21–30 of 111 posts
> invariably brought to you by someone holding a proof-of-stake bag.
Heavens forbid that anyone who does own cryptocurrency and have concerns about said massive reliance on PoCAAoPIWH should put their money where their mouth is regarding those concerns. An absolute scandal.
https://bitcointalk.org/index.php?topic=897488.msg10182752#m...
>I will formulate the attack: The "Second Pirate Savings and Trust" attack on Proof-of-Stake
>1. The attacker creates the "Second Pirate Savings and Trust" modelled after the "First Pirate Savings and Trust" later called "Bitcoin Savings and Trust" https://bitcointalk.org/index.php?topic=50822.msg605957#msg6.... This is done in a falling market.
>2. The "trust" offers a very attractive rate of interest payable in the POS coin. This rate is significantly higher than the stake rate
>3. The "trust" allows investors to leave the interest in the "trust" and roll over the investment.
>4. The "trust specifically disclaims that it is a HYIP / Ponzi scam https://bitcointalk.org/index.php?topic=50822.msg605981#msg6...
>5. The attacker sells a portion of the borrowed POS coin say 50% for XBT, another POW alt-coin, one or more fiat currencies etc. This will becomes the attackers profit at the end. This will also depress the price by short selling creating the "bear raid"
>6. A portion of the received POS coins is used to repay interest to those investors that do not reinvest their interest. This is the "ponzi" component; however see below.
>7. The rest of the borrowed POS coin is kept by the attacker, accumulated and staked.
>At this point this is no different from any bear raid on a stock, fiat currency POW currency etc. If the market exchange rate falls faster than 2x the interest rate less the stake rate then in the 50% example above, the attacker is actually in the black and there is no ponzi. In the normal bear raid the attacker, if the attacker can depress the price enough and cover the short, can actually walk away with a profit. The problem with the simple bear raid is that in covering the short the exchange rate can rise sharply. This converts the bear raid into a ponzi and the scheme collapses in a rising market. This is what happened to "First Pirate Savings and Trust". It collapsed during a rise in the Bitcoin price.
>It is at this point where the specific to Proof-of-Stake part of the attack comes into play.
>8. The attacker continues the ponzi until he has accumulated enough stake to launch a network attack.
>9. The attacker is also accumulating a greater debt in the POS coin and can even continue selling 50% of the borrowed coin to increase his profit.
>10. The attacker launches the attack on the coin causing its value to fall to zero. This wipes out the attacker's stake, but more importantly also wipes out the attacker's debt. The specifics of the attack will of course depend on the particular POS coin.
>11. The attacker is left with is profit in some other currency, a worthless amount of the POS coin and a debt denominated in the now worthless POS currency.
>Countermeasure:
>The only known countermeasure is the intervention of the state.
And to quote the same poster's thoughts as of a few months ago:
https://www.reddit.com/r/Monero/comments/hpfjk8/could_monero...
>Proof of stake is ultimately based upon the premise that the holder of the staked coins has a financial incentive to act in the best interest of the crypto currency, in order to protect her stake. In other words she is net long the crypto currency. The trouble is that the network has no way of knowing if she is short or long, is acting as a dishonest custodian of somebody else's coins while staking them, has borrowed and sold a much larger number of coins creating net short position, has take a massive short position using leveraged derivatives, etc. In fact the network cannot even tell if she is a beneficial owner of the staked coins or just a nominee.
>Based upon this I formulated The Second Pirate Savings and Trust attack on Proof-of-Stake over 5 years ago. https://bitcointalk.org/index.php?topic=897488.msg10182752#m... Those who were around Bitcoin in 2011 - 2012 may remember the The First Pirate Savings and Trust, where a massive short position in Bitcoin was created, it then evolved into a ponzi scheme as the price of 1 BTC started to rise above 2 USD towards ~15 USD. At this point that whole thing blew up in default. Then the US SEC got to work fitting its promoter for an orange jumpsuit. Bitcoin survived because it is POW. If Bitcoin had been POS, then the promoter could have used the BTC under his control to wreck havoc on the Bitcoin network, causing the price to crash effectively making his debts worthless and very likely avoiding prosecution.
This is like saying incandescent light bulbs should be banned. Sure, it’s a sensible thing to say once you have unilaterally-better bulbs already fully commercialized and in mass production. (And this happened with CFLs and then LED bulbs; and then we did ban incandescents, here in Canada and in many other places.) But we’re not at that “fully commercialized and in mass production” inflection point yet with Proof-of-…
Yes, and they are being banned, in many places: https://en.wikipedia.org/wiki/Phase-out_of_incandescent_ligh...
This is like saying incandescent light bulbs should be banned. Sure, it’s a sensible thing to say once you have unilaterally-better bulbs already fully commercialized and in mass production. (And this happened with CFLs and then LED bulbs; and then we did ban incandescents, here in Canada and in many other places.) But we’re not at that “fully commercialized and in mass production” inflection point yet with Proof-of-…
Doesn’t that seem ripe for hyper capitalist abuse? I realize the article is just offering a simplified explanation, but the idea that whoever has the most money directly controls the money supply itself seems... well, not ideal?
So could anyone elaborate on what else about proof of stake leads to decentralization and fairness as opposed to just more incentives for centralization?
This is like saying incandescent light bulbs should be banned. Sure, it’s a sensible thing to say once you have unilaterally-better bulbs already fully commercialized and in mass production. (And this happened with CFLs and then LED bulbs; and then we did ban incandescents, here in Canada and in many other places.) But we’re not at that “fully commercialized and in mass production” inflection point yet with Proof-of-…
And we can say "it will be banned in 1-2 years, you have the time to change the underlying tech.
With those premises the value will not change much, and the global advantages are big.
Nobody has any right to tell me what kind of math I can on processors I own powered by electricity that I bought.
We regulate all sorts of things, and this would be a smart thing to regulate.
Electricity distribution and often production is partly to fully socialized almost everywhere, meaning 'it affects us all'.
If you live on an island, disconnected from everyone else, then you can do whatever you want.
Nobody has any right to tell me what kind of math I can on processors I own powered by electricity that I bought.
This is like saying incandescent light bulbs should be banned. Sure, it’s a sensible thing to say once you have unilaterally-better bulbs already fully commercialized and in mass production. (And this happened with CFLs and then LED bulbs; and then we did ban incandescents, here in Canada and in many other places.) But we’re not at that “fully commercialized and in mass production” inflection point yet with Proof-of-…
They are banned in the EU, and are slowly being banned in the US.