This article was originally published on The Daily Chain, 4th December 2020.
“Proof-of-Stake will likely become the most adopted consensus technology of the blockchain industry.”
Sunny King, December 2020
Following the recent article, “Peercoin: The First Proof of Stake Cryptocurrency”, The Daily Chain spoke with Sunny King.
The anonymous developer is a legend in the cryptocurrency space, and his contributions have changed the course of its history.
Sunny co-created the Proof of Stake consensus mechanism, founded Peercoin in 2012, Primecoin in 2013 (the first research coin with a useful PoW), and V Systems in 2017. He contributes to all three in greater or lesser part.
This conversation focuses on Proof of Stake and Peercoin, although other projects are also mentioned.
Sunny King hasn’t done many interviews. Certainly one of the most memorable was in 2019, on stage behind a translucent screen with CoinMarketCap founder Brandon Chez.
Photos unavailable, we attach as artwork Sunny King’s avatar (with a white Peercoin logo), which he admitted to us he’d “thought was some random anime, but was actually related to the famous classic chinese novel “Outlaws of the Marsh.”“
The Daily Chain thanks Sunny King for taking time out of his busy schedule to answer some questions. Sunny’s replies are italicized, and our questions in bold.
What’s the problem with Proof of Work?
PoW is a very successful consensus system. Its main advantage is extremely high degree of decentralization. In theory, for the top PoW network with the most energy consumption, the node software may leave out the genesis block and open up the entire history of blockchain to the possibility of reorganization. But in practice, this advantage may be purely theoretic as I have not seen any network doing it that way, Bitcoin included.
However, one shortcoming is also quite obvious, in that it consumes a vast quantity of energy to achieve the consensus. From economics point of view, such high cost of maintaining a monetary system or consensus in general, can certainly be a burden on the entire economy, especially in the face of competition from technologies like PoS Consensus with much lower cost.
But there are less obvious shortcomings too. For example, weaker defense to 51% attacks, especially for the networks with lesser scale of energy consumption. Often times these smaller networks are dismissed as insecure.
This is actually a horizontal scaling problem for the blockchain technology. Why can’t we securely run millions if not more blockchains but must be subjugate ourselves to the top few massive energy black holes?
How did you and Scott Nadal come up with the idea of Proof of Stake?
We started a study group on Bitcoin in the second half of 2011. The idea was to get rid of this undesirable energy consumption requirement, and yet still be able to reach consensus. Peercoin indeed achieved this goal. Peercoin’s consensus algorithm is purely proof-of-stake consensus. Proof-of-work is used to distribute coins, not for consensus.
Who thought of the term staking?
I likely had started using such terms in 2011. It’s actually quite a natural term, proof-of-stake. So in Peercoin we added another special transaction called coinstake in addition to Bitcoin’s coinbase transaction.
When I started preparing the paper maybe a couple of months before Peercoin’s release in 2012 (then known as PPCoin), I did some research and found out that people in bitcointalk had also discussed such terms.
Proof-of-stake is kinda similar to voting with shares in a company. The term itself is not special. The difference in thinking between the bitcointalk group and us was that they treated it as simply a voting mechanism complementing Bitcoin, whereas I wanted to investigate proof-of-stake as the consensus. The real breakthrough in Peercoin was the realization that coin can support a consensus systems all by itself without any need for energy consumption.
Why did you reduce your responsibilities at Peercoin?
Peercoin has had good community base and talents. I am still an active and important member within Peercoin community. On the other hand, I also decided to give other talented people an opportunity to lead Peercoin while I can spend a bit more energy to lead Primecoin, which was another design of mine published in 2013.
2013 was a fruitful year for me. I completed Peercoin’s proof-of-stake consensus with Peercoin 0.3 release and then designed and implemented Primecoin’s unique proof-of-work consensus based on prime numbers.
Do you find it ironic so many coins use Proof of Stake and its variants, but few people know about Peercoin?
Peercoin’s community was largely a technical minded group who did not care about marketing at all at the time. But regardless its contribution to blockchain technology is likely set in stone now.
Could you talk about the evolution of PoS, the variants you liked and those you may not have?
Proof-of-stake is another solution to Sybil attack, where it’s known to be cheap to fake identities on the Internet. So the first principles are that we don’t try to make guesswork which identity is real which is fake. Just show us the coins.
A system that tries to reach consensus with the assistance of proof-of-stake, without the need for energy consumption, should be classified as a proof-of-stake consensus. V Systems’ SPoS consensus is another example, where proof-of-stake is used for minter election.
Example designs that I would be critical of is hybrid consensus involving both PoS and PoW, such designs still don’t quite get why PoS consensus is an important alternative to PoW consensus.
You’ve said Nothing At Stake isn’t a problem in practice. Others, like Ethereum, use punishments to keep validators in-check. What’s your opinion on this?
I still maintain the same opinion. Some designers in crypto community insist on over-designing stuff. The engineer in me doesn’t quite enjoy over-designing unnecessary features or protocols.
What are the disadvantages of Proof of Stake, and is it still in its infancy?
It’s in theory very slightly less decentralized than PoW. But given its significant advantages including energy savings, lower cost, higher security and much better horizontal scalability, I think PoS sooner or later will gain wider adoption than PoW.
Ethereum 2.0 launched this month. What does this mean to PoS, and to you personally?
It’s good that Vitalik still stays true to his beliefs in PoS since 2013. It means another step forward for the adoption of PoS, given the mainstream status of Ethereum.
Do you think cryptocurrencies would have still been considered stores of value if people hadn’t spent millions of dollars mining them?
Store-of-value is heavily designed into Bitcoin’s inflation model. It’s meant to reach inflation levels lower than gold, with a supply cap even. Gold does not have supply cap. Mining cost is a shared burden on the economy, I think they are separate.
Where does Peercoin go from here, and what does the future of PoS look like?
Peercoin shall continue to showcase itself as a true competition and alternative to Bitcoin technology, whereas PoS will likely become the most adopted consensus technology of the blockchain industry.
