoin network becomes roughly equal to the cost of electricity in relation to fees (meaning mining would cause a significant increase in power consumption world wide, making electricity more expensive and slowing down the economy). The way proof of stake solves this is by "burning" coin days to mine a proof of stake block. While I'm not entirely sure how this would work (would you need lots of coins to mine PoS, would you donate coins to a pool with others to mine PoS?) what this means is that the cost of a 51% attack is roughly equal to half of the coin stake that's being donated to secure the network, offsetting the cost of hardware/electricity to the value of the coin itself. The problem with PoS is the question of how do you distribute the innitial amount of coins in the network? While both NVC and PPC promiss about 1% inflation per year as your "reward" for mining you can't start at 0 coins because you can't generate 1% of 0. So the way NVC and PPC solved this is by distributing an initial base of coins through traditional proof of work mining. Except instead of using a planed, known release schedule like BTC/LTC, they released coins as a function of hashing power where more hashing power = less coins per block. Bassically when there were only one or two miners during the first couple days of the release they were generating thousands of times as many coins amoung themselves as later miners would get. This is different from BTC/LTC because no matter how many people are mining, the block reward for BTC/LTC remains the s