While I think that PoS is a very nice concept, I don't like this proposal very much. First because I think it will be very difficult to change Namecoin's distribution mechanism in this way (also community-wise, not only technically). AFAIK this would be the first alt-coin that does such drastic changes to its fundamentals while already running. I don't really see a problem that would justify the necessity for such a invasive change. Why would you want to introduce PoS and demurrage at all?virtual_master wrote:By currencies generally demurrage is the cost associated with owning or holding a currency.
Specifically by Namecoin the this costs would be associated with the running network nodes which are consuming electricity, the miners are securing the network.
Demurage is the honest solution for what the inflation is the dishonest solution.
If implemented then the network tells to the people the demurrage costs.
I am aware that the idea is not so popular but keeping it very low could be beneficial.
It could be even 1% demurrage/year. But if you bind your coins you can get 1% interests. That would keep balance because not more then 50% of the owners will bind their coins.
So could be created a second layer of coin(and eventually Proof of Stack block) production like PPC uses but not inflationary, just financed from the demurrage.
The merged mining with Bitcoin layer would be kept and a second with Proof of Stack would be added. That would improve network security.
The unpopularity of demurrage would be compensated by the popularity of creating own coins with POS. I think the popularity effect it would have a positive ballance because people are thinking more what they can win than what they can loose.
Second, I really dislike introducing demurrage. Of course, if you want a system that incentivises spending, then demurrage is indeed more honest than inflation. But I just don't think anyone would ever accept demurrage for psychological reasons; after all, I don't think central banks use inflation instead without a good reason. Furthermore, why do you actually want to incentivise spending / binding coins? Namecoin isn't intended as a payment system, and certainly not as one that should drive up consumption and encourage economic growth. Namecoin is about buying names. Do you want people to squat even more names just because they lose their coins eventually anyway to demurrage?
Finally, my understanding of PoS in PPC, for instance, is that you still need either substantial holdings or substantial mining power also in order to mine a PoS block. So even though PoS inflation might technically counter demurrage, wouldn't it require people without such massive resources to either a) waste their (small) coin age and just accept demurrage without interest, or b) deposit their coins at a "bank" / "PoS pool" that uses the combined coin age to mine blocks and pay out interest to all depositors? This is entirely against the decentralisation philosophy; just look at inputs.io and tell me that you really want to incentivise people to store their coins at some kind of "bank" instead of holding the wallets themselves. (If it is possible to get PoS interests for coins somehow "bound" in a trust-free way, please clarify how you would want to do that!)