<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>

CC BY-SA 3.0
2014-10-22T21:32:23.760Z
`despite having the third highest market capitalisation` Citation? [This website](http://coinmarketcap.com/) says that Bitcoin, Litecoin, and Dogecoin are all higher.
Nick ODell
CC BY-SA 3.0
2017-06-24T13:02:42.050Z
I ride without a helmet for the fifth year now without problems, therefore it is very safe and secure.
David Balažic
CC BY-SA 3.0
2017-06-24T20:25:18.990Z
Cryptocurrencies like [Peercoin](https://peercoin.net/) solved this issue by mixing both PoW and PoS in a way that new coins could still be mined (by virtually anyone with the hardware) while the network keeps secured by "minters" at PoS whose also get rewarded by securing the network, receiving ~1%/year in minted coins. Inflation is prevented by **destroying** transaction fees (instead of giving them to miners).
Claudio Holanda
CC BY-SA 4.0
2018-11-12T05:29:10.580Z
Funny you say that David: https://www.forbes.com/sites/carltonreid/2018/10/21/i-do-not-wear-a-bicycle-helmet/amp/
Gregory Magarshak
CC BY-SA 4.0
2021-06-14T20:10:14.043Z
"The founders have an interest in spending their wealth to support the coin."

Sounds a bit like trickle-down economics, no?
steventrouble
CC BY-SA 3.0
2014-07-07T12:42:09.280Z
2014-07-07T12:42:09.280Z
Brangdon
<p>the major one I can think of is the stakeholder with high stakes can have more easy execution whereas stakeholders with low stake will have to get less limelight to overcome this we have delegated proof of stake in which coin holders get to cast their vote and they may also call upon for network change parameters</p>

<p>For the offline stakes in the pos, they are highly vulnerable, to prevent them from attack we can have proof of checkpoint which ensures miner between blocks and matins scalability</p>

CC BY-SA 3.0
2017-08-09T20:28:51.880Z
2017-08-09T20:28:51.880Z
user57174
<p>There's an argument that certain properties of cryptocurrencies encourage hoarding, but I think this is wrong. If someone ends up rich through 'hoarding their coins, there is then an incentive to spend some of those coins, to buy a car,a house, go on holiday. 
I think this has been levelled at POS coins too, that eventually, all the coins end up in a few hands of big holders.
But they are going to spend at least some of their wealth on a luxury lifestyle.
Probably, they will remain super wealthy, but, their wealth will always be being spent and that wealth passed on to others, eg the guy who built the Aston Martin he just bought.</p>

CC BY-SA 3.0
2017-02-28T03:19:55.797Z
2017-02-28T03:19:55.797Z
Adrian
<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>

CC BY-SA 3.0
2014-07-05T20:00:12.193Z
But what would be the point of 'betting' on two blocks?
Jori
CC BY-SA 3.0
2017-01-27T17:09:42.513Z
Jori: because if you bet only on one, and you bet wrong (the chain ended up not being the longest one), you lose your income.
Pieter Wuille
CC BY-SA 4.0
2018-11-12T05:27:43.253Z
But can’t it be trivially revealed that you voted for both, and then others in system would just stop listening to you, and therefore all the coins you staked would be frozen forever? One strike and you’re out.
Gregory Magarshak
CC BY-SA 3.0
2014-06-04T17:48:48.423Z
2014-06-04T17:54:25.017Z
2014-06-04T17:54:25.017Z
instagibbs
<p>I am very skeptical about the security of the proof of stake system. Is it really that secure? Are there no disadvantages?</p>

CC BY-SA 3.0
2014-07-07T21:27:59.913Z
I found this great article: https://blog.ethereum.org/2014/07/05/stake/
Felipe
CC BY-SA 4.0
2020-04-14T05:45:01.557Z
Relevant: https://download.wpsoftware.net/bitcoin/pos.pdf
Felipe
CC BY-SA 4.0
2021-05-15T02:31:47.263Z
Relevant: https://lists.linuxfoundation.org/pipermail/bitcoin-dev/2021-May/thread.html#18895
Felipe
<proof-of-stake>
What are the downsides of proof of stake?
Felipe
# What are the downsides of proof of stake?

(Asked by: username_0 on 2014-06-03)

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

**Tags:** proof-of-stake

> **Comments:**
> **username_0**: I found this great article: https://blog.ethereum.org/2014/07/05/stake/  
> **username_0**: Relevant: https://download.wpsoftware.net/bitcoin/pos.pdf  
> **username_0**: Relevant: https://lists.linuxfoundation.org/pipermail/bitcoin-dev/2021-May/thread.html#18895  

---

## 4 answers

### Answer by username_9 on 2014-06-04. Score: 17 | Accepted answer

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.

> **Comments:**
> **username_10**: But what would be the point of 'betting' on two blocks?  
> **username_11**: username_10: because if you bet only on one, and you bet wrong (the chain ended up not being the longest one), you lose your income.  
> **username_5**: But can’t it be trivially revealed that you voted for both, and then others in system would just stop listening to you, and therefore all the coins you staked would be frozen forever? One strike and you’re out.  

---

### Answer by username_1 on 2014-07-07. Score: 7

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.

> **Comments:**
> **username_2**: `despite having the third highest market capitalisation` Citation? [This website](http://coinmarketcap.com/) says that Bitcoin, Litecoin, and Dogecoin are all higher.  
> **username_3**: I ride without a helmet for the fifth year now without problems, therefore it is very safe and secure.  
> **username_4**: Cryptocurrencies like [Peercoin](https://peercoin.net/) solved this issue by mixing both PoW and PoS in a way that new coins could still be mined (by virtually anyone with the hardware) while the network keeps secured by "minters" at PoS whose also get rewarded by securing the network, receiving ~1%/year in minted coins. Inflation is prevented by **destroying** transaction fees (instead of giving them to miners).  
> **username_5**: Funny you say that username_3: https://www.forbes.com/sites/carltonreid/2018/10/21/i-do-not-wear-a-bicycle-helmet/amp/  
> **username_6**: "The founders have an interest in spending their wealth to support the coin."  Sounds a bit like trickle-down economics, no?  

---

### Answer by username_7 on 2017-08-09. Score: 0

the major one I can think of is the stakeholder with high stakes can have more easy execution whereas stakeholders with low stake will have to get less limelight to overcome this we have delegated proof of stake in which coin holders get to cast their vote and they may also call upon for network change parameters

For the offline stakes in the pos, they are highly vulnerable, to prevent them from attack we can have proof of checkpoint which ensures miner between blocks and matins scalability


---

### Answer by username_8 on 2017-02-28. Score: -2

There's an argument that certain properties of cryptocurrencies encourage hoarding, but I think this is wrong. If someone ends up rich through 'hoarding their coins, there is then an incentive to spend some of those coins, to buy a car,a house, go on holiday.
I think this has been levelled at POS coins too, that eventually, all the coins end up in a few hands of big holders.
But they are going to spend at least some of their wealth on a luxury lifestyle.
Probably, they will remain super wealthy, but, their wealth will always be being spent and that wealth passed on to others, eg the guy who built the Aston Martin he just bought.


---

