The purpose of decentralization is to eliminate the requirement to trust any single person.
Unfortunately, it is impossible to run a Proof of Stake blockchain without needing to trust someone.
Where is trust absolutely needed? When figuring out what are the initial account balances of the miners and which blockchain is correct.
For a purely Proof of Stake coin you need to trust the person or organization that tells you what those account balances are. And the entire rest of the blockchain relies on trusting those account balances. Even the smartest computer programmer in the world can not tell you whether or not you are mining the correct blockchain.
Using a Proof of Work - Proof of Stake Hybrid
Proof of Work fixes this problem by creating provably impossible to fake proofs that a lot of energy went into mining the blockchain.
Therefore one seemingly easy potential fix is to use Proof of Work to mine a blockchain and trust the initial account balances verified by those Proof of Work miners, as done by Ethereum. Then build the Proof of Stake on top of this. Proof of Work makes sure you are starting off right, Proof of Stake takes it from there.
A POS - POW Hybrid is Only as Strong As POW
The problem is from a trust point of view, this means that the weak point of a hybrid Proof of Work/Proof of Stake chain, is still the Proof of Work component. If an attacker can 51% attack this portion, then everyone else joining the network or attempting to verify they are mining the correct chain will refer to the incorrect Proof of Work blockchain to prove they are on the correct blockchain.
Which essentially makes the Proof of Stake component worthless.
Proof of Work isn’t Decentralized Enough Either
With Proof of Work, you trust a few unknown individuals who run the mining pools. And similar to how humans tend to cluster around 2 or 3 companies in any industry online, time has proven that miners tend to cluster into two or three mining pools that have enough power to completely control Proof of Work blockchains. Yet this defeats the purpose of decentralization which is to minimize how many individuals you need to trust.
Not to mention the whole reason Proof of Stake is seen as superior to Proof of Work is that Proof of Work requires between 5,000 and 30 million times more energy than Proof of Stake or Proof of Person.
A Single 51% Attack Destroys Proof of Stake for Good
As discussed in depth, in the A 51% Blockchain Attack Is Worse Than You Might Think post. any 51% attack on a Proof of Stake cryptocurrency destroys it for good as it gives Proof of Stake miners the ability to give themselves as much money aka Stake to themselves and permanently control the currency. And the worse part is that by distributing it amongst multiple wallets, you may never even realize it.
Proof Of Person: The Truly Decentralized Blockchain
There is a solution to this: allow individuals to specify multiple individuals who they trust. Then build the blockchain off of this, which we call Proof of Person.
Proof of Person forces decentralization. Users must connect to roughly 10 other users and 30 or more is recommended. The ‘weak point’ for determining the correct blockchain is your trust in your friends, weighted by how much you trust them.
Beyond this, Proof of Person analyzes the social network formed by everyone linking to each other to weed out which individuals can and cannot be trusted to mine. Much research has been done in this field and we are achieving over 99.9% accuracy and protection from hackers in our internal testing.
Who Do You Trust Most?
- The government
- A few people running mining pools who you’ve never met
- A company
- Your friends and family
If you choose your friends and family, then sign up for an account at www.frink.global and get paid to start connecting to friends. Frink’s Proof of Person blockchain is coming soon.