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From: Erik Aronesty <erik@q32.com>
Date: Thu, 27 May 2021 09:11:13 -0400
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 SatoshiSingh <SatoshiSingh@protonmail.com>
Subject: Re: [bitcoin-dev] Opinion on proof of stake in future
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Problems with proof-of-stake:

 - A single CVE can tear down the network and hacked nodes can result
in transferring all mining power to one group
 - PoS is vulnerable to DOS attacks (increasing latency reduces the
cost of mining attacks)
 - PoS is vulnerable to stakers colluding to punish/drive out others

This *cannot* happen in PoW (or PoB), because "pulling the plug" is
sufficient to stop a hacked mining rig.  (I should know, my first rig
was hacked, day 1, until i learned how to secure it properly!)

**The value of a base layer is tied tightly to its "risk of default",
thus PoW will always be superior, harder money.**

Bitcoin has very, very low risk of default:

- proof model ties to real-world energy
- core devs that are risk averse and will never hard fork to reverse
transactions
- extremely decentralized, priority given to decentralization and
security over every other feature in every PR
- fees kept high enough to financially secure the network - allowing
billions in value to move safely for dollars in fees

PoW is harder money than PoS, and Bitcoin is, foremost, hard money.

PoS has no sunk-investment, no replication and requires stake to be
online (and attackable), and I think has no business being considered
as an alternative to PoW for a base-layer system like Bitcoin.

These are problems.that cannot be overlooked or swept under the rug.

If you cannot "pull the plug" on stake, then you cannot defend the
network from an attack.

On Thu, May 27, 2021 at 6:09 AM Billy Tetrud <billy.tetrud@gmail.com> wrote=
:
>
> >  using nothing at stake
>
> I see from the way you're using this term now that you mean something com=
pletely different by it than I usually understand the phrase. You seem to m=
ean it as that minters can check whether they can mint a block without any =
cost. By contrast, I generally understand the phrase to mean the problem wh=
ere there is no cost to broadcasting blocks on many different chains.
>
> > she gained an extra block over the honest strategy which would only giv=
e her block D
>
> I think I see what you're saying now. It actually sounds quite similar to=
 the selfish mining attack in proof of work. However I do acknowledge that =
the ability to secretly mint on both your secret chain(s) and the public ch=
ain makes it worse in PoS. How much worse is something that should be quant=
ified. This is also a solvable problem. Designing a secure system can be ki=
nd of like whack a mole. You fix the weakest link in the chain, and there i=
s inevitably now a new weakest link that is stronger than the link you fixe=
d. Bitcoin is no different, as development continues, more security improve=
ments are implemented.
>
> In this case, there's a number of possible solutions, some of which can b=
e combined. Eg you can program all honest clients to mint selfishly. You'd =
likely need to lengthen the number of blocks that constitute a finalized tr=
ansaction, but you can probably reduce the block time to compensate, so fin=
alization doesn't actually take longer. You could also require many additio=
nal signatures on each block from outside validators.
>
> > How is that relevant to our discussion?
>
> It is relevant because the benefits of proof of stake must be compared to=
 an alternative, and the alternative of reference here is clearly PoW. I'm =
pointing out that the vulnerability you're describing in the type of PoS yo=
u're talking about also exists in what its being compared against. To know =
whether PoS or PoW is better on this particular aspect, you need to compare=
 the levels of advantage that can be obtained in each, and how this affects=
 the cost of attacking the system. Its not as straight forward as saying "P=
oS is bad because it has this vulnerability" when the system you compare it=
 to also has a very similar vulnerability. You need to quantify the differe=
nce at that point.
>
> > the list of producers for next epoch is known up front and you confirme=
d that this is what you meant with "quorum" system
>
> Known by public key, not by IP address.
>
> > (CREATE PROBLEM ELSEWHERE) OR (NOT SOLVE IT COMPLETELY)
>
> I agree that claiming that Y is a solved problem would be misleading if t=
he solution creates problems that are of greater significance than the orig=
inal problem. I would also agree that if the solution creates significant p=
roblems that are substantially less significant than the problem it solves,=
 it would be misleading to say its a "solved problem" - saying "partially s=
olved" would be more accurate there.
>
> However, I do not agree that it is at all misleading to say "nothing at s=
take is a solved problem" just because solving that specific problem doesn'=
t solve all the problems with proof of stake. Its unreasonable to expect th=
at when someone claims problem X is solved, that it also implies all proble=
ms related to X are solved.
>
> I maintain that nothing at stake is a solved problem. There are solutions=
 that do not create other problems of anywhere near the same level of signi=
ficance.
>
> > Since the optimal scenario with all existing coins participating is jus=
t theoretical, the attacker's position will ever so improve. It seems we ar=
e in agreement here, great
>
> I don't believe we're in agreement there. I don't know how what you said =
refutes my point.
>
> > I'm afraid you've not realized the burden of proof is on your side if y=
ou vouch for a design that is not believed and trusted to be secure.
>
> You were the one that claimed proof of stake cannot be made secure. The b=
urden of proof is on you to support your own claims.
>
> > You have not described a system that would solve it
>
> I would be curious to hear a full critique from you about this protocol.
>
> On Wed, May 26, 2021 at 3:12 AM befreeandopen <befreeandopen@protonmail.c=
om> wrote:
>>
>>
>>
>> @befreeandopen I guess I misunderstood your selfish minting attack. Let =
me make sure I understand it. You're saying it would go as follows?:
>>
>> 1. The malicious actor comes across an opportunity to mint the next 3 bl=
ocks. But they hold off and don't release their blocks just yet.
>> 2. They receive a new block minted by someone else.
>> 3. The malicious actor then chooses to release their other 2 blocks on o=
n the second from the top block if it gives them more blocks in the future =
than minting on the top block. And instead lets the top block proceed if it=
 gives them more blocks in the future (also figuring in the 3 blocks they'r=
e missing out on minting).
>> 4. Profit!
>>
>> The problem with this attack is that any self respecting PoS system woul=
dn't have the information available for minters to know how blocks will aff=
ect their future prospects of minting. Otherwise this would introduce the p=
roblem of stake grinding. This can be done using collaborative randomness (=
where numbers from many parties are combined to create a random number that=
 no individual party could predict). In fact, that's what the Casper protoc=
ol does to decide quorums. In a non quorum case, you can do something like =
record a hash of a number in the block header, and then have a second step =
to release that number later. Rewards can be given can be used to ensure mi=
nters act honestly here by minting messages that release these numbers and =
not releasing their secret numbers too early.
>>
>>
>> Yes, you misunderstood it. First, let me say that the above thoughts of =
yours are incorrect, at least for non-quorum case. Since the transition in =
the blockchain system from S1 to S2 is only by adding new block, and since =
stakers always need to be able to decide whether or not they can add the ne=
xt block, it follows that if a staker creates a new block locally, she can =
decide whether the new state allows her to add another block on top. As you=
 mentioned, this COULD introduce problem of staking, that you are incorrect=
 in that it is a necessity. Usual prevention of the grinding problem in thi=
s case is that an "old enough" source of randomness applies for the current=
 block production process. Of course this, as it is typical for PoS, introd=
uces other problems, but let's discard those.
>>
>> I will try to explain in detail what you misunderstood before. You start=
 with a chain ending with blocks A-B-C, C being the top, the common feature=
 of PoS system (non-quorum), roughly speaking, is that if N is the total am=
ount of coins that participate in the staking process to create a new block=
 on top of C (let's call that D), then a participant having K*N amount of s=
take has chance K to be the one who will create the next stake. In other wo=
rds, the power of stakers is supposed to be linear in the system - you own =
10 coins gives you 10x the chance of finding block over someone who has 1 c=
oin.
>>
>> What i was claiming is that using the technique I have described, this l=
inearity is violated. Why? Well, it works for honest stakers among the comp=
etition of honest stakers - they really do have the chance of K to find the=
 next block. However, the attacker, using nothing at stake, checks her abil=
ity to build block D (at some timestamp). If she is successful, she does no=
t propagate D immediately, but instead she also checks whether she can buil=
d on top of B and on top of A. Since with every new timestamp, usually, the=
re is a new chance to build the block, it is not uncommon that she finds sh=
e is indeed able to build such block C' on top of B. Here it is likely t(C'=
) > t(C) as the attacker has relatively low stake. Note that in order to pr=
oduce such C', she not only could have tried the current timestamp t(D), bu=
t also all previous timestamps up to t(B) (usually that's the consensus rul=
e, but it may depend on a specific consensus). So her chance to produce suc=
h C' is greater than her previous chance of producing C (which chance was l=
imited by other stakers in the system and the discovery of block C by one o=
f them). Now suppose that she found such C' and now she continues by trying=
 to prolong this chain by finding D'. And again here, it is quite likely th=
at her chance to find such D' is greater than was her chance of finding D b=
ecause again there are likely multiple timestamps she could try. This all w=
as possible just because nothing at stake allows you to just try if you can=
 produce a block in certain state of block chain or not. Now if she actuall=
y was able to find D', she discards D and only publishes chain A-B-C'-D', w=
hich can not be punished despite the fact that she indeed produced two diff=
erent forks. She can not be punished because this production was local and =
only the final result of A-B-C'-D' was published, in which case she gained =
an extra block over the honest strategy which would only give her block D.
>>
>>
>>
>> Fun fact tho: there is an attack called the "selfish mining attack" for =
proof of work, and it reduces the security of PoW by at least 1/3rd.
>>
>>
>> How is that relevant to our discussion? This is known research that has =
nothing to do with PoS except that it is often worse on PoS.
>>
>>
>>
>> >   the problem is not as hard as you think
>>
>> I don't claim to know just how hard finding the IP address associated wi=
th a bitcoin address is. However, the DOS risk can be solved more completel=
y by only allowing the owner of coins themselves to know whether they can m=
int a block. Eg by determining whether someone can mint a block based on th=
eir public key hidden behind hashes (as normal in addresses). Only when som=
eone does in fact mint a block do they reveal their hidden public key in or=
der to prove they are allowed to mint the block.
>>
>>
>> This is true, but you are mixing quorum and non-quorum systems. My objec=
tion here was towards such system where I specifically said that the list o=
f producers for next epoch is known up front and you confirmed that this is=
 what you meant with "quorum" system. So in such system, I claimed, the kno=
wn producer is the only target at any given point of time. This of course d=
oes not apply to any other type of system where future producers are not kn=
own. No need to dispute, again, something that was not claimed.
>>
>>
>>
>>
>> > I agree that introduction of punishment itself does not imply introduc=
ing a problem elsewhere (which I did not claim if you reread my previous me=
ssage)
>>
>> I'm glad we agree there. Perhaps I misunderstood what you meant by "you =
should not omit to mention that by doing so, typically, you have introduced=
 another problem elsewhere."
>>
>>
>> Perhaps you should quote the full sentence and not just a part of it:
>>
>> "Of course you can always change the rules in a way that a certain speci=
fic attack is not doable, but you should not omit to mention that by doing =
so, typically, you have introduced another problem elsewhere, or you have n=
ot solved it completely."
>>
>> You can parse this as: (CREATE PROBLEM ELSEWHERE) OR (NOT SOLVE IT COMPL=
ETELY)
>> In case of the punishment it was meant to be the not solve it completely=
 part.
>> Also "typically" does not imply always.
>> But this parsing of English sentences for you seems very off topic here.=
 My point is, in context of Bitcoin, reject such unsupported claims that Po=
S is a reasonable alternative to PoW, let's stick to that.
>>
>>
>>
>> > As long as the staker makes sure (which is not that hard) that she doe=
s not miss a chance to create a block, her significance in the system will =
always increase in time. It will increase relative to all normal users who =
do not stake
>>
>> Well, if you're in the closed system of the cryptocurrency, sure. But we=
 don't live in that closed system. Minters will earn some ROI from minting =
just like any other financial activity. Others may find more success spendi=
ng their time doing things other than figuring out how to mint coins. In th=
at case, they'll be able to earn more coin that they could later decide to =
use to mint blocks if they decide to.
>>
>>
>> This only supports the point I was making. Since the optimal scenario wi=
th all existing coins participating is just theoretical, the attacker's pos=
ition will ever so improve. It seems we are in agreement here, great.
>>
>>
>>
>>
>> > Just because of the above we must reject PoS as being critically insec=
ure
>>
>> I think the only thing we can conclude from this is that you have come u=
p with an insecure proof of stake protocol. I don't see how anything you've=
 brought up amounts to substantial evidence that all possible PoS protocols=
 are insecure.
>>
>>
>> I have not come up with anything. I'm afraid you've not realized the bur=
den of proof is on your side if you vouch for a design that is not believed=
 and trusted to be secure. It is up to you to show that you know how to sol=
ve every problem that people throw at you. So far we have just demonstrated=
 that your claim that nothing at stake is solved was unjustified. You have =
not described a system that would solve it (and not introduce critical DDOS=
 attack vector as it is in quorum based systems - per the prior definition =
of such systems).
>>
>> Of course the list of problems of PoS systems do not end with just nothi=
ng at stake, but it is good enough example that by itself prevents its adop=
tion in decentralized consensus. No need to go to other hard problems witho=
ut solving nothing at stake.
>>
>>
>>
>>
>>
>> On Tue, May 25, 2021 at 11:10 AM befreeandopen <befreeandopen@protonmail=
.com> wrote:
>>>
>>>
>>> @befreeandopen " An attacker can calculate whether or not she can prolo=
ng this chain or not and if so with what timestamp."
>>>
>>> The scenario you describe would only be likely to happen at all if the =
malicious actor has a very large fraction of the stake - probably quite clo=
se to 50%. At that point, you're talking about a 51% attack, not the nothin=
g at stake problem. The nothing at stake problem is the problem where anyon=
e will mint on any chain. Its clear that if there's a substantial punishmen=
t for minting on chains other than the one that eventually wins, every mint=
er without a significant fraction of the stake will be honest and not attem=
pt to mint on old blocks or support someone else's attempt to mint on old b=
locks (until and if it becomes the heaviest chain). Because the attacker wo=
uld need probably >45% of the active stake (take a look at the reasoning he=
re for a deeper analysis of that statement), I don't agree that punishment =
is not a sufficient mitigation of the nothing at stake problem. To exploit =
the nothing at stake problem, you basically need to 51% attack, at which po=
int you've exceeded the operating conditions of the system, so of course it=
s gonna have problems, just like a 51% attack would cause with PoW.
>>>
>>>
>>> This is not at all the case. The attacker benefits using the described =
technique at any size of the stake and significantly so with just 5% of the=
 stake. By significantly, I do not mean that the attacker is able to comple=
tely take control the network (in short term), but rather that the attacker=
 has significant advantage in the number of blocks she creates compared to =
what she "should be able to create". This means the attacker's stake increa=
ses significantly faster than of the honest nodes, which in long term is ve=
ry serious in PoS system. If you believe close to 50% is needed for that, y=
ou need to redo your math. So no, you are wrong stating that "to exploit no=
thing at stake problem you basically need to 51% attack". It is rather the =
opposite - eventually, nothing at stake attack leads to ability to perform =
51% attack.
>>>
>>>
>>>
>>> > I am not sure if this is what you call quorum-based PoS
>>>
>>> Yes, pre-selected minters is exactly what I mean by that.
>>>
>>> > it allows the attacker to know who to attack at which point with powe=
rful DDOS in order to hurt liveness of such system
>>>
>>> Just like in bitcoin, associating keys with IP addresses isn't generall=
y an easy thing to do on the fly like that. If you know someone's IP addres=
s, you can target them. But if you only know their address or public key, t=
he reverse isn't as easy. With a quorum-based PoS system, you can see their=
 public key and address, but finding out their IP to DOS would be a huge ch=
allenge I think.
>>>
>>>
>>> I do not dispute that the problem is not trivial, but the problem is no=
t as hard as you think. The network graph analysis is a known technique and=
 it is not trivial, but not very hard either. Introducing a large number of=
 nodes to the system to achieve very good success rate of analysis of area =
of origin of blocks is doable and has been done in past. So again, I very m=
uch disagree with your conclusion that this is somehow secure. It is absolu=
tely insecure.
>>>
>>>
>>>
>>> Note, tho, that quorum-based PoS generally also have punishments as par=
t of the protocol. The introduction of punishments do indeed handily solve =
the nothing at stake problem. And you didn't mention a single problem that =
the punishments introduce that weren't already there before punishments. Th=
ere are tradeoffs with introducing punishments (eg in some cases you might =
punish honest actors), but they are minor in comparison to solving the noth=
ing at stake problem.
>>>
>>>
>>> While I agree that introduction of punishment itself does not imply int=
roducing a problem elsewhere (which I did not claim if you reread my previo=
us message), it does introduce additional complexity which may introduce pr=
oblem, but more importantly, while it slightly improves resistance against =
the nothing at stake attack, it solves absolutely nothing. Your claim is ba=
sed on wrong claim of needed close to 50% stake, but that could not be fart=
her from the truth. It is not true even in optimal conditions when all part=
icipants of the network stake or delegate their stake. These optimal condit=
ions rarely, if ever, occur. And that's another thing that we have not ment=
ion in our debate, so please allow me to introduce another problem to PoS.
>>>
>>> Consider what is needed for such optimal conditions to occur - all coin=
s are always part of the stake, which means that they need to somehow autom=
atically part of the staking process even when they are moved. But in many =
PoS systems you usually require some age (in terms of confirmations) of the=
 coin before you allow it to be used for participation in staking process a=
nd that is for a good reason - to prevent various grinding attacks. In some=
 systems the coin must be specifically registered before it can be staked, =
in others, simply waiting for enough confirmations enables you to stake wit=
h the coin. I am not sure if there is a system which does not have this coo=
ling period for a coin that has been moved. Maybe it is possible though, bu=
t AFAIK it is not common and not battle tested feature.
>>>
>>> Then if we admit that achieving the optimal condition is rather theoret=
ical. Then if we do not have the optimal condition, it means that a staker =
with K% of the total available supply increases it's percentage over time t=
o some amounts >K%. As long as the staker makes sure (which is not that har=
d) that she does not miss a chance to create a block, her significance in t=
he system will always increase in time. It will increase relative to all no=
rmal users who do not stake (if there are any) and relative to all other st=
akers who make mistakes or who are not wealthy enough to afford not selling=
 any position ever. But powerful attacker is exactly in such position and t=
hus she will gain significance in such a system. The technique I have descr=
ibed, and that you mistakenly think is viable only with huge amounts of sta=
ke, only puts the attacker to even greater advantage. But even without the =
described attack (which exploits nothing at stake), the PoS system converge=
s to a system more and more controlled by powerful entity, which we can ass=
ume is the attacker.
>>>
>>>
>>> So I don't think it is at all misleading to claim that "nothing at stak=
e" is a solved problem. I do in fact mean that the solutions to that proble=
m don't introduce any other problems with anywhere near the same level of s=
ignificance.
>>>
>>>
>>> It still stands as truly misleading claim. I disagree that introducing =
DDOS opportunity with medium level of difficulty for the attacker to implem=
ent it, in case of "quorum-based PoS" is not a problem anywhere near the sa=
me level of significance. Such an attack vector allows you to turn off the =
network if you spend some time and money. That is hardly acceptable.
>>>
>>> Just because of the above we must reject PoS as being critically insecu=
re until someone invents and demonstrates an actual way of solving these is=
sues.
>>>
>>>
>>>
>>> On Tue, May 25, 2021 at 3:00 AM Erik Aronesty <erik@q32.com> wrote:
>>>>
>>>> > > you burn them to be used at a future particular block height
>>>>
>>>> > This sounds exploitable. It seems like an attacker could simply focu=
s all their burns on a particular set of 6 blocks to double spend, minimizi=
ng their cost of attack.
>>>>
>>>> could be right.   the original idea was to have burns decay over time,
>>>> like ASIC's.
>>>>
>>>> anyway the point was not that "i had a magic formula"
>>>>
>>>> the point was that proof of burn is almost always better than proof of
>>>> stake - simply because the "proof" is on-chain, not sitting on a node
>>>> somewhere waiting to be stolen.
>>>>
>>>> On Mon, May 24, 2021 at 9:53 PM Billy Tetrud <billy.tetrud@gmail.com> =
wrote:
>>>> >
>>>> > Is this the kind of proof of burn you're talking about?
>>>> >
>>>> > >   if i have a choice between two chains, one longer and one shorte=
r, i can only choose one... deterministically
>>>> >
>>>> > What prevents you from attempting to mine block 553 on both chains?
>>>> >
>>>> > > miners have a very strong, long-term, investment in the stability =
of the chain.
>>>> >
>>>> > Yes, but the same can be said of any coin, even ones that do have th=
e nothing at stake problem. This isn't sufficient tho because the chain is =
a common good, and the tragedy of the commons holds for it.
>>>> >
>>>> > > you burn them to be used at a future particular block height
>>>> >
>>>> > This sounds exploitable. It seems like an attacker could simply focu=
s all their burns on a particular set of 6 blocks to double spend, minimizi=
ng their cost of attack.
>>>> >
>>>> > > i can imagine scenarios where large stakeholders can collude to pu=
nish smaller stakeholders simply to drive them out of business, for example
>>>> >
>>>> > Are you talking about a 51% attack? This is possible in any decentra=
lized cryptocurrency.
>>>> >
>>>> >
>>>> > On Mon, May 24, 2021 at 11:49 AM Erik Aronesty <erik@q32.com> wrote:
>>>> >>
>>>> >> > > your burn investment is always "at stake", any redaction can re=
sult in a loss-of-burn, because burns can be tied, precisely, to block-heig=
hts
>>>> >> > I'm fuzzy on how proof of burn works.
>>>> >>
>>>> >> when you burn coins, you burn them to be used at a future particula=
r
>>>> >> block height: so if i'm burning for block 553, i can only use them =
to
>>>> >> mine block 553.   if i have a choice between two chains, one longer
>>>> >> and one shorter, i can only choose one... deterministically, for th=
at
>>>> >> burn: the chain with the height 553.   if we fix the "lead time" fo=
r
>>>> >> burned coins to be weeks or even months in advance, miners have a v=
ery
>>>> >> strong, long-term, investment in the stability of the chain.
>>>> >>
>>>> >> therefore there is no "nothing at stake" problem.   it's
>>>> >> deterministic, so miners have no choice.  they can *only* choose th=
e
>>>> >> transactions that go into the block.  they cannot choose which chai=
n
>>>> >> to mine, and it's time-locked, so rollbacks and instability always
>>>> >> hurt miners the most.
>>>> >>
>>>> >> the "punishment" systems of PoS are "weird at best", certainly
>>>> >> unproven.   i can imagine scenarios where large stakeholders can
>>>> >> collude to punish smaller stakeholders simply to drive them out of
>>>> >> business, for example.   and then you have to put checks in place t=
o
>>>> >> prevent that, and more checks for those prevention system...
>>>> >>
>>>> >> in PoB, there is no complexity.  simpler systems like this are
>>>> >> typically more secure.
>>>> >>
>>>> >> PoB also solves problems caused by "energy dependence", which could
>>>> >> lead to state monopolies on mining (like the new Bitcoin Mining
>>>> >> Council).   these consortiums, if state sanctioned, could become a
>>>> >> source of censorship, for example.   Since PoB doesn't require you =
to
>>>> >> have a live, well-connected node, it's harder to censor & harder to
>>>> >> trace.
>>>> >>
>>>> >> Eliminating this weakness seems to be in the best interests of
>>>> >> existing stakeholders
>>>> >>
>>>> >>
>>>> >>
>>>> >>
>>>> >> On Mon, May 24, 2021 at 4:44 PM Billy Tetrud <billy.tetrud@gmail.co=
m> wrote:
>>>> >> >
>>>> >> > >  proof of burn clearly solves this, since nothing is held onlin=
e
>>>> >> >
>>>> >> > Well.. the coins to be burned need to be online when they're burn=
ed. But yes, only a small fraction of the total coins need to be online.
>>>> >> >
>>>> >> > > your burn investment is always "at stake", any redaction can re=
sult in a loss-of-burn, because burns can be tied, precisely, to block-heig=
hts
>>>> >> >
>>>> >> > So you're saying that if say someone tries to mine a block on a s=
horter chain, that requires them to send a transaction burning their coins,=
 and that transaction could also be spent on the longest chain, which means=
 their coins are burned even if the chain they tried to mine on doesn't win=
? I'm fuzzy on how proof of burn works.
>>>> >> >
>>>> >> > > proof of burn can be more secure than proof-of-stake
>>>> >> >
>>>> >> > FYI, proof of stake can be done without the "nothing at stake" pr=
oblem. You can simply punish people who mint on shorter chains (by rewardin=
g people who publish proofs of this happening on the main chain). In quorum=
-based PoS, you can punish people in the quorum that propose or sign multip=
le blocks for the same height. The "nothing at stake" problem is a solved p=
roblem at this point for PoS.
>>>> >> >
>>>> >> >
>>>> >> >
>>>> >> > On Mon, May 24, 2021 at 3:47 AM Erik Aronesty <erik@q32.com> wrot=
e:
>>>> >> >>
>>>> >> >> > I don't see a way to get around the conflicting requirement th=
at the keys for large amounts of coins should be kept offline but those are=
 exactly the coins we need online to make the scheme secure.
>>>> >> >>
>>>> >> >> proof of burn clearly solves this, since nothing is held online
>>>> >> >>
>>>> >> >> >  how does proof of burn solve the "nothing at stake" problem i=
n your view?
>>>> >> >>
>>>> >> >> definition of nothing at stake: in the event of a fork, whether =
the
>>>> >> >> fork is accidental or a malicious, the optimal strategy for any =
miner
>>>> >> >> is to mine on every chain, so that the miner gets their reward n=
o
>>>> >> >> matter which fork wins.   indeed in proof-of-stake, the proofs a=
re
>>>> >> >> published on the very chains mines, so the incentive is magnifie=
d.
>>>> >> >>
>>>> >> >> in proof-of-burn, your burn investment is always "at stake", any
>>>> >> >> redaction can result in a loss-of-burn, because burns can be tie=
d,
>>>> >> >> precisely, to block-heights
>>>> >> >>
>>>> >> >> as a result, miners no longer have an incentive to mine all chai=
ns
>>>> >> >>
>>>> >> >> in this way proof of burn can be more secure than proof-of-stake=
, and
>>>> >> >> even more secure than proof of work
>>>> >> >>
>>>> >> >>
>>>> >> >>
>>>> >> >>
>>>> >> >>
>>>> >> >>
>>>> >> >>
>>>> >> >> >
>>>> >> >>
>>>> >> >> On Sun, May 23, 2021 at 3:52 AM Lloyd Fournier via bitcoin-dev
>>>> >> >> <bitcoin-dev@lists.linuxfoundation.org> wrote:
>>>> >> >> >
>>>> >> >> > Hi Billy,
>>>> >> >> >
>>>> >> >> > I was going to write a post which started by dismissing many o=
f the weak arguments that are made against PoS made in this thread and else=
where.
>>>> >> >> > Although I don't agree with all your points you have done a de=
cent job here so I'll focus on the second part: why I think Proof-of-Stake =
is inappropriate for a Bitcoin-like system.
>>>> >> >> >
>>>> >> >> > Proof of stake is not fit for purpose for a global settlement =
layer in a pure digital asset (i.e. "digital gold") which is what Bitcoin i=
s trying to be.
>>>> >> >> > PoS necessarily gives responsibilities to the holders of coins=
 that they do not want and cannot handle.
>>>> >> >> > In Bitcoin, large unsophisticated coin holders can put their c=
oins in cold storage without a second thought given to the health of the un=
derlying ledger.
>>>> >> >> > As much as hardcore Bitcoiners try to convince them to run the=
ir own node, most don't, and that's perfectly acceptable.
>>>> >> >> > At no point do their personal decisions affect the underlying =
consensus -- it only affects their personal security assurance (not that of=
 the system itself).
>>>> >> >> > In PoS systems this clean separation of responsibilities does =
not exist.
>>>> >> >> >
>>>> >> >> > I think that the more rigorously studied PoS protocols will wo=
rk fine within the security claims made in their papers.
>>>> >> >> > People who believe that these protocols are destined for catas=
trophic consensus failure are certainly in for a surprise.
>>>> >> >> > But the devil is in the detail.
>>>> >> >> > Let's look at what the implications of using the leading proof=
 of stake protocols would have on Bitcoin:
>>>> >> >> >
>>>> >> >> > ### Proof of SquareSpace (Cardano, Polkdadot)
>>>> >> >> >
>>>> >> >> > Cardano is a UTXO based PoS coin based on Ouroboros Praos[3] w=
ith an inbuilt on-chain delegation system[5].
>>>> >> >> > In these protocols, coin holders who do not want to run their =
node with their hot keys in it delegate it to a "Stake Pool".
>>>> >> >> > I call the resulting system Proof-of-SquareSpace since most wi=
ll choose a pool by looking around for one with a nice website and offering=
 the largest share of the block reward.
>>>> >> >> > On the surface this might sound no different than someone with=
 an mining rig shopping around for a good mining pool but there are crucial=
 differences:
>>>> >> >> >
>>>> >> >> > 1. The person making the decision is forced into it just becau=
se they own the currency -- someone with a mining rig has purchased it with=
 the intent to make profit by participating in consensus.
>>>> >> >> >
>>>> >> >> > 2. When you join a mining pool your systems are very much stil=
l online. You are just partaking in a pool to reduce your profit variance. =
You still see every block that you help create and *you never help create a=
 block without seeing it first*.
>>>> >> >> >
>>>> >> >> > 3. If by SquareSpace sybil attack you gain a dishonest majorit=
y and start censoring transactions how are the users meant to redelegate th=
eir stake to honest pools?
>>>> >> >> > I guess they can just send a transaction delegating to another=
 pool...oh wait I guess that might be censored too! This seems really reall=
y bad.
>>>> >> >> > In Bitcoin, miners can just join a different pool at a whim. T=
here is nothing the attacker can do to stop them. A temporary dishonest maj=
ority heals relatively well.
>>>> >> >> >
>>>> >> >> > There is another severe disadvantage to this on-chain delegati=
on system: every UTXO must indicate which staking account this UTXO belongs=
 to so the appropriate share of block rewards can be transferred there.
>>>> >> >> > Being able to associate every UTXO to an account ruins one of =
the main privacy advantages of the UTXO model.
>>>> >> >> > It also grows the size of the blockchain significantly.
>>>> >> >> >
>>>> >> >> > ### "Pure" proof of stake (Algorand)
>>>> >> >> >
>>>> >> >> > Algorand's[4] approach is to only allow online stake to partic=
ipate in the protocol.
>>>> >> >> > Theoretically, This means that keys holding funds have to be o=
nline in order for them to author blocks when they are chosen.
>>>> >> >> > Of course in reality no one wants to keep their coin holding k=
eys online so in Alogorand you can authorize a set of "participation keys"[=
1] that will be used to create blocks on your coin holding key's behalf.
>>>> >> >> > Hopefully you've spotted the problem.
>>>> >> >> > You can send your participation keys to any malicious party wi=
th a nice website (see random example [2]) offering you a good return.
>>>> >> >> > Damn it's still Proof-of-SquareSpace!
>>>> >> >> > The minor advantage is that at least the participation keys ex=
pire after a certain amount of time so eventually the SquareSpace attacker =
will lose their hold on consensus.
>>>> >> >> > Importantly there is also less junk on the blockchain because =
the participation keys are delegated off-chain and so are not making as muc=
h of a mess.
>>>> >> >> >
>>>> >> >> > ### Conclusion
>>>> >> >> >
>>>> >> >> > I don't see a way to get around the conflicting requirement th=
at the keys for large amounts of coins should be kept offline but those are=
 exactly the coins we need online to make the scheme secure.
>>>> >> >> > If we allow delegation then we open up a new social attack sur=
face and it degenerates to Proof-of-SquareSpace.
>>>> >> >> >
>>>> >> >> > For a "digital gold" like system like Bitcoin we optimize for =
simplicity and desperately want to avoid extraneous responsibilities for th=
e holder of the coin.
>>>> >> >> > After all, gold is an inert element on the periodic table that=
 doesn't confer responsibilities on the holder to maintain the quality of a=
ll the other bars of gold out there.
>>>> >> >> > Bitcoin feels like this too and in many ways is more inert and=
 beautifully boring than gold.
>>>> >> >> > For Bitcoin to succeed I think we need to keep it that way and=
 Proof-of-Stake makes everything a bit too exciting.
>>>> >> >> >
>>>> >> >> > I suppose in the end the market will decide what is real digit=
al gold and whether these bad technical trade offs are worth being able to =
say it uses less electricity. It goes without saying that making bad techni=
cal decisions to appease the current political climate is an anathema to Bi=
tcoin.
>>>> >> >> >
>>>> >> >> > Would be interested to know if you or others think differently=
 on these points.
>>>> >> >> >
>>>> >> >> > [1]: https://developer.algorand.org/docs/run-a-node/participat=
e/generate_keys/
>>>> >> >> > [2]: https://staking.staked.us/algorand-staking
>>>> >> >> > [3]: https://eprint.iacr.org/2017/573.pdf
>>>> >> >> > [4]: https://algorandcom.cdn.prismic.io/algorandcom%2Fece77f38=
-75b3-44de-bc7f-805f0e53a8d9_theoretical.pdf
>>>> >> >> > [5]: https://hydra.iohk.io/build/790053/download/1/delegation_=
design_spec.pdf
>>>> >> >> >
>>>> >> >> > Cheers,
>>>> >> >> >
>>>> >> >> > LL
>>>> >> >> >
>>>> >> >> > On Fri, 21 May 2021 at 19:21, Billy Tetrud via bitcoin-dev <bi=
tcoin-dev@lists.linuxfoundation.org> wrote:
>>>> >> >> >>
>>>> >> >> >> I think there is a lot of misinformation and bias against Pro=
of of Stake. Yes there have been lots of shady coins that use insecure PoS =
mechanisms. Yes there have been massive issues with distribution of PoS coi=
ns (of course there have also been massive issues with PoW coins as well). =
However, I want to remind everyone that there is a difference between "prov=
ed to be impossible" and "have not achieved recognized success yet". Most o=
f the arguments levied against PoS are out of date or rely on unproven assu=
mptions or extrapolation from the analysis of a particular PoS system. I ce=
rtainly don't think we should experiment with bitcoin by switching to PoS, =
but from my research, it seems very likely that there is a proof of stake c=
onsensus protocol we could build that has substantially higher security (co=
st / capital required to execute an attack) while at the same time costing =
far less resources (which do translate to fees on the network) *without* co=
mpromising any of the critical security properties bitcoin relies on. I thi=
nk the critical piece of this is the disagreements around hardcoded checkpo=
ints, which is a critical piece solving attacks that could be levied on a P=
oS chain, and how that does (or doesn't) affect the security model.
>>>> >> >> >>
>>>> >> >> >> @Eric Your proof of stake fallacy seems to be saying that PoS=
 is worse when a 51% attack happens. While I agree, I think that line of th=
inking omits important facts:
>>>> >> >> >> * The capital required to 51% attack a PoS chain can be made =
substantially greater than on a PoS chain.
>>>> >> >> >> * The capital the attacker stands to lose can be substantiall=
y greater as well if the attack is successful.
>>>> >> >> >> * The effectiveness of paying miners to raise the honest frac=
tion of miners above 50% may be quite bad.
>>>> >> >> >> * Allowing a 51% attack is already unacceptable. It should be=
 considered whether what happens in the case of a 51% may not be significan=
tly different. The currency would likely be critically damaged in a 51% att=
ack regardless of consensus mechanism.
>>>> >> >> >>
>>>> >> >> >> > Proof-of-stake tends towards oligopolistic control
>>>> >> >> >>
>>>> >> >> >> People repeat this often, but the facts support this. There i=
s no centralization pressure in any proof of stake mechanism that I'm aware=
 of. IE if you have 10 times as much coin that you use to mint blocks, you =
should expect to earn 10x as much minting revenue - not more than 10x. By c=
ontrast, proof of work does in fact have clear centralization pressure - th=
is is not disputed. Our goal in relation to that is to ensure that the cent=
ralization pressure remains insignifiant. Proof of work also clearly has a =
lot more barriers to entry than any proof of stake system does. Both of the=
se mean the tendency towards oligopolistic control is worse for PoW.
>>>> >> >> >>
>>>> >> >> >> > Energy usage, in-and-of-itself, is nothing to be ashamed of=
!!
>>>> >> >> >>
>>>> >> >> >> I certainly agree. Bitcoin's energy usage at the moment is I =
think quite warranted. However, the question is: can we do substantially be=
tter. I think if we can, we probably should... eventually.
>>>> >> >> >>
>>>> >> >> >> > Proof of Stake is only resilient to =E2=85=93 of the networ=
k demonstrating a Byzantine Fault, whilst Proof of Work is resilient up to =
the =C2=BD threshold
>>>> >> >> >>
>>>> >> >> >> I see no mention of this in the pos.pdf you linked to. I'm no=
t aware of any proof that all PoS systems have a failure threshold of 1/3. =
I know that staking systems like Casper do in fact have that 1/3 requiremen=
t. However there are PoS designs that should exceed that up to nearly 50% a=
s far as I'm aware. Proof of work is not in fact resilient up to the 1/2 th=
reshold in the way you would think. IE, if 100% of miners are currently hon=
est and have a collective 100 exahashes/s hashpower, an attacker does not n=
eed to obtain 100 exahashes/s, but actually only needs to accumulate 50 exa=
hashes/s. This is because as the attacker accumulates hashpower, it drives =
honest miners out of the market as the difficulty increases to beyond what =
is economically sustainable. Also, its been shown that the best proof of wo=
rk can do is require an attacker to obtain 33% of the hashpower because of =
the selfish mining attack discussed in depth in this paper: https://arxiv.o=
rg/abs/1311.0243. Together, both of these things reduce PoW's security by a=
 factor of about 83% (1 - 50%*33%).
>>>> >> >> >>
>>>> >> >> >>  > Proof of Stake requires other trade-offs which are incompa=
tible with Bitcoin's objective (to be a trustless digital cash) =E2=80=94 s=
pecifically the famous "security vs. liveness" guarantee
>>>> >> >> >>
>>>> >> >> >> Do you have a good source that talks about why you think proo=
f of stake cannot be used for a trustless digital cash?
>>>> >> >> >>
>>>> >> >> >> > You cannot gain tokens without someone choosing to give up =
those coins - a form of permission.
>>>> >> >> >>
>>>> >> >> >> This is not a practical constraint. Just like in mining, some=
 nodes may reject you, but there will likely be more that will accept you, =
some sellers may reject you, but most would accept your money as payment fo=
r bitcoins. I don't think requiring the "permission" of one of millions of =
people in the market can be reasonably considered a "permissioned currency"=
.
>>>> >> >> >>
>>>> >> >> >> > 2. Proof of stake must have a trusted means of timestamping=
 to regulate overproduction of blocks
>>>> >> >> >>
>>>> >> >> >> Both PoW and PoS could mine/mint blocks twice as fast if ever=
yone agreed to double their clock speeds. Both systems rely on an honest ma=
jority sticking to standard time.
>>>> >> >> >>
>>>> >> >> >>
>>>> >> >> >> On Wed, May 19, 2021 at 5:32 AM Michael Dubrovsky via bitcoin=
-dev <bitcoin-dev@lists.linuxfoundation.org> wrote:
>>>> >> >> >>>
>>>> >> >> >>> Ah sorry, I didn't realize this was, in fact, a different th=
read! :)
>>>> >> >> >>>
>>>> >> >> >>> On Wed, May 19, 2021 at 10:07 AM Michael Dubrovsky <mike@pow=
x.org> wrote:
>>>> >> >> >>>>
>>>> >> >> >>>> Folks, I suggest we keep the discussion to PoW, oPoW, and t=
he BIP itself. PoS, VDFs, and so on are interesting but I guess there are o=
ther threads going on these topics already where they would be relevant.
>>>> >> >> >>>>
>>>> >> >> >>>> Also, it's important to distinguish between oPoW and these =
other "alternatives" to Hashcash. oPoW is a true Proof of Work that doesn't=
 alter the core game theory or security assumptions of Hashcash and actuall=
y contains SHA (can be SHA3, SHA256, etc hash is interchangeable).
>>>> >> >> >>>>
>>>> >> >> >>>> Cheers,
>>>> >> >> >>>> Mike
>>>> >> >> >>>>
>>>> >> >> >>>> On Tue, May 18, 2021 at 4:55 PM Erik Aronesty via bitcoin-d=
ev <bitcoin-dev@lists.linuxfoundation.org> wrote:
>>>> >> >> >>>>>
>>>> >> >> >>>>> 1. i never suggested vdf's to replace pow.
>>>> >> >> >>>>>
>>>> >> >> >>>>> 2. my suggestion was specifically *in the context of* a wo=
rking
>>>> >> >> >>>>> proof-of-burn protocol
>>>> >> >> >>>>>
>>>> >> >> >>>>> - vdfs used only for timing (not block height)
>>>> >> >> >>>>> - blind-burned coins of a specific age used to replace pro=
of of work
>>>> >> >> >>>>> - the required "work" per block would simply be a competit=
ion to
>>>> >> >> >>>>> acquire rewards, and so miners would have to burn coins, w=
ell in
>>>> >> >> >>>>> advance, and hope that their burned coins got rewarded in =
some far
>>>> >> >> >>>>> future
>>>> >> >> >>>>> - the point of burned coins is to mimic, in every meaningf=
ul way, the
>>>> >> >> >>>>> value gained from proof of work... without some of the sec=
urity
>>>> >> >> >>>>> drawbacks
>>>> >> >> >>>>> - the miner risks losing all of his burned coins (like all=
 miners risk
>>>> >> >> >>>>> losing their work in each block)
>>>> >> >> >>>>> - new burns can't be used
>>>> >> >> >>>>> - old burns age out (like ASICs do)
>>>> >> >> >>>>> - other requirements on burns might be needed to properly =
mirror the
>>>> >> >> >>>>> properties of PoW and the incentives Bitcoin uses to mine =
honestly.
>>>> >> >> >>>>>
>>>> >> >> >>>>> 3. i do believe it is *possible* that a "burned coin + vdf=
 system"
>>>> >> >> >>>>> might be more secure in the long run, and that if the enti=
re space
>>>> >> >> >>>>> agreed that such an endeavor was worthwhile, a test net co=
uld be spun
>>>> >> >> >>>>> up, and a hard-fork could be initiated.
>>>> >> >> >>>>>
>>>> >> >> >>>>> 4. i would never suggest such a thing unless i believed it=
 was
>>>> >> >> >>>>> possible that consensus was possible.  so no, this is not =
an "alt
>>>> >> >> >>>>> coin"
>>>> >> >> >>>>>
>>>> >> >> >>>>> On Tue, May 18, 2021 at 10:02 AM Zac Greenwood <zachgrw@gm=
ail.com> wrote:
>>>> >> >> >>>>> >
>>>> >> >> >>>>> > Hi ZmnSCPxj,
>>>> >> >> >>>>> >
>>>> >> >> >>>>> > Please note that I am not suggesting VDFs as a means to =
save energy, but solely as a means to make the time between blocks more con=
stant.
>>>> >> >> >>>>> >
>>>> >> >> >>>>> > Zac
>>>> >> >> >>>>> >
>>>> >> >> >>>>> >
>>>> >> >> >>>>> > On Tue, 18 May 2021 at 12:42, ZmnSCPxj <ZmnSCPxj@protonm=
ail.com> wrote:
>>>> >> >> >>>>> >>
>>>> >> >> >>>>> >> Good morning Zac,
>>>> >> >> >>>>> >>
>>>> >> >> >>>>> >> > VDFs might enable more constant block times, for inst=
ance by having a two-step PoW:
>>>> >> >> >>>>> >> >
>>>> >> >> >>>>> >> > 1. Use a VDF that takes say 9 minutes to resolve (VDF=
 being subject to difficulty adjustments similar to the as-is). As per the =
property of VDFs, miners are able show proof of work.
>>>> >> >> >>>>> >> >
>>>> >> >> >>>>> >> > 2. Use current PoW mechanism with lower difficulty so=
 finding a block takes 1 minute on average, again subject to as-is difficul=
ty adjustments.
>>>> >> >> >>>>> >> >
>>>> >> >> >>>>> >> > As a result, variation in block times will be greatly=
 reduced.
>>>> >> >> >>>>> >>
>>>> >> >> >>>>> >> As I understand it, another weakness of VDFs is that th=
ey are not inherently progress-free (their sequential nature prevents that;=
 they are inherently progress-requiring).
>>>> >> >> >>>>> >>
>>>> >> >> >>>>> >> Thus, a miner which focuses on improving the amount of =
energy that it can pump into the VDF circuitry (by overclocking and freezin=
g the circuitry), could potentially get into a winner-takes-all situation, =
possibly leading to even *worse* competition and even *more* energy consump=
tion.
>>>> >> >> >>>>> >> After all, if you can start mining 0.1s faster than the=
 competition, that is a 0.1s advantage where *only you* can mine *in the en=
tire world*.
>>>> >> >> >>>>> >>
>>>> >> >> >>>>> >> Regards,
>>>> >> >> >>>>> >> ZmnSCPxj
>>>> >> >> >>>>> _______________________________________________
>>>> >> >> >>>>> bitcoin-dev mailing list
>>>> >> >> >>>>> bitcoin-dev@lists.linuxfoundation.org
>>>> >> >> >>>>> https://lists.linuxfoundation.org/mailman/listinfo/bitcoin=
-dev
>>>> >> >> >>>>
>>>> >> >> >>>>
>>>> >> >> >>>>
>>>> >> >> >>>> --
>>>> >> >> >>>> Michael Dubrovsky
>>>> >> >> >>>> Founder; PoWx
>>>> >> >> >>>> www.PoWx.org
>>>> >> >> >>>
>>>> >> >> >>>
>>>> >> >> >>>
>>>> >> >> >>> --
>>>> >> >> >>> Michael Dubrovsky
>>>> >> >> >>> Founder; PoWx
>>>> >> >> >>> www.PoWx.org
>>>> >> >> >>> _______________________________________________
>>>> >> >> >>> bitcoin-dev mailing list
>>>> >> >> >>> bitcoin-dev@lists.linuxfoundation.org
>>>> >> >> >>> https://lists.linuxfoundation.org/mailman/listinfo/bitcoin-d=
ev
>>>> >> >> >>
>>>> >> >> >> _______________________________________________
>>>> >> >> >> bitcoin-dev mailing list
>>>> >> >> >> bitcoin-dev@lists.linuxfoundation.org
>>>> >> >> >> https://lists.linuxfoundation.org/mailman/listinfo/bitcoin-de=
v
>>>> >> >> >
>>>> >> >> > _______________________________________________
>>>> >> >> > bitcoin-dev mailing list
>>>> >> >> > bitcoin-dev@lists.linuxfoundation.org
>>>> >> >> > https://lists.linuxfoundation.org/mailman/listinfo/bitcoin-dev
>>>
>>>
>>