Bitcoin has proven to be a very secure system for storing the ledger using PoW. As we are now seeing the Bitcoin PoW system self organise into a centralized system, I believe we need to discuss alternatives to PoW. I understand that many folks have invested in expensive mining hardware, hence we need to give those people a chance to profit on their investment. Also, it is probable that there will be a large time delay between consensus and when an implementation is rolled out (if we do decide to change). Given the size of some of our mining pools it’s already debatable that we have no choice but to discuss this topic now. Please read the link above to understand the centralization issues Bitcoin is experiencing with PoW.
I really like PoW and I would love to see us implement SPECTRE, but this is not about our feelings. It’s about making the best choice for the Zen system. I think it’s important to note that it’s not just PoS systems in which the rich get richer. This can (arguably) be even more of a problem in PoW.
Obviously the main alternative is some sort of PoS system. Delegated PoS has (arguably) proved to be secure in current implementations. There has been a high level of rigor exercised in proving that the Oroborus Delegated PoS Algorithm will be secure. The other options I know of is to use a PoS system similar to EOS where the number of validators are limited (but constantly voted on) and have equal block producing likelihood, or a PoI system such as that implemented by NEM.
I know that Zen is research driven. My proposition is that we move that research to non PoW algorithms due to the centralized block producing power PoW has proven to produce. Let’s keep the discussion productive and respectful.
I absolutely agree that whatever is implemented needs to be secure and implementation of POS (as you said) is not easy. I’m not a fan of hasty decisions.
Are you sure that we have a hybrid POW+POS system? I like the concept. If my understanding is correct PoW progress needs to be approved by PoS. I don’t think this is the case in ZEN. Do I have some sort of misconception here?
My main concern is that it seems that one party will produce the majority of blocks with the current system. We need to discuss if this will probably be the case. I think the economics will work out for this to be the case. Are we okay with it? If not how can we avoid it?
Our roots are in ZCash and Zk-Snarks technology and we are still a privacy coin at the end of the day. I don’t know how a proof of stake system would work, or a delegated proof of stake would work if balances are shielded. So this needs to be a part of the discussion, especially if it becomes a trade off
Good point. I’m aware that a crypto-system called PIVX uses POS - and it’s a privacy coin. But I don’t think it uses Zk-snarks.
I get the feeling that the team would be in the best position to understand the technicalities of what sort of implementation would work. The main discussion I think we need to have first is about the economics. If we all think that the economics of POW works out so that one party is producing the majority of the blocks - are we cool with that? Do we think this will even be the case? If not, what direction of research should start to take now?
Interesting, I’ll have to research more into pivx.
I’m conflicted because I’m a miner so I have a bit of bias to keep proof of work, but at the same time, it seems that proof of stake is the future. I’d be curious how the coin would scale in tx/s, shorter block times. And would there be a supply cap?
I didn’t see anywhere if pivx has a max supply. If you have a coin that doesn’t have a cap, you end up with an inflationary currency, which can deter a lot of outsiders from investing. Deflationary coins, inherently gain in value assuming all else is equal because coins get lost over time. But in inflationary systems you typically see coins lose value over time. Just some thoughts
You can still have a supply cap with POS. Pivx does not. It’s a bit strange. They burn fees and have steady inflation, so the system can become deflationary with enough transactions. Supply is slightly inflating in their system atm.
Generally POS does have quicker cheaper transactions. Yeah it does seem to be the future. I really like POW too, but I’m very worried about the economics. To me it looks like BTC ran the experiment and now we are seeing the results: just a few parties mine the vast majority of the blocks.
Considering how long it takes to reach consensus and implement change it makes me think our research funds should go into something where the economics does not end up in centralization of block production.
I think you could safely replace ‘percieved’ with ‘proven’ in that sentence. The high energy cost is a real problem in a world where global warming is always high on the agenda. Having a currency (BTC) consume as much electricity as a small country can be really hard to sell. Yes I am mining too and it is good, but I am far more keen on the global economic benefits a usable and wide spread cryptocurrency can have. If JP Morgan says that “Both financial institutions and their non-banking competitors face the risk that payment processing and other services could be disrupted by technologies, such as cryptocurrencies, that require no intermediation.” then that is exactly what I want, and will happily sacrifice my mining profit for it (but I don’t have to as I can always use my miners on some other coin). Read on to see why I think a crypto cannot replace current banks while using current PoW algorithms.
I don’t see how moving from PoW to PoS affects the ability to use ZEN’s privacy features, but may be I’m missing something. If one wants to do minting or declare a stake in the coin in any way then they can’t use private addresses for it. People for whom privacy is the main benefit of the coin would lose nothing from moving to a PoS system as presently they can’t capitalise on their ZEN holdings anyway - unless they use them as stake for ZEN nodes which has to be in a transparent address. Mining is not private either.
Yes, we all want the value of ZEN to rise and make money from it - it’s only natural. It is important however to keep the larger picture in mind. Having a limited coin supply has worked well for BTC and may be a couple of its closest competitors. It is unrealistic however to think that ZEN will ever become a store of value token like BTC is at present as there is nothing it can offer over and above BTC or ETH in that respect. ZEN’s best chance for real success, for becoming a leader, is in evolving and competing based on usability. It could not only become a perfectly good replacement for fiat as a means for everyday payments, it could be a huge improvement over current systems. The catch is this is not possible using current PoW algorithms - I know I would not be happy waiting in a supermarket for a random amount of time, averaging 10 min or so, for a block to be found so the transaction can hopefully be recorded. And that is disregarding block size problems. I believe PoS can offer a solution here through instant transactions and much higher throughput. Looking at ZEN as a real world currency, having a slightly inflationary supply should work better than a deflationary one as it removes the incentive to hold the coin as a gold alternative and allows having a constant overall circulating volume.
There go my initial thoughts on this, I am sure people will point out the weak points
Thank you @Gandalf for the great topic, I was planning a post along those lines but you beat me to it
I disagree with your assessment that Bitcoin is centralized in terms of mining. Yes, there have been concentrations due to Asic mining and businesses developed mining the coin. But Blockchain/Bitcoin/Decentralized Banking is the most significant development in technology and banking in 50 years.
Zen Cash is in an excellent position in terms of circulating supply and bringing together miners from all over the globe to join in PoW. Yes it’s energy draining. So is fiat banking and their systems. Remember, this is a privacy coin and the goal is adequate decentralization, privacy, and secure nodes as an additional layer of security. In my opinion they have a very good chance of participating in the growth that has been afforded to Bitcoin, Monero, Zcash, and other privacy coins. There is no perfect eco system. The newer algo’s aren’t even proven yet. I agree with you that some privacy coins will tout other ways of proofs, but none as time tested as Proof Of Work.
And top that off with the secure node, a PoS offshoot that has a very low entry point (i.e. is very decentralized), and still has a great return.
I agree with nikmit on pretty much everything except this sentance…
I think Zen’s system has some privacy features that BTC and ETH can’t offer (atm) that acutally makes it a good store of value for some. Anyway…that’s not the point of this discussion.
I did not bring up the environmental costs of POW but I’m glad @nikmit did. Although it may not be a pivotal factor for many of the people in the current community, there is no doubt that millions of people see the energy consumption aspect of PoW as a turn off.
I think the issue we need to focus on is the centralization of block production. I’m sure that even @cryptomosk will agree that PoW has an issue with this. For example I just checked out the Block Explorer and found that a single pool (Suprnova) added 4 of the last 5 blocks. I’m pretty sure that we can all agree that this is not cool. please say so if you disagree with block production being centralized.
Okay, so if we agree about block production being centralized; the discussion naturally moves on to the question - What are we going to do about it? This is not a rhetorical question. I put forth the PoS idea, but I’m not 100% decided. All ideas for solutions welcome!
Agree - should have said “can’t offer enough over BTC and ETH to really challenge them as a store of value coin”. It could fill a niche, along with a few other coins.
Decentralisation of block production is a very important issue and having the vast majority of the network hashrate concentrated in just a few pools is bad enough. The reason for that centralisation, which is happening over and over again is that joining one of the largest pools has proven to be more profitable. The current system rewards centralisation of mining, and creates motivation for unfair competition between pool owners, some of which we saw at ZEN’s launch with dDOS attacks against some pools.
The main issue for me however is usability and creating the potential for gaining mass adoption as a means of payment. To do that we need very fast or instant transactions and much better scalability than what any PoW coin has offered so far. I think we should concentrate on improving the coin’s utility, making it useful for people. Of course that means it needs to stay secure as well.
There is a difference between being less centralised than current banks (which are ~ 100% centralised) and being truly decentralised. But I fully agree that BTC was a huge and very significant development for technology and banking. They say however that the pioneers get the arrows, the settlers that follow get the wealth. Yes BTC and PoW did an amazing job as a cryptocurrency proof-of-concept - to show the world that cryptos are a viable alternative to the current banking system. Yes the current banking system is rotten to the core - replacing it would be of great benefit to us all. But BTC also unearthed a lot of shortcomings to PoW and it would be silly not to try and find solutions.
I hate fiat banking for more than one reason but you can’t really compare its energy consumption with that of PoW cryptos. You could compare it with the energy consumption of secure nodes, which is insignificant when compared to mining.
I don’t see how replacing PoW with e.g. PoS affects that goal negatively?
Yes, it does have a very good chance. But is that all we should hope for? I think ZEN has the potential for so much more. I love the idea of the DAO, secure nodes can be very useful in multiple ways and the leadership team seems genuinely interested in delivering the project in the best way possible, rather than being limited by personal preconceptions.
There are a few algos out there with claims for being mathematically provable to be secure, Ouroboros being one of them. Please correct me if I am wrong, but AFAIK there is no such claim for PoW? Yes it is nice to be time tested, but if we give that too much weight we will have to abandon all progress…
Ouroboros has achieved acclaim in the intellectual communities. But it’s years out for integration and adoption, as Cardano’s roadmap shows. Proof of work is a valid method since 2008. Not sure " mathematically provable to be secure" is a concept, because the math, software and code might be perfect but the eco system and sum of all the parts is not.
I am by no means suggesting we change the algorithm today - that would obviously be a stupid thing to do. I am not even saying that Ouroboros should be the PoS algo we choose.
But I do think we should acknowledge that consensus algorithms are not what they were in 2008 and we should do what we can to stay current. Right now that would mean weighing up the pros and cons of different algos and deciding whether we want to adjust the roadmap to include an algorithm change in e.g. 2-3 years.
I think there are two parts to this task - the community needs to discuss and agree in general terms what change/s would be desirable and developers/leadership team have to determine feasibility. I hope we are currently making the first steps in achieving community consensus