user1761: I am very skeptical about the security of the proof of stake system. Is it really that secure? Are there no disadvantages?

user15355: Proof of stake has been used for many months in Nxt, and has not been broken despite having the third highest market capitalisation, so it does seem to be secure. If it wasn't, someone would have broken it by now. History shows forks rarely persist for more than a block, so it does achieve consensus.
In theory, a weakness is that people can vote for both sides of a fork. In practice, that doesn't seem to happen. The gain from doing so would be trivial (there's no block reward in Nxt), and the loss of security substantial, so no-one does it. With Proof of Stake, the people who secure the block-chain the most are also the people who possess the most coins, so they have the most incentive to preserve the integrity of the currency. To put it another way, in Nxt forging is done to secure the block-chain, not to make a profit.
One disadvantage is that in pure Proof of Stake, the only way to acquire coins is from someone who already has them. This can lead to issues with the distribution. For example, in Nxt the entire coin supply was initially distributed to 73 "founders", and some of those people still own significant fractions of the supply, giving them wealth and influence. That said, none now own as large a fraction as Satoshi owns of Bitcoin. It seems that the distribution problem solves itself over time, as the founders have an interest in spending their wealth to support the coin.

user17078: Vanilla proof-of-stake doesn't achieve consensus, unfortunately. People staking their coin can vote for both forks of the blockchain, and can even mine effortlessly in secret. In PoW this is impossible, as you are literally wasting energy by mining both sides of a fork.
To mitigate this, most modern PoS schemes use a mixture of PoS and PoW to ensure that someone will finally decide the chain.
http://www.reddit.com/r/Bitcoin/comments/1oi7su/criticisms_of_proofofstake/ for more discussion.

1761: <p>I am very skeptical about the security of the proof of stake system. Is it really that secure? Are there no disadvantages?</p>
 15355: <p>Proof of stake has been used for many months in Nxt, and has not been broken despite having the third highest market capitalisation, so it does seem to be secure. If it wasn't, someone would have broken it by now. History shows forks rarely persist for more than a block, so it does achieve consensus.</p>

<p>In theory, a weakness is that people can vote for both sides of a fork. In practice, that doesn't seem to happen. The gain from doing so would be trivial (there's no block reward in Nxt), and the loss of security substantial, so no-one does it. With Proof of Stake, the people who secure the block-chain the most are also the people who possess the most coins, so they have the most incentive to preserve the integrity of the currency. To put it another way, in Nxt forging is done to secure the block-chain, not to make a profit.</p>

<p>One disadvantage is that in pure Proof of Stake, the only way to acquire coins is from someone who already has them. This can lead to issues with the distribution. For example, in Nxt the entire coin supply was initially distributed to 73 "founders", and some of those people still own significant fractions of the supply, giving them wealth and influence. That said, none now own as large a fraction as Satoshi owns of Bitcoin. It seems that the distribution problem solves itself over time, as the founders have an interest in spending their wealth to support the coin.</p>
 17078: <p>Vanilla proof-of-stake doesn't achieve consensus, unfortunately. People staking their coin can vote for both forks of the blockchain, and can even mine effortlessly in secret. In PoW this is impossible, as you are literally wasting energy by mining both sides of a fork.</p>

<p>To mitigate this, most modern PoS schemes use a mixture of PoS and PoW to ensure that someone will finally decide the chain.</p>

<p><a href="http://www.reddit.com/r/Bitcoin/comments/1oi7su/criticisms_of_proofofstake/">http://www.reddit.com/r/Bitcoin/comments/1oi7su/criticisms_of_proofofstake/</a> for more discussion.</p>
