AI Coin Development Diary

[rpietila]

• 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".

Why is there a need to inflate the number of currency units by giving them to existing holders?

(I know the question is fundamental but still warrants to be answered.)

[1714760938]

1714760938

[1714760938]

1714760938

[1714760938]

1714760938

[1714760938]

1714760938

[LeChatNoir]

As I said in the other thread, this delegation scheme is the least appealing way to do PoS due to its centralization and reliance on people rather than protocols.

You as a stakeholder are free to choose who trust and you are free to run a super peer so i don't think this kind of centralization is a problem.

[clout]

• 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".

Why is there a need to inflate the number of currency units by giving them to existing holders?

(I know the question is fundamental but still warrants to be answered.)

there isn't, that causes unecessary network bloat. instead you burn the transaction fees, which acts as an implicit dividend or increase of stake for all stakeholders.

[clout]

How does that help when the other 100 super nodes are controlling what blocks are formed.  This is not a distributed consensus that I'm satisfied with.

I think you misunderstand that consensus still comes from everyone on the network. The reason there are delegates is because specialization and centralization lead to greater efficiency as we can see given that block production goes from 10min with bitcoin mining (dpow) to 10-30sec with dpos. Think of it through the lens of more traditional governing structures. we could have a fully democratic government in the united states but that would be terribly inefficient since it would take way to long to collect the votes of all citizens on any given issue. not to mention not everyone knows enough or cares enough about each issue, so we would never be able to get 100% of ppl to vote any way. These are the problems that plague peercoin. as the dpos whitepaper elucidates:

Peercoin is a hybrid coin and is thus partial centralized by the proof of work. Like Bitcoin it also has mining pools. Compared to Bitcoin the Peercoin is certainly more decentralized; however, because proof of stake mining requires users to keep their computers on and wallets unlocked, only a small percentage of the shareholders participate in any kind of mining.

peercoin has the same centralization as bitcoin due to pow mining pools (dpow) and it has low participation rates in pos mining which causes it to be to inefficient to provide security/consensus to the network. this is the underlying reason for this hybrid model, proof of stake mining essentially constitutes a fully democratic governing structure that requires human participation. just as with any democracy the incentives are not there to have 100% participation. furthermore the incentives are even more skewed in this model because people can make disproportionately more with pow mining than with pow stake mining (i believe at the current rate inflation it is something like 9:1) .

the problem with the representative democracy is that we vote every four years so the representatives are not directly accountable to their constituents. of course if you want to get reelected then you will attempt to act in your constituents best interests, but there lies another problem in the fact that the representatives job is so complicated and misunderstood by people that they do not always know if a representative has fully acted in their best interests.

in delegated proof of stake you vote for your own representative (it is important to understand that this still use transactions as proof of stake - you cast your vote through transactions). if your representative is in the top 100 delegates that means that he is one of the top 100 most trusted nodes on the network. the delegates job is simple, he must produce blocks in a timely manner and include all valid transactions in those blocks. if a delegate does not do these things everyone on the network can easily detect that the representatives is not acting in everyones best interest. the client will automatically adjust your vote setting to another more trustworthy delegate. you do not necessarily have to vote ( make a transaction) to change the delegates status. assuming that this is a healthy network and there are several hundred transactions per block if the delegate does not do his job those transactions will automatically have down votes for this delegate so that he is effectively fired on the spot.

dpos puts together the best aspects of decentralization (collectivism) with the best aspects of centralization (specialization). decentralization for the purpose of decentralization is not a way to organize society or a network. the truth is that an organization is most decentralized when there are few if any barriers to access for all positions that govern it. competition decides whether or not someone holds a position. the delegates term in dpos is limited not by arbitrary term limits but by his own conduct and whether or not that conduct serves that better good.

[SlipperySlope]

• 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".

Why is there a need to inflate the number of currency units by giving them to existing holders?

(I know the question is fundamental but still warrants to be answered.)

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.

[SlipperySlope]

As I said in the other thread, this delegation scheme is the least appealing way to do PoS due to its centralization and reliance on people rather than protocols.

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.

[SlipperySlope]

Personal communication with andytoshi . . .

1. As mentioned on -wizards, how do you propose to select the peers?
    How do you propose who mints each block?

2. How do you determine who is "trustworthy"? You suggest human
    judgement is involved — but then how is consensus reached on the
    superpeer list?

3. What if somebody trustworthy mints two blocks and forks the chain?

4. What if peers do not mint a block when they are expected to?

5. What if peers drop off the network temporarily or permanently? How
    would you tell the difference?

My suspicion is that you need a distributed consensus to answer any of
those questions.

(Also, if you modify Bitcoin to require trust anywhere, it will not be
Bitcoin anymore.)

Oh, and some people on bitcointalk are talking about stake based on "proof
of transaction". This is a nonsense idea. Myself and Greg Maxwell figured
out how to completely destroy that system (if it was ever implemented..)
within 10 minutes of reading the whitepaper.

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.

[bybitcoin]

Exactly: the correct departure point to start from.
If peercoin or especially nxt PoS consensus model does lack certain necessary conditions, then please address them mathematically.
This way you'll arrive into a math problem for which you can see what obstacles you have to overcome and pass to solve the problem theoretically first of all. An engineering approach is not always the best one when attacking a problem of fundamental nature.

[r0ach]

A super-peer network of 100 or less pools use Chord technology to form a robust ring.

I believe using an approach like this in proof of stake sounds more feasible than in PoW.

You could implement a weighted, decentralized checkpoint system for PoS.  As per your example, the top 100 PoS wallets could be referenced for the checkpoint since we're relying on game theory to make any of this stuff work.  It doesn't seem like the majority of the top 100 peercoin/blackcoin/whatever wallets would be interested in destroying their investment.

I'm sure there's dozens of ways to weight checkpoint negotiation without using an arbitrary number like the top 100 wallets online as well.

[SlipperySlope]

Exactly: the correct departure point to start from.
If peercoin or especially nxt PoS consensus model does lack certain necessary conditions, then please address them mathematically.
This way you'll arrive into a math problem for which you can see what obstacles you have to overcome and pass to solve the problem theoretically first of all. An engineering approach is not always the best one when attacking a problem of fundamental nature.

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.

[SlipperySlope]

A super-peer network of 100 or less pools use Chord technology to form a robust ring.

I believe using an approach like this in proof of stake sounds more feasible than in PoW.

You could implement a weighted, decentralized checkpoint system for PoS.  As per your example, the top 100 PoS wallets could be referenced for the checkpoint since we're relying on game theory to make any of this stuff work.  It doesn't seem like the majority of the top 100 peercoin/blackcoin/whatever wallets would be interested in destroying their investment.

I'm sure there's dozens of ways to weight checkpoint negotiation without using an arbitrary number like the top 100 wallets online as well.

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.

[SlipperySlope]

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.

[jonald_fyookball]

I like the creativity. Keep exploring and combinations and possibilities.  Maybe you will hit on something good.

The checkpointing that is used in bitcoin, is I think, related to the math probabilities I alluded to earlier.  The PoW scheme is not guaranteed to avoid a split network but diminishes in probability the wider the network is.  This just a hypothesis.  Someone needs to write it out though, and this will illuminate and clarify the possibilities for PoS.

[gacrux]

Not directly related to your round-robin rotating single mint idea (which I still haven't fully wrapped my head around), but you may wish to add this to your reading list at the top of the thread:

http://blog.ethereum.org/2014/01/15/slasher-a-punitive-proof-of-stake-algorithm/

[SlipperySlope]

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.

[SlipperySlope]

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?

[jonald_fyookball]

Not sure I get the question?

Transactions cannot be forged because all transactions
are signed using private keys.

A node cannot change that.

PoW or PoS creates consensus at the block level
and every block must cryptographically mesh or link
to the one before it.

[SlipperySlope]

Not sure I get the question?

Transactions cannot be forged because all transactions
are signed using private keys.

A node cannot change that.

PoW or PoS creates consensus at the block level
and every block must cryptographically mesh or link
to the one before it.

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

how do I sync my node and be sure I actually came to a state of consensus the same as everyone else? in bitcoin the real work done makes figuring out the cost to an attacker of faking that consensus well-defined; I don't see how in your system there is any cost at all

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.

[benjyz]

If you are so interested in these kinds of things, you should study the problem first. You seem to overlook some basics of Bitcoin. The current stakeholders, i.e. ASIC owners, have no interest in giving up their money printing press. To make changes to Bitcoin you need the consensus of those who have mining power and developers ("community consensus"). That community consensus is very clear.  Bitcoin will never move to PoS.

[rpietila]

If you are so interested in these kinds of things, you should study the problem first. You seem to overlook some basics of Bitcoin. The current stakeholders, i.e. ASIC owners, have no interest in giving up their money printing press. To make changes to Bitcoin you need the consensus of those who have mining power and developers ("community consensus"). That community consensus is very clear.  Bitcoin will never move to PoS.

I am afraid you are mistaken. If the coin creation method is changed, the ASIC owners have nothing to say. Only the economic decision of the coin owners will matter. If after the fork everyone tries to dump the PoS coins, it proves they are worthless. If everyone tries to move to PoS selling their PoW coins, the previous version with ASICs is worthless.