More Bitshares Greed

[StanLarimer]

Because of the increased interest, Bytemaster added this article to his blog overnight.

http://bytemaster.bitshares.org/article/2015/01/07/The-Most-Decentralized-Proof-of-Stake-System/

It describes how he used POS as a starting point and worked to address some of its remaining shortcomings.  Isn't this what innovators are supposed to do?  We all stand on the shoulders of giants.

Hopefully it will help men and women of good will to focus on the merits
(and help us improve it over time.)

Remember

Bytemaster started with a POW clone 18 months ago and moved to POS and then on to TPOS and ultimately DPOS.  So technology marches on with this one.  He is not afraid to incorporate valid innovations when discovered so if you have a solid case for something he missed, bring it on! 

[1714006834]

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[1714006834]

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[1714006834]

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[1714006834]

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[achimsmile]

Because of the increased interest, Bytemaster added this article to his blog overnight.

http://bytemaster.bitshares.org/article/2015/01/07/The-Most-Decentralized-Proof-of-Stake-System/

It describes how he used POS as a starting point and worked to address some of its remaining shortcomings.  Isn't this what innovators are supposed to do?  We all stand on the shoulders of giants.

Hopefully it will help men and women of good will to focus on the merits
(and help us improve it over time.)

Remember

Bytemaster started with a POW clone 18 months ago and moved to POS and then on to TPOS and ultimately DPOS.  So technology marches on with this one.  He is not afraid to incorporate valid innovations when discovered so if you have a solid case for something he missed, bring it on! 

Bytemaster seems to assume that everyone shuts down their node if it's not profitable. I don't observe that in reality.

[Daedelus]

What if everyone playing Skyrim was also running a node? Negligible cost and no reason for objection, especially if Nxt provided something in return.

If only there was a way of providing Skyrim players a better gaming experience while at the same time bolting a Nxt node on...



  

[substitute Skyrim for any online multiplayer game, if you choose]

[StanLarimer]

Let's focus on achieving the original ideology of Bitcoin.  Arguing about the merits of the technology is good but shouldn't result in a destructive food fight.  As I answered DE's concern about preserving Bitcoin's ideology in another thread this way:

Actually, returning to the original ideology of Bitcoin was the theme of Bytemaster's keynote address at the Las Vegas Inside Bitcoin conference:

https://www.youtube.com/watch?v=U44MujtVj00

His point is that most of us share the ideology of Bitcoin and are working to upgrade it for the long term success of the ideology, not the technology du jour.  No other industry's technology stands still these days, why should Bitcoin be stuck with its initial implementation forever?  A lot of technology has gone into aerospace since the Wright Brothers first flight. Should we still be using wing warping and pusher propellers?

Anyway, BitShares seeks to grow the Bitcoin ecosystem by providing a decentralized exchange to avoid what happened at Mt Gox and BitStamp.  The two can co-exist, and together with other serious block chains work to forge a solution to the real competitor: today's corrupt global financial system.

Guys, it's all open source.  

The best ideas will emerge and recombine until the Bitcoin ideology wins out over those who hold our freedom hostage today.

Why fight over scraps?  
The world is ours for the taking!  

[DecentralizeEconomics]

Here I will clean up a few remaining issues extracted from your post above.  (I've labeled them for reference.)

ISSUE 4. Bitshares(TM) is a corporation based in the United States dealing, as you say, in "products" such as "currency and commodity derivatives" and "trading services".  From your explanation it seems that Bitshares is a trademarked "COMPANY, NOT A CURRENCY" selling "shares" that attempts to pass itself off as a currency to avoid US security regulations.

ISSUE 4.  BitShares is not trademarked and is not a corporate creation of any government.  It is a free-space blockchain just like Bitcoin with zero footprint in fiat space.  References to it being like a company are metaphorical to help people constrained by the Bitcoin currency metaphor to break free from that perspective and see that other uses of blockchain technology are possible.

ISSUE 4 Your website says different.





Bitshares' Logo Trademarked on BitsharesWiki


What's the deal Stan?  Is Bitshares trademarked or not?  If it is not trademarked why on all your logos are you using the TM mark?  The only reason you would be using TM while not "trademarked" is that you are applying for a trademark on the name.  If you are currently in the application process for trademarking Bitshares and it is your intention to do so, don't you think claiming Bitshares isn't trademarked is misleading?

Sounds like you're being disingenuous.

[StanLarimer]

Good catch!

Those logos were made by one member of BitShare's decentralized community while another one was attempting to get the trademark approved.  The US government authorities declined to issue a trademark because, in their profound wisdom, the name was "too descriptive".

Apparently they thought it described a company that was in the business "sharing bits".  (I'm not making this up.)  No amount of reasoning by the BitShares lawyers could dynamite them out of that highly insightful position.

So, we need to circle back around and encourage all the independent decentralized users of the BitShares logo to properly reflect the current status.

A bit like herding cats, but that's the price we pay for total decentralization.  Nobody can order anybody to do anything.

Gotta love it!

[DecentralizeEconomics]

Let's focus on achieving the original ideology of Bitcoin.  Arguing about the merits of the technology is good but shouldn't result in a destructive food fight.  As I answered DE's concern about preserving Bitcoin's ideology in another thread this way:

Actually, returning to the original ideology of Bitcoin was the theme of Bytemaster's keynote address at the Las Vegas Inside Bitcoin conference:

https://www.youtube.com/watch?v=U44MujtVj00

His point is that most of us share the ideology of Bitcoin and are working to upgrade it for the long term success of the ideology, not the technology du jour.  No other industry's technology stands still these days, why should Bitcoin be stuck with its initial implementation forever?  A lot of technology has gone into aerospace since the Wright Brothers first flight. Should we still be using wing warping and pusher propellers?

Anyway, BitShares seeks to grow the Bitcoin ecosystem by providing a decentralized exchange to avoid what happened at Mt Gox and BitStamp.  The two can co-exist, and together with other serious block chains work to forge a solution to the real competitor: today's corrupt global financial system.

Guys, it's all open source.  

The best ideas will emerge and recombine until the Bitcoin ideology wins out over those who hold our freedom hostage today.

Why fight over scraps?  
The world is ours for the taking!  

You are NOT preserving the original ideology of the movement.  You are unnecessarily centralizing nodes I suspect for your own gain.  Are you charging ~$1100 just to become a delegate.  If this is payment in arrears, it does nothing to prevent an individual from applying for multiple delegate positions.  If it is an upfront cost, you are disenfranchising stakeholders who don't have the means to pay your tax to forge on their own.  ALL INDIVIDUALS IN A POS OR DECENTRALIZED SYSTEM HAVE THE INALIENABLE RIGHT TO SECURE THEIR INVESTMENT FOR THEMSELVES.

Your son's article is factually inaccurate.

NXT didn't "recently" add leased forging.  It has been a feature for around eight months.

DPoS is a solution in search of a problem.  1000 TPS per second on any crypto network is extremely far off.  When we do finally reach it, hardware costs necessary to support such a network will be even cheaper than they are now.  A 64Mbps synchronous connection is nothing.  Most people in the developed world have extremely fast internet connections.  If transactions are broadcast to the next forger instead of all the potential forgers (implemented in NXT Transparent Forging) this cuts down on the bandwidth required.  Signing transactions doesn't take that much processing power.  It is arguable that reducing Bitshares' forgers to 101 puts more strain on those 101 nodes and results in decreased fault tolerance of the network.  If any chain starts accumulating 2TB of data per week, blockchain shrinking measures will be implemented.  This whole article is simply a rehash of Bytemasters' argument from months ago except he included more ridiculous examples.

He fails to take into account that businesses who use the payment network will be running hardware 24/7/365 anyway.  In addition many home users run their computers constantly and running a node is no additional cost to them.  Let's assume a home user runs his laptop 24/7/365.  A laptop consumes 35W * 24hrs * 365days / 1000 kW * $0.10 kWh = $30.66 a year.  They would be paying this anyway.  He doesn't take into account that running a node has a lot more benefits than simply collecting transaction fees.

He claims Bitshares has "the ability to leverage millions of users" to secure the network.  Let's not forget this is done through voting.  Voting has a history of being susceptible to manipulation.  Look at GHash.io.  How long did miners keep GHash.io at 51%?  They voted to keep their miners directed at that pool.  You are forcing people to centralize into pools that can't be verified to be independent.  It is my assumption that you are pursuing this route because you plan on monopolizing the delegates in the system for your own gain.

[DecentralizeEconomics]

Good catch!

Those logos were made by one member of BitShare's decentralized community while another one was attempting to get the trademark approved.  The US government authorities declined to issue a trademark because, in their profound wisdom, the name was "too descriptive".

Apparently they thought it described a company that was in the business "sharing bits".  (I'm not making this up.)  No amount of reasoning by the BitShares lawyers could dynamite them out of that highly insightful position.

So, we need to circle back around and encourage all the independent decentralized users of the BitShares logo to properly reflect the current status.

A bit like herding cats, but that's the price we pay for total decentralization.  Nobody can order anybody to do anything.

Gotta love it!

So, let me get this straight.  You tried to trademark it and would have, if you could have convinced the USPTO, but since they denied your application, you come on here and attempt to prove your "decentralization" by advocating the fact that you're not "trademarked" when in fact you attempted to do so.  Yeah, that sounds TOTALLY above board.  Hahaha

You might want to get around to changing those logos "Mr. Decentralization", it's been over THREE months since your application was rejected.  I'd hate for people to get the idea that you're a company.

Of course.  BitShares is a company!  If the owning stakeholders think that will make them more profitable and grow faster, why can't a company decide to do that?  

In the short term, while shares are worth pennies

Remember, BitShares is a company, not a currency.  It is a unmanned, decentralized company that produces and trades interest-paying "smart currencies" as its product.  So judge it by whether it is a good idea and implementation for a company, not a currency.  Then you can get past all the accepted rules that (may or may not) apply to future currencies and see clearly what the investment opportunity truly is here.

[StanLarimer]

So, let me get this straight.  You tried to trademark it and would have, if you could have convinced the USPTO, but since they denied your application, you come on here and attempt to prove your "decentralization" by advocating the fact that you're not "trademarked" when in fact you attempted to do so.  Yeah, that sounds TOTALLY above board.  Hahaha

You might want to get around to changing those logos "Mr. Decentralization", it's been over THREE months since your application was rejected.  I'd hate for people to get the idea that you're a company.
...

Remember, BitShares is a company, not a currency.  It is a unmanned, decentralized company that produces and trades interest-paying "smart currencies" as its product.  So judge it by whether it is a good idea and implementation for a company, not a currency.  Then you can get past all the accepted rules that (may or may not) apply to future currencies and see clearly what the investment opportunity truly is here.

The trademark symbol is not an indication that you are a company, it protects a brand to avoid consumer confusion.  One of our biggest independent supporters thought it would be good to protect the name for that reason and paid  for the trademark application.  He is an independent agent and can do what he pleases.  We appreciated his efforts.  

You can put ™ on anything; it simply means that you consider it to be a trademark for your product or service. The registered trademark bug ® is used to indicate that your trademark is registered with the government, which gives you a wider range of statutory remedies in case of infringement. You only use the registered bug if you've actually registered the trademark formally, but you can use ™ freely.

The BitShares graphic was developed by another graphic's artist.  All of the web sites and forums and blogs, etc. are run by separate independent parties in the decentralized BitShares ecosystem.  They will all make their own independent decisions.  I recommend they continue to use TM for the above reasons.

I assume no responsibility for their actions, I merely try to communicate the BitShares vision and help out wherever I can as, once again, an independent contributor compensated by the token owners of the blockchain to run around making myself useful as best I can.

The business about whether BitShares is a company or currency is a pedagogical metaphor selection issue which was asked and answered multiple places in this very thread, for example, https://bitcointalk.org/index.php?topic=913075.msg10059744#msg10059744

The best answer to this question was given by Bytemaster himself in his article What is BitShares? where he used TEN different nested metaphors to describe it.  It is eye-opening in its scope.

[Come-from-Beyond]

Today I saw http://bytemaster.bitshares.org/article/2015/01/13/Decentralization-of-Nxt-vs-BitShares/ and became interested by the title enough to spend some time on reading. The article is related to http://bytemaster.bitshares.org/article/2015/01/07/The-Most-Decentralized-Proof-of-Stake-System/ and the both analyze the same phenomenon (decentralization), so I will treat them as a single article.

I'd like to comment some things mentioned in the articles.

Today the numbers are in for Nxt with data from their very own block explorer. These numbers show that 60% of all blocks are produced by just 15 people.

I believe "people" means "accounts", we don't know how many people behind these accounts. There can be only 4 of them, or 400 (yes, one of the accounts can be controlled by a company which has its own hierarchy).

...I found enough block producers that were above 1% and less than 2% that I can safely conclude that after 720 blocks less than 101 unique block signers have confirmed the block.

I see a reference to the 101 delegates. I'd like to point that 101 is not a big number, someone could successfully control 10 such delegates or 20 delegates could collude. I can safely bet that the 101 delegates distribution follows Pareto's Principle that states that "80 delegates are controlled by 20 entities" (numbers may vary). The point of "101 is not a big number" is that order of magnitude of this number (let's write it as 99 + 2) is roughly the same as deviation caused by external factors. When a measured value has the same order of magnitude as errors of measurement scientists trash such measurements. The comparison of number of forgers and number of delegates in a 720-block window doesn't make sense to me because of this very reason.

What is even more interesting is the overall speed of the network. The Nxt blockchain aims for 1 minute blocks, but on average gets only one block every two minutes. You can see this on their blocks-per-day chart.

It's a long story why we have 2-minute blocks now, it doesn't influence distribution of forgers among forged blocks though and should be discarded.

Our delegates are far more reliable with near 100% participation compared to Nxt forgers at about 50% participation.

A number would be much better. One could argue that it's not "far more" but rather "a little bit more".

For Nxt to have a block confirmed by 101 unique individuals would require 7 hours best case.

This is an incorrect statement. Block generation and block confirmation are different things. All nodes confirm every single block indirectly by agreeing to propagate it over the network. All merchants confirm every single block indirectly by accepting money sent to them recently. All users confirm every single block indirectly by including the reference to a block generated 20 minutes back in their transactions.

If BitShares were to lose 50% of its delegates all at once due to a government crackdown the remaining 50 delegates would still be producing a more secure, decentralized, and distributed ledger with greater decentralization per minute than every other blockchain on the market.

I see a violation of CAP theorem there (if BitShares are decentralized). How do you know that a blockchain generated by remaining 50 delegates is legit while a blockchain generated by other 50 delegates is not?

For the sake of this article, I am going to define decentralization as the total number of unique individuals participating in the validation process such that no one individual is responsible for a disproportionate amount of blocks.

You have the right to define decentralization in such the way, but practical usefulness of this definition is quite low. It assumes that all individuals are equal in their power and their intentions to save the current state of things. One person who is able to protect blockchain against a reorg is more valuable than 100 others who are unable to do it.

If you want to have a million users participate in the consensus process then you will require a million computers all connected to the internet and consuming bandwidth.

No, we will not. Imagine that one of the nodes is a computer controlled by 1000 people (a company). In Nxt users without computers take part in the consensus too, via Economic Clustering (though it's almost not used now).

Each additional validator provides less and less value to the network despite costing the network the same.

It's true only for a system with a bad architecture. O(N) should be replaced by O(log N). I'm almost sure that Bitcoin, BitShares and Nxt networks are all follow O(log N) because nodes send packets to a fixed number of peers.

To cover operating expenses a crypto currency network must charge transaction fees.

Why? If usage of a cryptocurrency network generates extra profit itself then fees can be as small as it's enough for fighting spam. Hashcash could be used to remove fees completely.

These early proof of stake systems claim that they have greater decentralization than BitShares.

These systems can claim nothing. Only some of their users can.


I skipped the rest of the article because there are already so much disagreements that the rest of the math from the article is worthless.


PS: It would be great to see comments on comments...

[Daedelus]

These early proof of stake systems claim that they have greater decentralization than BitShares.

Nobody has claimed this. Any claims have centred around "Bitshares can't be called decentralized". These are two different things.

[lucky88888]

bytemaster.bitshares.org/article/2015/01/13/Decentralization-of-Nxt-vs-BitShares/

unbelievably biased comparison!

i like how the way ethereum does this sort of things, much more mature and professional.

[testz]

bytemaster.bitshares.org/article/2015/01/13/Decentralization-of-Nxt-vs-BitShares/

unbelievably biased comparison!

i like how the way ethereum does this sort of things, much more mature and professional.

Please share the links with us.

[Daedelus]

bytemaster.bitshares.org/article/2015/01/13/Decentralization-of-Nxt-vs-BitShares/

unbelievably biased comparison!

i like how the way ethereum does this sort of things, much more mature and professional.

Please share the links with us.

He means Vitalik allows comments where claims can be questioned and discussed. Choose any of Vitaliks blogposts.

[StanLarimer]

bytemaster.bitshares.org/article/2015/01/13/Decentralization-of-Nxt-vs-BitShares/

unbelievably biased comparison!

i like how the way ethereum does this sort of things, much more mature and professional.

Please share the links with us.

He means Vitalik allows comments where claims can be questioned and discussed. Choose any of Vitaliks blogposts.

For administrative reasons,
Bytemaster encourages comments on his blog articles
at this location: 
bitsharestalk.org/index.php?board=83

[StanLarimer]

Today I saw http://bytemaster.bitshares.org/article/2015/01/13/Decentralization-of-Nxt-vs-BitShares/ and became interested by the title enough to spend some time on reading. The article is related to http://bytemaster.bitshares.org/article/2015/01/07/The-Most-Decentralized-Proof-of-Stake-System/ and the both analyze the same phenomenon (decentralization), so I will treat them as a single article.

I'd like to comment some things mentioned in the articles.

...

PS: It would be great to see comments on comments...

It's great to see you here, and I appreciate the civil tone of your comments!
(Its like a breath of fresh air.)

I have notified Bytemaster that you have made some serious comments on his article and I am sure that he will study them closely, and if necessary correct the referenced article.  We certainly don't want to misrepresent anything about the product of anyone else's blood, sweat, and tears!

I assure you that no attack on NXT is intended beyond an attempt to respond to others here who requested a concrete example.  We are in no way suggesting that NXT is not a viable product with a bright future.

There's a lot of discussion in these threads and the wavefront keeps bouncing around between three of them:
https://bitcointalk.org/index.php?topic=920621.0;all (now apparently locked)
https://bitcointalk.org/index.php?topic=916696.40
https://bitcointalk.org/index.php?topic=913075.0;all (this thread)

So I don't expect you to have come across the context or motives behind the subject article.

I think we have adequately dealt with the more reckless postings in these threads, but there is an interesting recurring debate (when you remove all the clutter) about the meaning of the word "decentralized".  Apparently one opinion is that the connotations of the word in this industry have moved it away from its dictionary denotations and that further evolution of its meaning in response to ongoing technological innovations should be resisted.

Our point has been that there are multiple valid ways to move control away from the center and that having all stakeholders select from a high-quality set of candidate block signers based on their established reputations has some design advantages over randomly selecting signers from a much larger group of candidates with unknown reputations. (At least for some systems with certain additional design objectives and target applications.)  Signing authority is uniformly distributed among the 101 most respected members of the community without regard to the size of their stakes.  This can change every 10 seconds and everybody has a chance to participate based on merit, not chance.  Signers have strictly limited power.  They can either faithfully do their job or be detected and immediately fired.

The key is recognizing that there are multiple design degrees of freedom we can play with.  We need enough scalable signing nodes to be fault tolerant and a decentralized way to select them.  Both NXT and BitShares accomplish this objective in different, valid ways.  Whether each stakeholder does the routine and transparent signing work on their own computer or on a computer from someone with a vetted reputation they are still selecting which computer they want to have do it.  I know I'd certainly rather pick somebody I trust to do the signing than take responsibility for that technical specialty myself!

All "trustless" systems allocate residual trust somewhere, usually by default.  We have made it explicit.  Making it explicit in turn gives us a unique by-product asset - trustworthy nodes selected by all stakeholders.  Our designs then leverage these assets to assign them other functions that benefit from established trustworthy reputations, where any breach of trust can be detected and instantly removed by all stakeholders as well.

A recent article I wrote with Bytemaster attempts to clarify this distinction by clearly highlighting the roles of decentralization, scalability, and fault tolerance in designing robust, profitible, and incorruptible systems.  We would value you feedback on it.

Decentralization, Scalability, and Fault Tolerance of Bitcoin

[Come-from-Beyond]

I have notified Bytemaster that you have made some serious comments on his article and I am sure that he will study them closely, and if necessary correct the referenced article.

Thank you.

I think we have adequately dealt with the more reckless postings in these threads, but there is an interesting recurring debate (when you remove all the clutter) about the meaning of the word "decentralized".

I noticed this too. People often confuse "decentralized" and "distributed" and sometimes they set the threshold for "this is decentralized" too high.

Signing authority is uniformly distributed among the 101 most respected members of the community without regard to the size of their stakes.  This can change every 10 seconds and everybody has a chance to participate based on merit, not chance.  Signers have strictly limited power.  They can either faithfully do their job or be detected and immediately fired.

It's hard to do something immediately in a decentralized system. It's like trying to fly faster than light.

A recent article I wrote with Bytemaster attempts to clarify this distinction by clearly highlighting the roles of decentralization, scalability, and fault tolerance in designing robust, profitible, and incorruptible systems.  We would value you feedback on it.

Decentralization, Scalability, and Fault Tolerance of Bitcoin

This part is not clear to me:

The total decentralized population of the all owners participate in selecting the most reliable machines to run the network. Those 101 parts have no power over the owners. 101 dispersed redundant parts is a decentralization red herring! That’s not where control lies. Those 101 chosen nodes can be completely reconfigured or replaced by the fully decentralized participating owners in 10 seconds.

How the system of nodes can do it in a coordinated manner if the only reliable comunication channel is controlled by the delegates (and some of them are rogue ones)? A very similar problem is explained here - http://www.links.org/files/decentralised-currencies.pdf (second half of part 3).

[Shuai]

How the system of nodes can do it in a coordinated manner if the only reliable comunication channel is controlled by the delegates (and some of them are rogue ones)? A very similar problem is explained here - http://www.links.org/files/decentralised-currencies.pdf (second half of part 3).

Whisper would work great for this.

[bytemaster]

Today I saw http://bytemaster.bitshares.org/article/2015/01/13/Decentralization-of-Nxt-vs-BitShares/ and became interested by the title enough to spend some time on reading. The article is related to http://bytemaster.bitshares.org/article/2015/01/07/The-Most-Decentralized-Proof-of-Stake-System/ and the both analyze the same phenomenon (decentralization), so I will treat them as a single article.

I'd like to comment some things mentioned in the articles.

Today the numbers are in for Nxt with data from their very own block explorer. These numbers show that 60% of all blocks are produced by just 15 people.

I believe "people" means "accounts", we don't know how many people behind these accounts. There can be only 4 of them, or 400 (yes, one of the accounts can be controlled by a company which has its own hierarchy).

This is a fair assessment and I have updated the blog post to reflect accounts vs. people.  I chose to be generous by calling them people because I didn't want to bring up the potential for sybil attacks to skew the apparent decentralization of Nxt.  For all intents and purposes an account is a single private key controlled by some individual.  Nxt may be more centralized, but not less than the accounts indicate.

...I found enough block producers that were above 1% and less than 2% that I can safely conclude that after 720 blocks less than 101 unique block signers have confirmed the block.

I see a reference to the 101 delegates. I'd like to point that 101 is not a big number, someone could successfully control 10 such delegates or 20 delegates could collude. I can safely bet that the 101 delegates distribution follows Pareto's Principle that states that "80 delegates are controlled by 20 entities" (numbers may vary). The point of "101 is not a big number" is that order of magnitude of this number (let's write it as 99 + 2) is roughly the same as deviation caused by external factors. When a measured value has the same order of magnitude as errors of measurement scientists trash such measurements. The comparison of number of forgers and number of delegates in a 720-block window doesn't make sense to me because of this very reason.

I think this assessment is quite false.  On what grounds do you bet the 80/20 for delegates?   Each delegate is like a senator and the voters (share holders) have financial incentive to verify their uniqueness.  Delegates are (or will be) public.    At the moment we do have several people who run multiple delegates, but I can safely say that we do not have 20 entities with more than 4 delegates each.   I can also safely say that if BitShares were to get to the size of Bitcoin that no individual or organization would control more than 1 delegate.   There would be no need and the demand/competition to be elected would insure that is the case.   

What is even more interesting is the overall speed of the network. The Nxt blockchain aims for 1 minute blocks, but on average gets only one block every two minutes. You can see this on their blocks-per-day chart.

It's a long story why we have 2-minute blocks now, it doesn't influence distribution of forgers among forged blocks though and should be discarded.


It impacts the speed of decentralization and thus the viability of your order book.  The more unique individuals that sign off on a block the more secure / confirmed your transaction is and the less likely it is to be reversed.  Ignoring the speed of decentralization impacts markets.

Our delegates are far more reliable with near 100% participation compared to Nxt forgers at about 50% participation.

A number would be much better. One could argue that it's not "far more" but rather "a little bit more".


Numbers can be found on bitsharesblocks.com which is currently reporting 100% and was reporting 100% when I wrote the article.  Sometimes a delegate will miss a block and the rate can fall lower in the event of a software bug.  High reliability is the normal state.

For Nxt to have a block confirmed by 101 unique individuals would require 7 hours best case.

This is an incorrect statement. Block generation and block confirmation are different things. All nodes confirm every single block indirectly by agreeing to propagate it over the network. All merchants confirm every single block indirectly by accepting money sent to them recently. All users confirm every single block indirectly by including the reference to a block generated 20 minutes back in their transactions.

It is true that all crypto currencies propagate and validate blocks at every node.  Even BitShares has 1000's of full nodes all validating every block.   Lets not mix apples and oranges.  What matters for consensus and potential for forking is not whether or not a block is "valid", but whether or not it is part of the consensus set which is only voted upon by block producers.     

If BitShares were to lose 50% of its delegates all at once due to a government crackdown the remaining 50 delegates would still be producing a more secure, decentralized, and distributed ledger with greater decentralization per minute than every other blockchain on the market.

I see a violation of CAP theorem there (if BitShares are decentralized). How do you know that a blockchain generated by remaining 50 delegates is legit while a blockchain generated by other 50 delegates is not?

Well for starters, there are 101 to make it odd, so it can never be evenly split.  In this case I was mentioning the situation where the delegates simply disappear, not where they start producing an alternative chain.  With delegates spread out over many countries it is unlikely that a government would take over a delegate and intentionally produce a fork.  More likely they would just shut the delegate down.  If 51+ delegates had their keys compromised by the government then the stakeholders would be able to detect it by their public misbehavior and vote in a new set.   It would be a temporary disruption but not fatal to the consensus process.   

For the sake of this article, I am going to define decentralization as the total number of unique individuals participating in the validation process such that no one individual is responsible for a disproportionate amount of blocks.

You have the right to define decentralization in such the way, but practical usefulness of this definition is quite low. It assumes that all individuals are equal in their power and their intentions to save the current state of things. One person who is able to protect blockchain against a reorg is more valuable than 100 others who are unable to do it.

Now you are arguing the benefits of centralization.  This is where 101 TRUSTED and VETTED individuals are much better than 101 anonymous and UNVETTED individuals like you have in all other Proof of Stake systems.

If you want to have a million users participate in the consensus process then you will require a million computers all connected to the internet and consuming bandwidth.

No, we will not. Imagine that one of the nodes is a computer controlled by 1000 people (a company). In Nxt users without computers take part in the consensus too, via Economic Clustering (though it's almost not used now).

Yes you are correct, Nxt has leased forging which has similar centralization behavior as delegated proof of stake.   By this measure you would have to count the number of individuals voting for 101 delegates, not the 101 delegates themselves.   It was my argument that mining pools and leased forging will tend to cluster around fewer than 101 entities which could be compromised.

Each additional validator provides less and less value to the network despite costing the network the same.

It's true only for a system with a bad architecture. O(N) should be replaced by O(log N). I'm almost sure that Bitcoin, BitShares and Nxt networks are all follow O(log N) because nodes send packets to a fixed number of peers.

  All blockchains are O(N) on transaction validation time.  The network bandwidth grows M*O(N) where N is the number of transactions and M is the number of peers per node.  Each validator needs to be compensated for M*O(N) work and thus costs to the network as a whole grow at O(N) the number of validators.   

To cover operating expenses a crypto currency network must charge transaction fees.

Why? If usage of a cryptocurrency network generates extra profit itself then fees can be as small as it's enough for fighting spam. Hashcash could be used to remove fees completely.

  Someone has to be paid to validate blocks and run the network.  How they get paid and who pays them is something else entirely.  I suggest that a system is not sustainable unless income from some source is greater than what is paid to block validators which is greater than the cost of validation.   How does a network generate extra profit itself (aside from appreciation) without fees.  If appreciation is how it accumulates value, then it would require dilution to pay fees.  If you expect some users to subsidize others then that is a group trap and depends upon charity, especially a scale.   

These early proof of stake systems claim that they have greater decentralization than BitShares.

These systems can claim nothing. Only some of their users can.

  True, I will correct this to state that only some users of these systems claim that. 

I skipped the rest of the article because there are already so much disagreements that the rest of the math from the article is worthless.


PS: It would be great to see comments on comments...

[Come-from-Beyond]

It impacts the speed of decentralization and thus the viability of your order book.

Speed of decentralization is an interesting parameter. I can't comprehend its physical meaning yet, need to think more of this.

Well for starters, there are 101 to make it odd, so it can never be evenly split...

I see that you chose 101 because it's 50 + 51. To be able to decide which group to join if the network splits...

Well, I don't get why you think that at least one group will include at least 51 delegates, what if we get 34 + 34 + 33?

Also, take a look at this (from http://research.microsoft.com/en-us/um/people/lamport/pubs/byz.pdf):

Reliable computer systems must handle malfunctioning components that give conflicting information
to different parts of the system. This situation can be expressed abstractly in terms of a group of
generals of the Byzantine army camped with their troops around an enemy city. Communicating only
by messenger, the generals must agree upon a common battle plan. However, one or more of them
may be traitors who will try to confuse the others. The problem is to find an algorithm to ensure that
the loyal generals will reach agreement. It is shown that, using only oral messages, this problem is
solvable if and only if more than two-thirds of the generals are loyal; so a single traitor can confound
two loyal generals. With unforgeable written messages, the problem is solvable for any number of
generals and possible traitors. Applications of the solutions to reliable computer systems are then
discussed.

If BitShares can be modelled in terms of Byzantine generals problem then 51 is an overkill (because even 1 would be enough) or 51 is not enough (you need at least 67). Or maybe you see a 3rd option?