This article may rely excessively on sources too closely associated with the subject, potentially preventing the article from being verifiable and neutral. Proof of stake must have a way of defining the next valid block in any blockchain. Instead, several different methods of selection bitcoin mining 2015 profitable definition been devised. Peercoin’s proof-of-stake system combines randomization with the concept of “coin age”, a number derived from the product of the number of coins multiplied by the number of days the coins have been held.
Coins that have been unspent for at least 30 days begin competing for the next block. Older and larger sets of coins have a greater probability of signing the next block. However, once a stake of coins has been used to sign a block, it must start over with zero “coin age” and thus wait at least 30 more days before signing another block. This process secures the network and gradually produces new coins over time without consuming significant computational power. Peercoin’s developer claims that the lack of need for centralized mining pools—and the fact that purchasing more than half of the coins in circulation is likely more costly than acquiring 51 percent of available proof-of-work hashing power—makes a malicious attack on the network more difficult. Proof-of-stake currencies can be more energy efficient than currencies based on proof-of-work algorithms.
Incentives also differ between the two systems of block generation. Under proof of work, miners may potentially own none of the currency they are mining and thus seek only to maximize their own profits. It is unclear whether this disparity lowers or raises security risks. Some authors argue that proof of stake is not an ideal option for a distributed consensus protocol. Ethereum’s suggested Slasher protocol allows users to “punish” the cheater who forges on top of more than one blockchain branch.
This proposal assumes that one must double-sign to create a fork and that one can be punished for creating a fork while not having stake. Peercoin, in its early stages, used centrally broadcast checkpoints signed under the developer’s private key. No blockchain reorganization was allowed deeper than the last known checkpoints. Checkpoints are opt-in as of v0. 6 and are not enforced now that the network has reached a suitable level of distribution. Nxt’s protocol only allows reorganization of the last 720 blocks. However, this merely rescales the problem: a client may follow a fork of 721 blocks, regardless of whether it is the tallest blockchain, thereby preventing consensus.
Hybrid “proof of burn” and proof of stake. Proof-of-burn blocks act as checkpoints, have higher rewards, contain no transactions, are more secure, and anchor both to each other and to the PoS chain but are more expensive. Statistical simulations have shown that simultaneous forging on several chains is possible, even profitable. But proof of stake advocates believe that most described attack scenarios are impossible or so unpredictable as to be only theoretical. Archived from the original on 3 February 2015.