Now let me have all those latest juicy transaction fees that have arrived in the past few minutes! That would constitute a breakdown in the analogy of burning with proof-of-work hashing. A trillion proof-of-work hashes on a pre-reorg block are of no value on the post-reorg chain. And having decided to focus on one, a miner should incur a risk of lost expense if their choice turns out to be "the wrong one" in network consensus terms.
The above point makes it clear why the act of burning should be a decent interval earlier than the act of exhibiting proof. Two months may be overdoing it, but the protocol should require it to be sufficiently far back that there's no practical possibility of it being undone. There are in fact some further issues, to do with making sure it's not cheap for a miner to re-exhibit their proof of having performed a suitably substantial burn a suitably long time ago on multiple competing chains.
Details to follow. Now then! How much burning will actually happen, under this protocol? The answer is straightforward enough, though its implications are quite broad and in some ways surprising. Miners will burn bitcoins at an average rate very close to the average rate that ordinary users are sending them fees and any coin-minting still going on too of course , minus the miners' true real-resource costs i. This follows by the same sort of "approach to equilibrium" reasoning that tells us that miners will expend real resources on proof-of-work to roughly that extent - if they didn't, mining would be supra-normally profitable, and new entrants would be attracted into the trade.
If burning coins, rather than buying a lot of kit from a mining rig supplier, is the expense incurred by a miner to compete for the revenue stream, the same economic principles apply. Iain Stewart writes: In this subsection I give a provisional technical sketch of the operational details of the proof-of-burn protocol I've currently settled on. It can be summed up in the following pithy slogan:. What that slogan means will become clear as I go on.
Basically, proof-of-work is so elegant, in so many different ways, excepting its high real-resource cost, that I decided my attempt at an alternative to it, avoiding its real-resource cost, should mimic it as faithfully as possible in every other aspect. Well, only readers can judge whether I've succeeded! The key is to use a stream of true randomness - see below for where that comes from!
Now, obviously we don't want to "simulate" every actual hash! A "simulation" of proof-of-work at that level of detail would just be proof-of-work! So: first of all, what exactly is my "stream of true randomness"? Chop up time into units considerably shorter than the intended inter-block time, but with no need to go much finer than general network latency. Seconds will do, I think. For each second, t, we need a uniform random number between 0 and 1 assigned to it, RAND t.
This sounds as if we need some awful dependency on a fragile central source - some high-powered laser at NASA pouring out quantum noise every second, or something - with all the trust and failure issues that would imply. Fortunately, for simulating mining rigs, we don't need anything like that. All that matters is that, to someone "buying a simulated mining rig" burning some bitcoins, that is!
See introductory motivating section above. It's basically just a generous waiting period to make sure a burnt coin is truly definitely burnt, and won't have any chance of being "unburnt" in a chain reorg, by the time it comes into use in mining. And we don't mind if the stream is known a "short" time into the future - e. Such a lesser goal can, I believe, be achieved with just a few tens of bits of true randomness per week.
Quality is what matters, not quantity! I suggest tapping into the world's most highly-audited source of low-bit-rate true randomness: lotteries. These the big reputable ones anyway are already subject to elaborate inspection of the machinery that tosses the balls around and draws some of them out.
And the results are publicised so widely, in so many newspapers, TV channels, websites etc, as to make it impossible for anyone to lie about them. Roughly weekly, a config-file lottery-results. There is no hurry about this, it doesn't need to be exactly every week, or even the same lottery every time, it just needs several tens of bits of fresh lottery data added roughly weekly.
I believe there would be no trouble propagating this to all nodes, by out-of-band means if necessary. The format should be utterly simple and transparent, a 1-line plain text description of the results and the timestamp t in RAND t from which they are to be paid attention to, onwards. Like this:. Obviously the meta-level words "for use from Each line is added in a leisurely, unhurried fashion, at some time it doesn't matter when between the draw and the intended start-paying-attention-to-it date.
Some time between and , in the case of the example last line above. This gives plenty of time for people to add it themselves, from their favourite news source, and check by out-of-band means that they've added what everybody else has added, right down to spelling and punctuation. Which in practice probably means copying it from somewhere.
The point is, the "somewhere" doesn't need to be trusted - a lie, or an unexpected variation in format or spelling or punctuation, would be called out well within the leisurely timescale. RAND t is then HASH config-file [excluding any lines that are "for use from time later than t onwards" of course], plus t itself [in some standard format, e. Thus RAND t is a bit integer, which we regard conceptually as a real number between 0 and 1 by putting a binary point in front.
I'm aware that people on the forums are coming up with randomness protocols for proof-of-stake, proof-of-activity and the like which don't involve external true randomness like lotteries - they just hash the last hundred blocks' hashes together, or something like that.
I don't think this is good enough. However, if I'm wrong about this, and hashing the last hundred blocks is in fact fine, then good! We can drop the lottery rigmarole! Anyway, for the rest of this description, I'll simply assume that RAND t becomes available for all t, but remains unknown until a week or two before t, and in particular, RAND 2 months or more from now is "massively unknown" right now - unknown with many tens to hundreds of bits of unknowable future entropy.
That's all that matters for turning burnt coins into simulated mining rigs. Right then! What do we do with this RAND t stream? We simulate the capricious behaviour of a true proof-of-work mining rig! Now, what does it actually mean for your rig to perform h hashes during 1 second? It means you're producing h uniform random numbers between 0 and 1. That binary point again!
But you don't really care what they all are individually - how well you did during that 1 second is defined as "what was the lowest hash value you produced during that 1 second? This is then inspected for whether it beats [is lower than] the network's current target; or, perhaps, whether it beats the lesser [i. If it's good enough, that precious lowest hash is published to the network or mining pool , and the others are just thrown away not published. If it's not good enough, even the [not-so-]precious lowest hash isn't published - and certainly not the others.
So, in the simulation, we only need to produce, for each second, a simulated "lowest hash for that 1 second". The "others" don't have to exist at all! For reproducing statistically the pattern of hits and misses w. Two further subtleties. First of all, it turns out to be desirable to include the block number chain height 1 per block in the formula - just to keep the owners of simulated mining rigs "on their toes" and not be able to tell a week or so in advance when they'll be lucky.
This encourages them to run a continuous full node. Maybe that's not in fact that important. We should not include finer details of the block, to avoid "gaming" a la the hundred blocks business I mentioned earlier. Secondly, it turns out that to keep the burning process going forever, rather than a pulse of initial burning that no-one ever again wants to contribute further burning to, we should simulate one more property of real-world mining rigs: they break down!
That is, we should demurrage away the strength of a simulated mining rig. A plea to the reader: Don't be alarmed by the word "demurrage". This is burnt coins I'm talking about - they should be treated "harshly", in whatever style mimics real-world mining rigs to the required fidelity.
Ordinary unburnt coins are not being demurraged! We could demurrage each burnt coin in that style - it abruptly expires E years after its creation - but I think a smooth exponential demurrage is nicer, i. So there you have it! With this formula, life as a miner is spookily similar to the real proof-of-work case. You "buy a mining rig" - you burn coins, and that hits you in exactly the way sending off money to a chip supplier would have hit you, even though over the whole economy, no real resources have been expended - and you then hope that, by submitting lucky hashes to the network in the form of blocks, you can make more back in fees over time than you spent initially.
If you don't keep connected to the network, you won't know what transactions are eligible for including in your next would-be block, and your next lucky hash will run to waste. Meanwhile, other people are "buying mining rigs" burning coins too, either freshly or to make up for the "wearing out" of their existing ones; and the network is adjusting its target hash value [reciprocal difficulty] to regulate the rate all this mining effort is producing blocks at, to some preferred average rate.
All spookily normal, in other words! Now, I'm being a little bit disingenuous to say that everything is normal. We need protection against certain things use of a lucky hash on two or more competing chains; timestamp-falsification abuse which either do not exist at all under true proof-of-work - the former - or exist but with the consequences and mitigation strategy being different in detail - the latter. I believe I have a way of standing up to the various forms of malice we need to worry about of those kinds.
More to follow soon hopefully! The key insight is that verifiably, publicly burning some coins of a known-total-stock-issued currency is the same as "remurrage" opposite of "demurrage" - it may not be a correct word, but it's a nice back-formation on the remainder. By burning the currency, it provides proof as well as immutability.
However, by committing coins to the unspendable address, the miner has shown commitment to mine on the system and therefore is given lifetime privileges to mine on the system. The more coins that the miner burns the better the opportunity he will have to mine the next block. Although there are clear advantages of Proof to Burn over Proof of Work, there are also a number of advantages that it has over Proof of Stake. As an attacker would require significant time to obtain a large amount of coins they could easily be traced by the legitimate owner of the private.
Proof of Burn rewards long-term investments, by providing that miners are effectively trading short-term losses for long-term gains. It therefore encourages long-term involvement in the project, unlike other cryptocurrencies. In addition, because of the probability of profits, it is more likely that there will be a stable amount of nodes on the network, as there is incentive even when the price is low.
Proof of Burn is used by Slimcoin as part of its consensus algorithm and alternative mining method. The network allows participants with full Slimcoin nodes to earn coins by finding Proof of Burn blocks, which is determined by a score called Effective Burnt Coins, based on the amount of coins burnt by the node.
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Chancecoin is the first I've seen to use this way to generate their coins. The reason why we believe that this is a burn address and not a vanity address is that all but 6 characters seem to have been predetermined. The way you would find an address like this which you could send coins to is by running a loop. This address is very unlikely to have been generated with a private key, or if so, it would show a big weakness in bitcoin and many other security practices.
So we assume that the nobody has access to this private key. Proof-of-Burn addresses are pretty easy to generate. Assuming a cryptocurrency is derived from bitcoin, and uses the base58 protocol, one can generate an address that is obviously a burn address visually. The last part "VyY", is a Python Base58 and Base58Check implementation template and is the safeguard, and no private key was generated by the Base58Check. See Python Software Foundation. Sign up to join this community.
The best answers are voted up and rise to the top. What is Proof of Burn? Ask Question. Asked 6 years, 10 months ago. Active 4 years, 4 months ago. Viewed 3k times. Can someone explain me: What is Proof of Burn What is the difference between Proof of Burn and Proof of Work How Proof of burn works Which virtual currency uses Proof of burn technology instead of Proof of Work Can someone explain these things to me in a understandable manner? Improve this question.
Joe Pineda 2, 2 2 gold badges 15 15 silver badges 28 28 bronze badges. Since you want us to evaluate and explain an external resource for you, could you at least provide a link to it? Can someone explain me about this? What for? To "transfer" your crypto-wealth from one coin to another whilst forcing everyone to be honest.
The old coins are transferred to an address whence noone could use them, neither original owner nor creator of new coin. Add a comment. Active Oldest Votes. Improve this answer. Mark Mark 1, 8 8 silver badges 16 16 bronze badges.
This would be a bit safer than this "improbable" approach, however good it is. Jun 12 '14 at Lohoris, I have never heard of this. However, by committing coins to the unspendable address, the miner has shown commitment to mine on the system and therefore is given lifetime privileges to mine on the system. The more coins that the miner burns the better the opportunity he will have to mine the next block.
Although there are clear advantages of Proof to Burn over Proof of Work, there are also a number of advantages that it has over Proof of Stake. As an attacker would require significant time to obtain a large amount of coins they could easily be traced by the legitimate owner of the private. Proof of Burn rewards long-term investments, by providing that miners are effectively trading short-term losses for long-term gains. It therefore encourages long-term involvement in the project, unlike other cryptocurrencies.
In addition, because of the probability of profits, it is more likely that there will be a stable amount of nodes on the network, as there is incentive even when the price is low. Proof of Burn is used by Slimcoin as part of its consensus algorithm and alternative mining method. The network allows participants with full Slimcoin nodes to earn coins by finding Proof of Burn blocks, which is determined by a score called Effective Burnt Coins, based on the amount of coins burnt by the node.
Although an interesting alternative to proof of work, Proof of Work is still considered to be wasting resources — although in this instance it is a waste of coins rather than real-world energy.
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