Your issue is noted, and thanks for bringing it up.

My code will be open sourced on GitHub, where presently sits a cloned Bitcoin repository . . .

https://github.com/StephenLReed/bitcoin

My plan is the keep this branch up-to-date with regard to released versions of the main branch.

My ideas about reward distribution change almost every day. For example today I am mulling simply allocating the block rewards, e.g. $500 million this year, to the super-peer pools, and let them compete for acquiring proof-of-stake shares from client full nodes.

With the exception of certain full nodes in the P2Pool, existing ASIC miners do not participate in the Bitcoin network. They provide shares of hashing power to their respective pools in return for daily payouts. My pitch for Bitcoin 1.0 would be to the pools who could retain a lot more of the $500 million passing through their hands each year. There are only 12 or so to persuade. There are about 7300 other full nodes that verify the blockchain and have the power to ban other full nodes who misbehave. Either a majority of existing full nodes must migrate to this project's version, or they must somehow be greatly outnumbered by new paid full nodes on the new version. Other powerful entities in the Bitcoin network include the exchanges and payment processors. Nearly all of these must be on board with the new version. I believe that they would be swayed primarily by popular opinion, and to a lesser extent by the possible zero-confirmation, and lower fee transactions, made possible by the single temporary mint.

I plan a friendly takeover of the blockchain in some possible future world, where I am effectively invited to do so by Bitcoin experts, media, and the public. There will be no doubt those who get spun out on the old blockchain with the old client. But I simply do not see how they could compete with this project.

I want the bitcoin experts to recognize this project as an unimplemented Bitcoin system. That requires passing a very strict test regarding the Satoshi Social Contract. A draft project whitepaper will formally specify how everything is to work. It will no doubt be revised many times, perhaps even after coding and testing reveal glaring errors on my part.

Yes, the question posed on the bitcoin-wizards irc channel was . . .

I need to work through the math of proof of stake consequences for blockchain forgery. I also have ideas for full nodes performing queries to several of the super-peers who in response give the current hash - similar to how SPV nodes trust the network, and which I now must study.

Misbehaving node problem

With a hub and spoke network architecture, what guarantees that information received by the endpoints has not been corrupted by an intermediary? Satoshi solved this problem with proof-of-work embedded into the blockchain which makes forgery difficult.

How does proof of stake prevent forgery?

Bitcoin Proof-of-stake Super Peer Network Diagram

Here is a proposed network diagram for how Bitcoin scales to accommodate all the world's financial transactions plus the numerous additional transactions expected from transaction-bots, e.g. the Internet of Things. One of the illustrated super-peers is the temporary mint that creates the new block on the blockchain that contains all the new transactions that efficiently flow inbound from wallets at the spoke endpoints. Transactions reach the mint in at most 3 hops. New blocks efficiently flow in the opposite direction, from the temporary mint super peer out to the full nodes that verify and replicate the blockchain.

Unlike the current Bitcoin network, all connections are SSL/TLS encrypted with X.509 authentication at both endpoints. X.509 certificate management has not yet been designed. Satoshi's network protocol does not need encryption to protect the contents, yet why let anyone even count transactions before they reach the public blockchain?

Note that I have not yet designed the procedure to re-join two such networks after a catastrophic separation - the split brain problem.

After-the-fact Distributed Consensus and Repair

I proposed the super-peer, round-robin mint, as a solution to the decentralized consensus problem. Thoughtful critics have questioned the central power of the temporary mint. My initial response was to use a weak analogy with the mining pool situation today in which miners judge which pool is most honest. I think that response satisfactorily covers mining rewards, but says nothing about the risk under my scheme that the temporary mint could misbehave constructing the new block - then what?

I am now revisiting distributed consensus using the notion of checkpoint. Immediately after the new block is created by the temporary mint, there is one chance for collective malfeasance detection and repair. In my scheme, there are 100 well-compensated super peers having at least a total of 8,000 compensated full nodes - the current number - as direct clients. I task each of these with validating the performance of the temporary mint in the 10 minutes before the mint responsibility gets passed along to the next super peer.

Correct block creation should be easy to verify. Only a single new block may be added to the blockchain. All the transactions in the new block have been circulated around the super peer ring. They are well interconnected, so none get lost. The audit trail provided by the temporary mint explains how its algorithm selected or did not select particular transactions. Likewise the audit trail, available for algorithmic inspection, lists the aggregate stake-shares submitted by the temporary mint for its direct client full-nodes, as well as the aggregate stake-shares submitted by each of the super peers. The distributed block reward portions to each super peer can be verified. I mean to ensure that every aspect of the temporary mint's behavior provides justification that is subject to algorithmic verification by thousands of peers.

As a first thought, I suppose that a quorum of super peers and their respective full-node clients verify the actions of the temporary mint. If a certain number of them invalidate the actions of the temporary mint, then the new block is reverted in the same manner as current full nodes deal with a wrong fork. The reverted transactions join the set of those awaiting incorporation into a new block, and the next temporary peer recreates the new block. The misbehaving peer is algorithmically penalized, to an extent not yet designed.

I dub this idea "after-the-fact distributed consensus and repair", provided that it has not already been invented by one of the bright minds around here.

Could you suggest some web pages, documents or discussion threads here that I should study?

I am starting here . . . What are checkpoints in bitcoin code? and a critque . . .
Bitcoin code has checkpoints, controlled by centralized small group of people.

[update]

OK, I read a few posts and instantly got it. The Bitcoin Core code has blockchain data information encoded into it as constants, to prevent the full node from processing purported forks from before a developer-consensus date where those developers believe that the blockchain is immutable. This the sort of software engineering pragmatism that skirts the edge of the Satoshi Social Contract and one can understand the idealistic debate around it.

That empty debate is a precedent for what I need to do. The social contract is about certain unchangeable aspects of Satoshi's design. I believe that checkpoints are a great example of how the social contract is maintained while bowing to practical software engineering realities.

I, for one, am not critiquing other proof-of-stake implementations. The defense of NXT and PPC is up to their respective supporters, which can happen here as we all can learn from the debate.

The super-peer network I've proposed together with a round-robin single mint, is very attractive from a software engineering point of view. Namely 2 hops from transaction origination to blockchain. Only one confirmation is required. No redundant work. No orphans, No forks. Highly scalable with a high performance backbone which is a good thing because transaction growth is 3.2x annually.

Questions are focused on the super peers and the sorts of things that can go wrong with them. Answering these questions is my focus at the moment.

Personal communication with andytoshi . . .


I will ponder your questions a bit. My solution necessitates centralization in order to avoid the distributed consensus problem.

I suppose that with a sufficient audit trail the other super peers and perhaps any validating full node can detect misbehavior after the fact. There is a degree of human trust in today's network. Miners trust pools to fairly deliver the corresponding rewards. Almost all the rewards are distributed in this manner. I argue that the algorithmic portion of the social contract already accommodates human trust. I make it no worse I think.

This delegation scheme is close I think to how the existing Bitcoin network actually creates coins. A mere dozen or so greatly centralized entities - the pools - create nearly all the coins.

I rely on people's judgement to select primary and backup pools because that works today. My reference pool implementation will publicly log, in a realtime manner, all the operation details for audit by anyone. Anyone can check the calculations of reward distribution and why-or-why-not particular new transactions were incorporated into the block.

The super peer network, and round robin single mint, are indeed centralized - but no more I argue than the current system.

Experts say that the distributed consensus problem prevents proof-of-stake from ever working. Rather than solve this problem that has stumped better minds than mine, I remove the distributed part. This stretches the Satoshi Social Contract but does not break it I argue, when compared to the pros and cons of the current system.

Here is how I think about the centralization scheme of this project. Could it defend itself against a particular adversarial legal jurisdiction? Yes, because the pools can be located anywhere in the world. If one pool is taken down or subjected to a DDoS attack, the super peer Chord ring automatically heals, and the disconnected full node clients automatically connect to the prearranged backup pool.

At this point I believe Satoshi's fears of government ban or reprisal are overblown, yet they are still possible. What is more likely to attack Bitcoin centralization are patent trolls emboldened by short sighted notions of software intellectual property protection and greedy for the large sums of money flowing now through the network. Suppose my code infringes on someone's patent claims. I am not afraid. Operators of pools and full-nodes have some degree of anonymity and can move around to avoid the trolls.

There is a need to continue the block reward schedule to preserve the Satoshi Social Contract. The value of bitcoin depends on our belief that what we bought into will not change, especially that it will not get worse. Getting rid of wasteful proof-of-work, which by trend grows to $5 billion sometime in 2015, is the main thing.

Satoshi created the notion of block rewards to motivate miners. In this project, the need for miners to provide wasted work is removed. The motivation to maintain the integrity of the network and blockchain is moved directly to pools who today create new blocks and to their client full nodes that validate and replicate the blockchain.

The Bitcoin network I propose in this project should be secured to financial enterprise class security and performance at a far lower expense than what the existing network is doing buying mining rigs that will certainly be junk in two years and for power.

But what to do with the surplus rewards? I say grant them because Satoshi created a  block reward schedule that this project is held to. I welcome your ideas on how to distribute the awards, in addition to ideas that I have.

The Bitcoin Proof-of-Stake project thread is https://bitcointalk.org/index.php?topic=584719.msg6397403#msg6397403 . A descriptive post there is . . . https://bitcointalk.org/index.php?topic=584719.msg6415632#msg6415632 .

Thanks for clarifying your point.

Thanks for an idea how to automate it. I was thinking that clients enroll with a pool, and possibly change to a different pool, manually using their judgement as is the case today with regard to miners and their pools. Perhaps this aspect of trustworthiness does not have to be defined algorithmically.

I believe you mean https://bitcointalk.org/index.php?topic=354573.msg3793765#msg3793765, which is the first thread I could find on the topic. I will study the whitepaper.

Thanks for the tip. I am open to all improvements.

Well, the first thought that comes to mind is to distribute the open source code, in the Java language, for operating a compliant pool. I would create a reference pool if I cannot sign on at least one existing Bitcoin mining pool. New pools would join the super-peer network In the same manner that Bitcoin Core clients connect to the existing network via a built-in set of IP addresses - I think,

Bitcoin pools, and altcoin pools today are advertised by their promoters, and joined by clients on the basis of human judgement. I would retain that working aspect of the status quo.

Somehow they form up and compete. To be fair, pools could have other pools as clients without losing the super-peer topology benefits.

The nodes are mining pools that, like today, advertise and solicit clients. The 100 is arbitrary. It is a simple a round number larger than the effective number of nodes that control bitcoin mining today. Slightly more decentralized than today. The idea is to have a high bandwidth Bitcoin network backbone to handle every one of the worlds financial transactions plus all the machine-to-machine transactions coming with the Internet-of-things.

Coin age as I describe it above is a to-myself transaction. If this is not what you mean, then please clarify.

A Bitcoin Super-Peer Network

Andytoshi, a participant in the bitcoin developers mail list advised me to solve the problem of distributed consensus. While thinking about this problem, advice given to me by others in this forum came to mind. I will attempt to solve Bitcoin proof-of-stake by solving a simpler and larger problem, revisiting the thoughts of Satoshi, in light of how Bitcoin has come to operate.

Satoshi quit commenting on this forum about the time that slush started the first mining pool. Satoshi's defining paper had no provision for pools,
 yet in the recent four-day period, a mere 68 public and private pools mined all the bitcoin . . ..



https://blockchain.info/pools?timespan=4days

. . . out of a total 7,650 full nodes, and 2.6 million online wallets reported by Blockchain.info and Coinbase.

https://getaddr.bitnodes.io/

Today's Bitcoin network is different than what Satoshi may have envisioned in his defining paper, but it works.

I believe that the Satoshi Social Contract, between developers and users, accommodates a variety of network topologies and responsibilities.

To overcome the problem of how to provide distributed consensus about which version of the blockchain is correct, I propose to build a blockchain that does not fork. The coin-creating responsibility is assigned to one agent, rotated round robin every 10 minutes among the 100 largest trustworthy such agents.



A super-peer network of 100 or less pools use Chord technology to form a robust ring. A mining-permit token is advanced around the ring every 10 minutes. The pool with the token creates the new block and via solicited proof-of-stake shares, distributes the block creation reward to its clients, and to the other super-peers in the ring in proportion to their reported proof-of-stake shares. The proof-of-stake shares are to-myself transactions with a 10 minute age, in which the transaction amount in bitcoin is input into the reward distribution algorithm executed by the super-peer. Proof-of-stake shares are thus analogous to proof-of-work shares submitted to a pool today by client hashers.

Here is a diagram of Chord ring topology. These are the closely connected super-peers - the 100 pools - of the proposed Bitcoin proof-of-stake network  . . .



I seek two sorts of critiques, (1) if this does not work then how could it be modified to work? (2) what are the likely attacks? I also want to be sure these ideas are clearly stated.

If the idea maybe could work then it has these advantages over the current Bitcoin network, beyond the efficiency argument of proof-of-stake vs. existing money-consuming proof-of-work . . .

• A single instance of bitcoind is deterministically chosen to create the new block - there are no redundant block creation attempts, no forked blockchains, no orphans and no waste.
• Internet bandwidth usage is greatly reduced in a topology where client blockchain validating and maintaining full-nodes communicate with a single pool, and potentially with a set of backup pools. High bandwidth and high availability channels between pools reflect the status quo with how Bitcoin works today.
• Human judgement of pool trustworthiness removes the need to algorithmically provide it - again this is the status quo.
• Because new transactions can reach a pool in one hop, and reach the pool creating the new block in one more hop, network latency is reduced, potentially allowing a reduction of confirmation times, and reducing the possibility of double-spend versus the current Bitcoin network.
• The reward distribution algorithm does not have to be strictly in proportion to the offered bitcoin stake, rather it could and should be distributed in part to the super peers in return for substantial bandwidth and data security costs that they incur. Full node operators should receive sufficient reward to accommodate their expenses validating and replicating the blockchain, whose transactions grow at 3.2x annually, far in excess of Moore's Law cost reductions. The remaining large portion of the block creation reward, I propose to distribute in a manner which disproportionately rewards smaller stake holders, and perhaps somehow those wallet-owners not running full-nodes. The manner of distribution should should somehow dispel "the rich get richer".

Your thoughts?