[size=8pt]Disclaimer: Before buying an insane amount of peercoins, I want to be sure I’m not shooting myself in the foot. I’ve therefor started thinking about how I would go about killing Peercoin. Better to learn about it now when its still fixable. I love the coin, so it isn’t that… you know… just so you know :-*[/size]
Peercoin bank doing 51% attack?
I create a Peercoin Bank where I promise to safe-keep your coins. You take the offer because if coins are lost, they are actually covered by the insurance the bank have bought. You also do this because you earn an interest. The interest you earn is a steady stream of new coins, no matter how little coins you have deposited. This is possible because the bank have many customers and can create minting wallets were it keep coins for the purpose of minting. The rest of the coins are in hot wallets, which depositors can then use to make purchases with (which implies that they can spend some coins without actually ruining their minting stake). Since the minting wallet is big, variance decreases and there is a more reliant stream of new coins. Also, as a depositor you don’t have to worry about anything, don’t go through the “mess” of setting up minting and so forth and so on. The bank takes a small fee for its services and that’s how they make money.
Why is this argument flawed?
It is flawed and you don’t have to worry because (extracted from the thread and edited):
[ul][li]The Peercoin Bank would destroy its own business model and destroy future revenue. The profit motive for an attack is unclear. If the price goes down all coins kept in the reserve would go down in value, clients would close their accounts and it the value of the bank (shares outstanding or however you measure it) would likely go down.[/li]
[li]If Peercoin Bank’s are a way to make money, there will be many of them and thus the coins deposited in banks will be distributed and we avoid the concentration needed for the attack.[/li]
[li]If the Peercoin Bank is a legal entity (not hiding in the darkweb or similar) law enforcement can crack down on the operation.[/li]
[li]Large Peercoin investors will have an incentive to watch out for and the means to deploy capital for designing solutions to mitigate these kinds of risks.[/li][/ul]