What about much bigger inflation caused by PoW? I think we don’t even use PoW to secure block chain as it’s block weigh is something like ~0 and yet we pay all that inflation to PoW.
Proof of work indirectly contributes to the network’s stability and security. It is true that if you have a lot of people minting that proof of work is effectively “wasted” inflation of the monetary supply. However, we’re not far enough along (in my opinion) to rule out the variance that could occur if a number of people decided to stop actively minting for one reason or another.
Remember, proof of work was able to bootstrap the network until it had enough mature peercoins in circulation that they could begin to mint. Until the network is running at a point where the difficulty is high enough to indicate that there’s widespread adoption of active minting, it’s a risk to remove it completely.
Yea I agree with bootstraping I just think PoW did it’s part and we could do a lot better without it from now on. Look at nxt, blackcoin etc I didn’t hear any of those coins got attacked… I don’t know but I think price would hold much better if there were no fresh coins dumped every day by PoW. Even if that means we need to give higher interest rate to PoS it’s good trade-off.
I don’t have anything against pure investors per se, but I think it is also important to realize that this behavior weakens the security of the network. Pulling coins out of the minting cycle makes it easier for anyone to set up an attack.[/quote]
This reminds me of a misconception. Imagine if one “trustworthy” person had 10 million peercoins. This may come as a surprise, but if they don’t participate in minting, and they are never sold, it’s as if they don’t exist, from a security perspective. The remaining coins can be considered to be the entire network.
However, security is unaffected only as long as they don’t assist an attack with them. The actual risk is that the owner attacks, or is bribed to attack, by using the coindays of the dormant coins.
Look at it this way: if I lose the private key to my peercoins, so that they can never be recovered, does this affect network security? It’s as if they cease to exist.
I’m now curious what proportion of peercoins were mined or minted and reside in addresses that are no longer accessible.
I had similar thoughts on this subject over a month ago.
I don’t know if that is theoretically possible. If someone hasn’t realized his paperwallet is lost because a mouse wetted it, his backup wallet is corrupted, he has forgotten the passphrase because he bumped his head in a car accident… so his coin will be inaccessible forever, how do we every know that？ Actually if after two years he suddenly remembers his passphrase and his coins are accessible again, how do we know it now?
We must give out free mice, magnets, and cars to all Peercoin holders to increase our odds of their forgetfulness.
I don’t know if that is theoretically possible. If someone hasn’t realized his paperwallet is lost because a mouse wetted it, his backup wallet is corrupted, he has forgotten the passphrase because he bumped his head in a car accident… so his coin will be inaccessible forever, how do we every know that？ Actually if after two years he suddenly remembers his passphrase and his coins are accessible again, how do we know it now?[/quote]
you could estimate if you say coins with coindays over n days are considered lost, wasnt it that it is capped at 90 days?
Irritant, good idea, but you can never be sure, even for very large n. A retirement account might not move for 30 years, but that doesn’t mean that its owner doesn’t know how to get the funds!
I have started a new project coin that will help give some incite to this over time. It uses an annual stake rate of 750%, so it is giant, but at the same time it has a maximum stake reward of 1,000 coins so inflation does have a control parameter. In my coin economics view I would see the maximum reward as a much more efficient way of controlling inflation and also of allowing small coin holders to get stake rewards that are large and still compete with the big guys. This also increases the network stake weight because holders have the incentive to split blocks into an ideal amount to achieve maximum reward, rather than hold one large block.
Just my two cents, but the main reason why I back Peercoin and not Blackcoin or Nxt is precisely PoW. Without PoW, early investors totally control the market: they get to choose how much is available, and at what price. This problem is obvious with Nxt, and Blackcoin tried to hide it behind a very short mining phase. The fact is still that there were only a handful of miners (the top 100 addresses own 70% of all blackcoins). Widespread adoption takes years, and mining should remain possible and viable for as long as a coin has not built a sufficient large user base. I think Peercoin got it quite right. Mining caps the selling price for early investors.
Another benefit of PoW: it increases the number of coins available in a chain for minting. This means that it is harder to do a history revision attack, because there would be less coins to mint with in the revised fork.
For this reason, I would personally have preferred the PoW rewards to remain constant (like in the Ethereum model). The PoW inflation rate would still tend towards 0 with time. It would take longer, but it would take some influence away from the early investors (both for price manipulation and attacks), which are IMHO the biggest issues with PoS cryptos.