Transactions as Proof-of-Stake & The End of Mining

http://the-iland.net/static/downloads/TransactionsAsProofOfStake.pdf



Quote The concept behind Proof-of-Stake is that a block chain should be secured by those with a financial interest in the chain. This paper will introduce a new approach to Proof-of-Stake that utilizes coin-days-destroyed by every transaction as a substitute for the vast majority of the security currently provided by Proof-of-Work. Unlike prior Proof-of-Stake systems in which only some nodes contribute to the proof-of-stake calculation, we present a new approach to Proof-of-Stake whereby all nodes generating transactions contribute to the security of the network. The result is that the network immune to known attacks against Bitcoin or Peercoin.

Quote Every transaction on the network carries with it an implicit Proof-of-Stake in the network. The creator of the transaction wants the network to accept it and the receiver of the transaction is making decisions on whether or not to ship goods based upon whether or not the network has accepted the transaction. It is clear that those behind the transaction have a stake in the health of the network. After all, the network is worthless if transactions cannot be executed as expected. A well functioning network will have thousands of transactions every single block. This represents thousands of stake holders who could be contributing to the security of the network.



Quote In order for a 51% attack to be successful in a Proof-of-Work system, the attacker must keep their alternative chain secret. Once they have locked in the profits from their first spend, they can broadcast the longer secret block chain which will invalidate the original transaction. Keeping solved blocks secret is also used in the selfish-mining attack which can be effective with much less than 51% of the hashing power.



In order to prevent this kind of behavior we must make it impractical for miners to maintain secret block chains. If every transaction that is broadcast contains the hash of a recent block and the block chain enforces the rule that the transaction can only be included in block chains that build off of that block then no one will be able to build secret block chains that leverage the coin-days-destroyed of transactions in the public chain.



Please read my paper for further details, but I believe that I have a Proof-of-Stake system that requires no explicit mining and for which mining is never 'profitable'. If the security model holds review then this could dramatically change the future of all DACs and crypto-currencies, eliminate mining pools, lucky mining, vesting, ASICs, the 51% attack, selfish-mining, merged-mining, denial of service, etc.



Please review and give me your feedback.







Interesting concept. I think I would add that the purpose of mining isn't just to promote the security of the network in a static technical sense but also promote the health of the network in a dynamic economic sense. To elaborate, if mining is profitable then people must constantly upgrade their computers and the aim would be for these people to upgrade their computers in a decentralized manner. Millions of users buying GPUs, CPUs, RAM, or encrypted hard drives are all good for technological progress and mining indirectly encourages that.A lot more GPUs were sold because of mining. A lot of CPUs are sold because of mining. Generally mining as an industry produces a lot of beneficial economic activity which I think we should not want to lose.The other benefit of mining beyond coin distribution is that spare CPU cycles can actually be used in beneficial ways as well. The POW in Bitcoin is functionally useless but in future iterations or new coins there might be a POW which does protein folding, which has some useful supercomputer purposes, so I don't think we ought to give up these possibilities either.Those are of course the benefits. The costs of POW are that there are cheaters in the system who pump and dump, who use botnets, who get what many people consider to be an unfair amount of coins early on, and they provide none of the economic benefits in the two examples I laid out. In the case of using digital ocean someone had to purchase the hardware so the economic benefit exists and in my opinion that is beneficial. It ultimately is not any different from having bought the coins with the only benefit being that it was bought before the exchange was set up. A botnet contributes hashing power but has a negative economic impact because the person running the botnet truly has no stake because they did not pay any money for the coins, or even really mine them on their own computers, so these individuals have no stake at all in the success of the network.What are the benefits and costs of transactions as Proof of Stake? What are the benefits and costs of the end of mining? We need a side by side comparison between the current state of things and the new way of doing things so that we can do a side by side analysis of the benefits and costs of each proposal.For me I want a network where those who secure the network are rewarded, and can make profit in doing so but also have the incentive be set up that they'll take a portion of their profit to upgrade the network as well. Part of the issue I keep hearing with Bitcoin is that the Max_Block_Size is an issue and now we are reaching the limits of the 7 transactions per second. Why can't they raise the Block Size? They claim it's because the majority of people don't have computers fast enough to handle it.The only solution in my opinion is for mining to be profitable enough for everyone to be able to upgrade their computers to add new functionality to the network as needed. Will the transactions as Proof of Stake be robust enough to scale? Bitcoin currently isn't scaling in my opinion primarily because the profits from mining are too centralized and only people with ASICs (perhaps farms of ASICs) at this point can mine professionally.Transactions as proof of stake should be tested out. Perhaps it is a good idea to try it on a hybrid chain at first and see. Then if it can work on a hybrid then try it out on it's own chain. At this moment in time it's untested and I'd like to see what it can do in a test setting.