Nonmonetary Transaction Fees

MireloMirelo Member Posts: 7
This is an attempt to address the objections to proof-of-stake made here: http://bitcoinmagazine.com/10829/impossible-trinity-security-environment-protection-decentralization/. This attempt applies the following two restrictions to the proof-of-stake model implemented by Peercoin:

1. Money created by block chaining is only useful in paying transaction fees.

2. Only money created by block chaining is useful in paying transaction fees.

Here is a possible implementation:

1. If the private key controlling a stake output signs a transaction, then:

(a) This transaction must have its whole fee subtracted from that stake output.

(b) This transaction must have all its inputs coming from other, normal outputs.

2. A private key controlling a stake output must sign every transaction.

Those restrictions have the following advantages:

1. The rich no longer can become richer merely by chaining blocks: the money thus created is only useful in paying for additional transactions, which increases fairness.

2. A network-related activity (chaining blocks) has a network-related (making transactions) rather than monetary reward, which increases consistency.

3. Chaining blocks becomes a requirement for making transactions, instead of needing some incentive, which increases network security by enforcing decentralization.

4. The ratio between the block-chaining reward (stake output) and individual transaction fee only means the maximum number of transactions allowed by the network, which reduces its adjustment to a problem of network administration rather than monetary policy.

5. No block-chaining reward (stake output) or transaction fee has any monetary value left, which keeps the money supply unaffected.

Comments

  • VitalikButerinVitalikButerin Administrator Posts: 84 admin
    edited March 2014
    ChangJia's argument that proof of stake is superlinear applies equally to PoW and PoS; in both cases there is a cost to opening one's laptop. I would argue that PoS is more decentralized, because aside from that cost of running a node there are no economies of scale, so the graph is linear past a certain threshold; in PoW, on the other hand, with ASICs economies of scale run into the millions of dollars.
  • MireloMirelo Member Posts: 7
    edited March 2014
    The problem is what happens under that threshold. My proposal attempts to address the ultimate cause of the possible unfairness and centralization of the present proof-of-stake implementations, which consists in requiring the reward for chaining blocks to be monetary.
  • JasperJasper Eindhoven, the NetherlandsMember Posts: 514 ✭✭✭
    Reading the link, the tendency of centralization of real life is much greater. The rich have much more disposable income to spend.(Karl Marx noticed this) Also PoS doesnt have many of the other aspects, the well connected rich having more information.

    Might have some useful point in there, but expect it too be more complicating than the benefit is worth. I am not 100% clear how you mean it to work.

    The only scenario that sort-of works, of non-transferrable transaction-coins that are used before regular coins in the case of transactions, still suffers from people trustful of those rich people buying the private keys to those addresses.
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