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Author Topic: Transparent mining, or What makes Nxt a 2nd generation currency  (Read 34843 times)
Come-from-Beyond
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December 09, 2013, 09:58:22 AM
 #1

Below u'll find a short description of Nxt mining system. The description is based on text written by BCNext, I paraphrase it in my own words to protect BCNext's real identity against text style analysis (as was agreed).

I want u to pay attention to a paper titled Decentralised Currencies Are Probably Impossible But Let’s At Least Make Them Efficient.

The author writes:
Quote
To match this to the notion of “decentralised” (i.e. lacking central authority), the consensus group must be, at least, all participants in the currency. This does not present any real problem when that group is known. For example, it would be possible to define the group as “all people currently in the United States”– where the currency would be something akin to the US Dollar. Assuming the majority decide to behave honestly (as seems likely, after all, that is what happens now), then they should have no difficulty in forming consensus on who has how much money at what time. However, the most general notion of decentralisation does not admit such re-strictions. After all, in some sense, placing any such restriction simply pushes the central authority back a layer: instead of controlling the currency, the authority controls membership of the consensus group. A system like this must allow any entity to participate, and to join and leave the scheme at will. And here lies the problem. If you can never know who is in the scheme (bear in mind that knowing who is in is also a consensus problem!), then you can never get agreement.

In Nxt this problem doesn't arise coz all participants (miners) r known. This is a side-effect of 100% proof-of-stake currency. So, let's move to the most interesting part...

As u may know, Bitcoin et al. can be attacked by an entity that possesses 51% of hashing power. 2 main scenarios r possible:
1. Part of the miners leave the "legit" branch of the blockchain and start mining their own branch.
2. Someone buys/produces mining equipment and starts mining secret branch.

The 2nd scenario can't be applied to Nxt, coz no NXTs exist outside the network. Let's look closer at the 1st scenario.

Yesterday the average base target was ~700%. This means that only 1/7 of all stakeholders were generating blocks, we can't say if the rest 6/7 were hit by bus or trying to fork Nxt blockchain. This is in the current Nxt implementation. BCNext is satisfied with the results shown during last 2 weeks and now is going to adjust the mining algo a little bit to make it transparent.

What does this transparency mean? It means that anyone can predict (with very high probability) who and when will generate next block(s). And this gives us superior advantages:
1. Transactions can be sent directly to the miner who will mine the next block (if he decides to reveal his location on the Internet), thus saving traffic and coming much closer to VISA/MasterCard processing volumes.
2. Blocks can be generated in advance and sent to most of the miners before they become valid (timestamp validation), thus greatly reducing rate of orphaned blocks.
3. Due to ability to predict timestamps of future blocks (rate of blocks) it becomes possible to set appropriate fees to assure quick confirmations for important transactions (without paying too much for inclusion into a block).

And the most important feature:
The network can detect which miners don't take part in block generation and act accordingly.

The last point deserves to be described with more details.

Imagine someone is going to do a "51%" attack against Nxt and he owns 90% of all coins. The adversary must stop generating blocks for legit branch coz he won't be able to compete against 100% mining power with his 90%. So he decides to "skip" his turn to generate a block. The rest 10% of the network detects this and penalizes the adversary by setting his mining power to 0 and distributing it among other miners. Now the network is back to 100% power coz everyone got 10-fold increase. The adversary can mine other branch in a secret place but it won't be able to replace the legit branch. Of course, the 2nd branch will have 100% "hashing" power tied to it as well, coz the attacker will get his 90% bumped to 100% but this can be counteracted by some mechanisms of advanced consensus (still not revealed).

As a 100% PoS currency Nxt is protected against a government wealthy entity that could buy/produce a lot of ASICs, with the transparent mining it's protected even against someone buying most of the coins.

So, what does make Nxt a really next-gen currency? Not those nice features like decentralized exchange, or decentralized DNS, or decentralized app store. The transparent mining algo does, and this is only the 1st part of BCNext's plan...



This is a short description. Ask questions that will help to make the description more clear.

PS: Cunicula, BCNext is waiting for ur approval on this.

Edit: BCNext pointed out that I forgot to mention Selfish Mining. Sorry. Transparent mining solves the selfish mining issue completely. Dixi.
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NxtChoice
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December 09, 2013, 10:29:33 AM
 #2


with the transparent mining it's protected even against someone buying most of the coins.


Will this affect the price?

How to define "most of the coins". Of course it shoud not be 51%, so how about 5%?
Come-from-Beyond
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December 09, 2013, 10:31:19 AM
 #3

I'm not sure I catch what the particular implications of that last part are. Is there a specific penalty for not mining?

Non-mining stakeholders get temporary penalty to their ability to mine.
abctc
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December 09, 2013, 10:31:42 AM
 #4

Interesting plan, but does it needed to be implemented right now? It seems that Hallmarks, introduced in the v.0.3.15, can secure the Nxt for a quite long time. And maybe right now decentralized exchange (first in history) is more important for Nxt to survive against an emerging competitors.

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, the Next platform.  Magis quam Moneta (More than a Coin)
Come-from-Beyond
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December 09, 2013, 10:33:06 AM
 #5


with the transparent mining it's protected even against someone buying most of the coins.


Will this affect the price?

How to define "most of the coins". Of course it shoud not be 51%, so how about 5%?


Dunno about the price.

Most of the coins is 90%+, maybe even 99%.
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December 09, 2013, 10:35:12 AM
 #6

Interesting plan, but does it needed to be implemented right now? It seems that Hallmarks, introduced in the v.0.3.15, can secure the Nxt for a quite long time. And maybe right now decentralized exchange (first in history) is more important for Nxt to survive against an emerging competitors.

BCNext decided to implement transparent mining step-by-step. This is more important than decentralized exchange, imo. It's like quality (mining) vs quantity (exchange).
NxtChoice
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December 09, 2013, 10:37:14 AM
 #7


with the transparent mining it's protected even against someone buying most of the coins.


Will this affect the price?

How to define "most of the coins". Of course it shoud not be 51%, so how about 5%?


Dunno about the price.

Most of the coins is 90%+, maybe even 99%.

yeah, so it is an absoultely secure network. However, I care about Nxt distribution right now. How will those 5% react?
Come-from-Beyond
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December 09, 2013, 10:38:27 AM
 #8

yeah, so it is an absoultely secure network. However, I care about Nxt distribution right now. How will those 5% react?

Which 5%?
NxtChoice
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December 09, 2013, 10:40:58 AM
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yeah, so it is an absoultely secure network. However, I care about Nxt distribution right now. How will those 5% react?

Which 5%?

Those who owns ~ 5% of the total coins.
bizz
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December 09, 2013, 10:53:20 AM
 #10

I'm not sure I catch what the particular implications of that last part are. Is there a specific penalty for not mining?

Non-mining stakeholders get temporary penalty to their ability to mine.

Brilliant. So this system would introduce something like what mining pools have against pool hopping?
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December 09, 2013, 11:04:39 AM
 #11

yeah, so it is an absoultely secure network. However, I care about Nxt distribution right now. How will those 5% react?

Which 5%?

Those who owns ~ 5% of the total coins.


If they miss their chance to mine a block they'll be penalized. Stakeholders r supposed to protect Nxt, not just sit and wait for 1 NXT = 1,000,000 USD day.

NB: The only penalty is inability to mine blocks within some period of time. They still can decide not to bother with mining, but their "hashing" power will be distributed to those who do protect the network.
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December 09, 2013, 11:06:52 AM
 #12

I'm not sure I catch what the particular implications of that last part are. Is there a specific penalty for not mining?

Non-mining stakeholders get temporary penalty to their ability to mine.

Brilliant. So this system would introduce something like what mining pools have against pool hopping?

Sorry, I'm not familiar with pool hopping.
bizz
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December 09, 2013, 11:33:08 AM
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I'm not sure I catch what the particular implications of that last part are. Is there a specific penalty for not mining?

Non-mining stakeholders get temporary penalty to their ability to mine.

Brilliant. So this system would introduce something like what mining pools have against pool hopping?

Sorry, I'm not familiar with pool hopping.

Pool-hopping is the practice of mining in a pool only during the good times, and leaving during the bad times; by so doing, a pool-hopper can get more out of the pool than the value he contributes to it, increasing his rewards at the expense of other miners.

PPLNS favors constant and/or occasional loyal pool members over pool hoppers.
http://pool-x.eu/aboutpplns

Although very different because this is POS and no new coins are created it is comparable?
Come-from-Beyond
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December 09, 2013, 11:35:16 AM
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Although very different because this is POS and no new coins are created it is comparable?

I think no.
NxtChoice
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December 09, 2013, 12:17:42 PM
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NB: The only penalty is inability to mine blocks within some period of time. They still can decide not to bother with mining, but their "hashing" power will be distributed to those who do protect the network.

Due to the redistribution of "hashing power", is there any chance for someone who holds less than 50% attack the network?

Say, 50% of the coins are "dead" (never mining), the max of which holds 27% of total coins. Now the other 50% coins are mining, and the max holding of which is 26% of the total coins, will this 26% ( more than 50% of the redistribution power) attack the network? Is the network monitoring the maximum "alive power"? Hmm, very interesting, the dynamic PoS mining power network!

NxtChoice
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December 09, 2013, 12:24:19 PM
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yeah, so it is an absoultely secure network. However, I care about Nxt distribution right now. How will those 5% react?

Which 5%?

Those who owns ~ 5% of the total coins.


If they miss their chance to mine a block they'll be penalized. Stakeholders r supposed to protect Nxt, not just sit and wait for 1 NXT = 1,000,000 USD day.


There is still some diligent stakeholders now mining and protecting the network, so they are always richer and richer. It is different from Peercoin, which is an open and maybe a little inflation system, and the rich and poor always get richer at the same rate. But Nxt is a closed and constant coin system. It the distribution problem can't handle properly, Nxt can't get mass adoption, which does hurt the stakeholders.

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December 09, 2013, 12:26:48 PM
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NB: The only penalty is inability to mine blocks within some period of time. They still can decide not to bother with mining, but their "hashing" power will be distributed to those who do protect the network.

Due to the redistribution of "hashing power", is there any chance for someone who holds less than 50% attack the network?

Say, 50% of the coins are "dead" (never mining), the max of which holds 27% of total coins. Now the other 50% coins are mining, and the max holding of which is 26% of the total coins, will this 26% ( more than 50% of the redistribution power) attack the network? Is the network monitoring the maximum "alive power"? Hmm, very interesting, the dynamic PoS mining power network!

Mm... I lost in ur numbers.
Come-from-Beyond
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December 09, 2013, 12:27:46 PM
 #18

It the distribution problem can't handle properly, Nxt can't get mass adoption, which does hurt the stakeholders.

So be it.
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December 09, 2013, 01:16:21 PM
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It the distribution problem can't handle properly, Nxt can't get mass adoption, which does hurt the stakeholders.

So be it.
Grin

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December 09, 2013, 03:11:55 PM
 #20

This is great! You guys are doing an amazing job

Looking forward to the future of this coin

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