Proof of Stake is worth being highly skeptical of. The fact that most people blindly support the idea when it seems to leave fundamental questions swept under the rug is worrying.

I wish I could give a further critique, but I'm not familiar enough with the subject. There have been several persuasive comments posted to HN on the brittle nature of Proof of Stake, and the lack of hard answers to basic problems. Tacking it on as "this would use even less power" is a sign that perhaps these alternate schemes (including the one in the article) should be taken with a dash of salt and pepper.

What is proposed here is not proof of stake. Proof of stake relies on either random selection (lottery) or wealth/age of investment(equity). This is a new beast.

The final sentence of your GP was that PoS would use even less power. Probably that is what your parent was responding to.

I don't think that approach avoids the core problem; it just shoves it onto a different resource; the same fraction of general economic output is still incentivized to convert from "satisfying human needs" to "mining". It will just manifest in difference ways.

Remember, the whole point of proof of work is to make it too expensive for "bad guys" to amass enough work to force their skewed version of the ledger[1].

As long as you have the constant rate of coin production, and difficulty adjustments to ensure it, you have the exact same arms race. Miners might not use more energy[2], but they'll still take away workers, land, metal, etc. from the real economy.

[1] They can't forge transactions, but they can publish empty blocks, effectively shutting it down.

[2] Although even that's doubtful: when you throw money at a problem, you generally end up throwing a proportional amount of energy at it too.

>real economy

Interesting you don't consider this real economy. Do you think banking is also not part of the 'real economy'

I may have been imprecise in terminology, but that's no reason to pearl-clutch about my choice of words.

Resources spent on PoW are effectively an arms race (outrunning attacks on the network that other systems don't need to deal with). It's meaningful to distinguish between resources devoted to zero-sum arms races vs. positive-sum satisfaction of human desires. Resources spent on PoW take from the latter and add to the former (at the macro level).

Edit: So yes, in that categorization, I would count (at least some) banking as in the positive sum part: they identify which opportunities for investment will pay back, and help enforce the agreement, thereby increasing over capital allocation efficiency and therefore wealth.

> I may have been imprecise in terminology, but that's no reason to pearl-clutch about my choice of words.

I think you got your point across fine. Obviously it doesn't look like 'real' work since there's so much power being spent, seemingly unnecessarily. But I think it is easy to underestimate how effectively it can replace the current financial system.

Why do you think wealth can't be generated with digital currency? What part of 'positive-sum satisfaction of human desires' you think current digital system can't satisfy? And I think you're looking at the resources spent on digital currency and the current financial system in a different way. There's no need of people spending lots of time and energy to safe guard big lock rooms.

Banking can move to the digital ecosystem just fine. And it is just in its first iteration.

>Why do you think wealth can't be generated with digital currency?

I didn't say that. I said that the marginal unit associated with mining can't be credited with the wealth gains of digital currency applications. The criticism was of the mining costs you need to make this work, not the stuff you can layer on top of the currency itself. For it to be a social net positive, all those benefits would have to outweigh the mining costs.

>And I think you're looking at the resources spent on digital currency and the current financial system in a different way. There's no need of people spending lots of time and energy to safe guard big lock rooms.

Of course the financial system has to pay for similar "defense", but the comparison is not favorable to Bitcoin/PoW. The costs of securing conventional centralized mechanisms (or bank vaults) ramp up much slower than Bitcoin per dollar or per unit of wealth secured.

Fair point. I guess something only like PoS can avoid that problem, if it is infallible, which might not be the case.

>The costs of securing conventional centralized mechanisms (or bank vaults) ramp up much slower than Bitcoin per dollar or per unit of wealth secured.

Actually I think the costs are much less, because after a certain point, you're not working to secure the network but racing to make more bitcoin. The network can be secure with much less resources than what is currently being spent.

It is a misconception to think that effort to mine is to fight external attacks. It is more like fight between banks to transact faster.

In economics jargon, financial services are explicitly defined as not the real economy as an outcome of how "real value" is defined. Finance deals primarily with nominal(price) values, versus real ones(cost of inputs, utility to consumer). There is some imprecision to this, of course: banks do use paper and labor, but not in the same way that a factory uses pig iron and labor.

So banks would be defined as not real economy since they are transacting in debt, savings, and other instruments that exist on balance sheets, while Bitcoin mining would be defined as real economy since it bottlenecks on an energy input.

> In economics jargon, financial services are explicitly defined as not the real economy as an outcome of how "real value" is defined

What century was that? I think financial services fit very well into the proper functioning of the real world. I believe it does provide very 'real' value and I'm ready to disagree with the definition of 'real value'.

>while Bitcoin mining would be defined as real economy since it bottlenecks on an energy input.

Bitcoin mining isn't competing with the wealth transaction part, but the wealth creation part. The wealth transaction part was secured a long time ago and now there are efforts to make it more efficient without dealing with the race for creation - like Lightning Network.

Did you mean to reply to the parent?

I believe this is the recording of that Berkeley talk: https://www.facebook.com/BerkeleyBlockchain/videos/200606982...

Still a lot of implementation details to be revealed, but looks really interesting.

So instead of just using energy we'll be wasting physical resources on making hard drives? Doesn't sound eco-friendly to me. It does sound like a good way to drive up costs for the NSA to store everyone's data. That's a really clever way to fight mass surveillance.

One might make a general claim that as any coin stabilizes, the money spent on generating it will always approach the amount of money received.

So for bitcoin, if miners get X on average to mine it, they will spend X-ε in electricity (in bitcoins case), where ε is a tiny profit margin (or perhaps paying back investment).

This will remain true for any other coin and its proof scheme. The amount spent on generating it will asymptotically approach the amount received. The difference is that it might be possible for the byproducts to be useful.

It's rather more interesting than that. The amount of resources thrown at mining causes the price to be what it is in USD terms.

The electricity costs of mining are about 20% of the price of Bitcoin - now as it was in 2011. https://medium.com/modern-money-matters/the-cost-of-bitcoin-...

The value of the token is what it costs to get it. You won't let it go for any less than that.

The NSA gets their money from the taxpayer so you're only looking at more taxes to sustain they're storage costs.

We'll also waste money to power empty hard drives.

Thanks for the explanation. Does the proof of storage allow that storage to continue to be used?/does the proof use the space on a disk?

Or is it sort of like mining bitcoin where a gpu is wholly used for mining?

Certainly the latter.

I can imagine proof of space implemented by requiring nodes to store terabytes of random bytes, and compute the hash of specific subsets of this huge blob based on the last block in the ledger.