Cross-post from reddit, where I didn’t get much response:
I am wondering about the implications of proof of stake, as it is currently implemented in Peercoin. I will preface this by saying that I am actually quite intrigued by the concept of proof of stake, and that some or all of my concerns are probably due to my own lack of knowledge. Here are my thoughts:
POS requires that your coins be held (at least part of the time) in an online wallet.
I know that it is not necessary to keep your coins online 24x7 and that you can periodically bring your coins online for shorter periods and still get (most or all?) the advantages of POS minting due to the dependence on coin-age.
#1 seems to counter the philosophy that PPC should be used as a “reserve currency” vs other altcoins. After all, how many people would park any significant amount of their savings in an online wallet given the security risks? #2 seems to dilute the effectiveness of POS from a security point of view. Once PPC transitions to 100% proof of stake, what percentage of coin holders are likely to be minting at any given moment (given that people are fearful of keeping their coins online)?
I want to be excited about PPC, but I can’t wrap my head around these issues. Help!
Sunny is working on this in the new client I think. Personally I have not mined with my coins which is kept in cold storage, but I will when I can do so without bringing my private key online.
Thanks for your response. Which problem is Sunny working on: the relative infrequency of POS minting (ie, logging in once a year to mint) or the issue of having an unlocked online wallet during POS minting? Also, can you provide a source for this?
Maximum coin age is 90 days, you’d only be doing yourself a disservice to mint once a year. As for the other issue:
PPC v0.4 has been making progress but it still needs some more work. Hopefully the merge with bitcoin v0.8 would be code complete this week and testing can be started. On the other hand, I am evaluating the cold-locked transaction feature proposed several months ago, it may get implemented into v0.4 if things go smooth. This feature allows PPC users to run hot wallet minting stake without the risk of losing the coins due to compromised system. This feature is particularly important for operators with public wallet such as exchanges.