Breaking News
0

Exclusive: Proof-of-Stake May “Inhibit Distribution,” Says Zcoin COO

Cryptocurrency NewsJun 13, 2018 11:41AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
Exclusive: Proof-of-Stake May “Inhibit Distribution,” Says Zcoin COO

Although the vast majority of large cryptocurrencies on the market currently use proof-of-work models to ensure the security of their networks, there’s been a significant rise of coins that make use of another way of doing things.

Just recently, Ripple’s CEO made a point about more than half of Bitcoin’s hashrate being controlled by firms in China, demonstrating that proof-of-work could fall victim to centralization. We ran our own investigation into this issue and found, in fact, that this number is actually closer to 80% than 50%.

However, Reuben Yap, Zcoin’s COO, told us that we should also be cautious about proof-of-stake models during a conversation we had with him in Telegram.

“I’m not against PoS, but maybe against pure PoS systems or arguing just as a way for people to get interested. It’s why people say ASIC resistance shouldn’t be pursued, but I beg to differ. We need commodity hardware to do mining. As for PoS, my main issue for it as a currency is that it inhibits distribution. I’m all for it in smart contract systems, though,” he said.

When coins start out with proof-of-stake, the biggest problem is perhaps distribution because of the fact that the largest “hodlers” and earliest investors reap the most rewards from the system. Reuben Yap emphasized the importance of initial distribution during our talk when we asked him how PoS systems inhibit this.

“It’s because there is no mechanism of distribution that is separate from owning it or buying it. So, initial distribution is super important, which is a difficult issue. Most PoS systems allocate their entire supply at the outset or have a proof of work period, then a PoS period. Also, rewarding PoS holders with additional staking rewards is equivalent to not having any rewards since everyone gets more rewards proportionately,” Yap added.

He also said that “if people are just looking for PoS just for scalability,” then it’s not worth it. However, having a hybrid PoW and PoS node may be a promising prospect, according to Yap.

“Decred’s hybrid is interesting and is more a matter of reaching consensus and having another layer of protection for double-spend attacks, since technically the ticket holders can vote to reject a block. But it still doesn’t take away most of the issues of PoW, which is the energy cost. There’s also some debate about whether Decred’s approach also solves the nothing-at-stake issue at all, since there is nothing to prevent someone from double-signing,” he said.

Zcoin has an interesting system called “Znodes,” where holders of at least 1,000 coins can put them up as collateral to host a “reliable and powerful node” that supports the network.

It sounds like a quasi-PoS system, but the difference here is that although the nodes validate transactions just like any other node, they don’t really do much more for the security and integrity of Zcoin’s blockchain.

“Znodes don’t do proof of stake. It’s more like proof of service. They don’t provide security. They provide a service and only indirectly provide security, but not in the same way as PoS. Even DASH master nodes don’t do PoS. They don’t do any ‘work’ or help with consensus. They don’t have any right to determine which transaction gets included,” Yap told us.

This doesn’t mean that Znodes can’t play a bigger role in the coin’s blockchain. As a privacy coin, Zcoin allows users to mint and burn coins in a manner that masks their activities on the blockchain in a manner somewhat unique to the Zerocoin protocol.

Since this essentially amounts to a zero-knowledge protocol, it needs proofs. Otherwise, people who send coins cannot prove to their recipients that a transaction came from them or that it even exists.

Naturally, such a thing requires a certain amount of resources from the network. However, Yap has an idea on how this system could be improved with Znodes.

“One of the things we were thinking of with our next-gen privacy system is an interesting application of Znodes. So, usually, when you do a zero-knowledge proof that you burnt a coin, you have to do it for each burn. But there are ways to aggregate proof. So, I can generate a proof of roughly the same size, but prove a couple of burns in that one proof. To have the Znodes act as a pool where people can aggregate their proofs with others is an excellent scaling mechanism. Instead of 20 proofs for 20 burns, which take 1.3 kilobytes or so, you can have one proof for maybe 2 kilobytes that proves 20 burns and have that one proof on the blockchain,” he said.

Proof of stake has a long march forward, but for it to work, developers and the community around cryptocurrencies alike have to understand the possible pitfalls of the system and not disregard proof of work entirely.


This article appeared first on Cryptovest
Exclusive: Proof-of-Stake May “Inhibit Distribution,” Says Zcoin COO
 

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email