PoS Boo introduction
We want to first of all tell you that most of the article is written in a way that makes it possible for anyone to get a vision of our PoS. We will, in future articles go into the fine details of our PoS. Like what problems we are solving or on what we are trying to upgrade as it already is an awesome feature and but isn’t perfect yet. We’ll also try to explain how everything exactly works instead of the analogies used here. We don’t know when we’ll release our next article about our PoS but the wait for a explanation can we a long one. We are releasing a different article about PoS before November ends but we think we’ll not have that much more in place than we currently do. We do hope this helps to clear things up about our PoS.
SHIELD is a coin designed to live a long life and will stay relevant until many other coins have failed and new ones are here again. While this can be understood in a very light and easy way it actually means that we’ll have to work hard to keep not only everything up to date but also that we have to be better than our competitors. This isn’t hard in every field but when it comes to the crypto world it takes a whole new meaning as there are as many innovators as normal users and people constantly expect updates to the blockchain. One of the things people want, or better people deserve, is a better solution to PoW. One solution is something we call PoS or Proof of Stake. Although the basics of PoS don’t seem that hard or it may even sound or look broken to some, we think that the system works better than PoW in certain ways.
How does PoW work?
PoW isn’t something new or something we have improved much on as we are focusing more on our PoS which will be out before the end of 2018. But Proof of Work is a system where someone gets coins for solving problems. To make the system a little better Satoshi figured out it would be a great idea to make it harder to solve the problems when there are more people trying to solve them (actually more computing power). This is called difficulty. He also decided, to combat inflation, to give a descending amount of coins when time goes on. With Bitcoin it’s done by halving the amount of blocks you get after certain blocks but there are some other coins that do it in a less abrupt way to keep the mining profitable. One problem with PoW is of course that if you have all the computing power, you don’t only get most of the coins, you also get to decided what the blockchain “looks like” as this is also a something that miners do, they “confirm” transactions and the blockchain that gets the most “votes” gets used. Well you see the problem is, get a little lucky and find the most blocks while having a lot of computing power and you could do malicious attacks to the chain. This isn’t easy to do and with big coins as bitcoin it really would be quite hard but if the government of a country like Russia or North Korea decided they wanted to cause chaos they could which would be a problem for any currency. Proof of Work also brings another problem as it costs a lot of power to maintain. Blockchains like Bitcoin or Ethereum cost millions of dollars a day to maintain and if they would like to grow even bigger it would get worse and worse. But as time moves on they find better and better solutions to the current scaling problems but still, the system needs improvement to get mainstream.
One of those solution is increasing the size of the blocks. SegWit does this for the bitcoin blockchain but also has some draw backs. Bitcoin had a few problems, high transaction fees and high confirmation times. Although by doubling the amount of transactions that fit into one block will help somethings and is indeed a improvement it just isn’t that great. Something like SegWit also wouldn’t work for SHIELD as we do not (yet at least) have to worry about long confirmation times and will probably never have to worry about high transaction fees. So what’s there to worry about? If we don’t need any more upgrades? Well it’s not that easy unfortunately. There could still be made some improvements to the project as with the current rate of things all of the coins will be mined before 2018 ends (a lot earlier!) It would just make mining less profitable and give more power to people who can sustain of little payments.
But what if people who have coins could vote on the blockchain/blocks they think are valid this could be solved as it doesn’t really matter how much computing power you have and we could make the payment a little closer for everyone. Like mining you would get coins if you “voted” on the blockchain with the most votes and you will have to pay a penalty if you voted wrongly. That could work as it makes 51% attacks a ton harder and fixes some other problems. Like the maintaining cost of the blockchain which would be greatly reduced by implementing Proof of Stake. You may think it would be possible to solve this problem with implementing PoS AND keeping PoW, which we will do, in the beginning at least. There are multiple reasons for not switching immediately and there are some more on why we do eventually want to make that full switch. First of all, in PoW, a block is valid if it is chained to the genesis block, and if the block hash meets the difficulty requirement for its chain. With our PoS you will have to have the current information in order to authenticate the blockchain. These two are so different from each other that it isn’t a great idea to keep a hybrid. Furthermore we think it’s bad to just abandon a whole section of your community in one or two updates to the coin. This is why we will* slowly but surely make PoW obsolete until we abandon it completely. This subjectivity has caused a lot of people a lot of concern, but it is necessary for security-deposit based proof-of-stake to be secure against the bribing attacker.
*We are not sure if we actually are going to do it this way, we’ll have to test certain routes before we know the way we think is the best. We can’t stress enough how important it is to be certain of your case when it comes to projects like this. There is a possibily that we’ll push out PoW in a short period of time but we really just don’t know yet.
Still haven’t explained PoS, let’s get into that.
These will just be the basics but will hopefully be enough to show people a little how our PoS will work. More information can be found in our whitepaper which will be released soon.
What does PoS actually do? Well PoS gives you coins for having coins, like interest on a bank. As you know banks invest the money you have on them and it would be weird for a cryptocurrency to do the same. So why are we giving people money for not spending it? PoS itself is a really broad concept as you can build on it and think of variations from the first few versions, but what you’re doing in every version is basically voting on the valid blockchain. If you’re right, you get coins and if you’re wrong you lose coins. There are a million ways to make this system fair and that is what we’re planning to do. We have already been thinking about the system a lot and how we are going to make it fair but we’ll give you some numbers and concepts.
We think the inflation of the coin doesn’t have to be that intense. We are thinking about a non-linear stake reward but are not sure yet how we’ll do this. But the difference between the stake of whales and others won’t be huge as this would lead to an advantage for whales. There will be a maximum amount of interest you are able to get. We haven’t yet decided what this maximum percentage will be but we’ll provide further number in our whitepaper. We are also thinking about a penalty system for malicious nodes. The penalty shouldn’t be as big either as we don’t want to punish people for accidentally doing something wrong. We will have a system in place that deals with these malicious nodes but we are still working on some an optimal solution. We have to take in consideration that in some third world countries salaries are a lot lower in USD and for them penalties could get to a point where they’d be in trouble which we don’t want to have happen. Although we do want to offer the coin to everyone and do know that making mistakes can happen to anyone we do want to make sure 51% attacks are as close as to impossible as we can. That’s why we’re also contemplating about a system that reduces the penalty you get over time. We’re still thinking about an optimal way to do this. We’re still working on further details and will have to test extensively as we want it to be fair for everyone.
So why is it going to take is so long to implement? Well as we have already said, there are many ways to make a fair system but even more ways to create a unfair one. And we absolutely don’t want to do that because that could almost instantly kill our project. We will be trying to create a version of PoS that doesn’t make mining obsolete but that still actually rewards you for helping us. We have to try value’s that you lose when voting wrongly and calculate gains when voting correctly which can be tricky as we don’t want people to get to many coins as this will create an insane inflation but we also don’t want to undervalue them as that would go against the point. This all creates some variables we have to keep in mind and may make it so we will be working on it for a while, but we promise you the wait will be worth it!
More Medium posts will be coming out shortly explaining our different Projects. Tomorrow we’ll release an article about Project Billfold that will explain our wallet situation in more depth.
Talk with us on our Twitter, ANN or Discord where we would like to answer all of your questions.