Redemocratizing Permissionless Cryptocurrencies
* Article: Proof-of-Personhood: Redemocratizing Permissionless Cryptocurrencies. By Maria Borge, Eleftherios Kokoris-Kogia et al. EPFL, 2018
Abstract
"Permissionless blockchain-based cryptocurrenciescommonly use proof-of-work (PoW) or proof-of-stake (PoS) toensure their security, e.g. to prevent double spending attacks.However, both approaches have disadvantages: PoW leads tomassive amounts of wasted electricity and re-centralization,whereas major stakeholders in PoS might be able to create amonopoly. In this work, we propose proof-of-personhood (PoP),a mechanism that binds physical entities to virtual identities ina way that enables accountability while preserving anonymity.Afterwards we introduce PoPCoin, a new cryptocurrency,whose consensus mechanism leverages PoP to eliminate the dis-advantages of PoW and PoS while ensuring security. PoPCoinleads to a continuously fair and democratic wealth creationprocess which paves the way for an experimental basic incomeinfrastructure."
Discussion
Maria Borge, Eleftherios Kokoris-Kogias et al.:
"One of the main distinguishing features among permissionless cryptocurrencies, such as Bitcoin, is the way they enable open participation in the consensus mechanism while ensuring resistance against Sybil attacks. Bitcoin and many of its offspring use proof-of-work (PoW) mecha-nisms to obtain the above properties and allow pseudony-mous, untrusted, external actors to securely extend theblockchain. However, PoW requires costly special-purpose hardware and consumes massive amounts of electricity. This has led to a re-centralization since only a few privileged entities who have access to the necessary resources are capable to mine, whereas regular users who can not afford such hardware and its maintenance are excluded. Consequently,the control over the entire system rests in the hands of a small number of elite users, for example as in Bitcoin; an undemocratic approach.
Proof-of-stake (PoS), where participants use their assets (coins) to create (mint) new assets, is another approach that promises similar properties as PoW but consumes far less energy. However, PoS is essentially nothing but a shareholder corporation where the rich again have an advantage as they possess more assets and thus are able to mint new coins faster than less-privileged participants. As a consequence, the (already) rich become even richer; again,an undemocratic approach." (https://www.scribd.com/document/341908428/Proof-of-Personhood-Redemocratizing-Permissionless-Cryptocurrencies?)