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Offline bytemaster

Nxt Rollback & Bitshares - Just an Idea for Consideration
« on: August 18, 2014, 08:37:53 PM »

There comes a point in every crypto-currency's life where a major hack threatens the health of the system.   It is always possible for major stakeholders (miners) to hard-fork in order to correct the problem, but hard-forks are messy and ugly.

The options for a network are:

a) never reverse transactions, to hell with the share price
b) permit bailouts with consensus

If the BTSX on BTER had been stolen, what would we do?   It would certainly be within our power to reverse it with a single update pushed to the delegates.  It could potentially "fork" the network if the delegates disagreed with the process.

Given that forks are "difficulty but possible" it sets a certain threshold that must be reached before it would be considered.  I think that it may be best to recognize that sometimes a network needs to come to consensus about this stuff and design it in ahead of time so that there are no hard forks.   

Fortunately we have delegates and thus we can design a process something like this:

Step 1)  Pay a large fee to propose reallocating funds from a set of addresses to a new set of addresses.
Step 2)  Delegates have 48 hours to approve the reallocation during which time the funds are frozen.
Step 3)  Require 51% of the delegates to approve it.
Step 4)  Like the pay-rate, delegates can campaign on a platform of always voting NO and this campaign promise can be enforced.
Step 5)  The amount in question must be greater than X% of the shares, and the fee should be very high.

Potential Problems:
1) Someone could attempt to "bribe the delegates" by proposing a massive reallocation to the delegates as part of approving the process....
   a) someone could also do this to bribe miners, forgers, etc to mine on the fork

Bottom line is this:  if it is possible to implement via a hard fork and there are cases where people would choose to hard fork, then perhaps we should formalize the process and prevent the hardfork and overall disruption.   The mere presence of such recourse is likely to prevent many large thefts in the first place.

Thoughts?

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Anything said on these forums does not constitute an intent to create a legal obligation or contract between myself and anyone else.   These are merely my opinions and I reserve the right to change them at any time.

Offline tonyk

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Re: Nxt Rollback & Bitshares - Just an Idea for Consideration
« Reply #1 on: August 18, 2014, 08:42:06 PM »
Wanted to ask the same question ever since the incident happened:

If the BTSX on BTER had been stolen, what would we do?

Would you have offered (the software for a fork) and would you have expressed opinion for/ against fork?

After all the rumor is NXT was as exposed, as probably BTSX and other coins on bter.
« Last Edit: August 18, 2014, 08:44:50 PM by tonyk »
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline speedy

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Re: Nxt Rollback & Bitshares - Just an Idea for Consideration
« Reply #2 on: August 18, 2014, 08:47:38 PM »
Difficult question, but after BitUSD launches, there will be less need to keep BTSX on the exchanges, so this is less of an issue.

Offline thisisausername

Re: Nxt Rollback & Bitshares - Just an Idea for Consideration
« Reply #3 on: August 18, 2014, 08:52:29 PM »
I don't see how not implementing the idea helps with the potential problems (delegates could be bribed to a different fork as is, no?)  I'd say go for it.
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Offline BldSwtTrs

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Re: Nxt Rollback & Bitshares - Just an Idea for Consideration
« Reply #4 on: August 18, 2014, 09:01:49 PM »
What would prevent a government to pay delegates to retrieve funds identified as tax evaders' possession?
« Last Edit: August 18, 2014, 09:03:26 PM by BldSwtTrs »

Offline Empirical1

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Re: Nxt Rollback & Bitshares - Just an Idea for Consideration
« Reply #5 on: August 18, 2014, 09:02:06 PM »
I have to think about this one.

At the time. Off the top of my head I thought we could take the the top 1-20 delegates and tell the even numbered ones to change their names to 'YES' and the odd numbered ones to change their name to 'NO' for 24/48 hours. Then shareholders add and remove approval as necessary. At the end of 24/48 hours you can see by how many YES's are in the top 10 or adding/re-calculationg their approval to determine which decision shareholders at that time support.

Difference between the two strategies being we would know how BTSX shareholders felt about that particular incident maybe. 

I'm sure there's probably lots of problems with this approach, one being people might be lazy to re-adjust their vote afterwards and delegates might be pushed down a few positions by being randomly assigned the unpopular decision
(2. Maybe the hacked funds could influence the approval levels unless we could block them from voting.) 

Offline bytemaster

Re: Nxt Rollback & Bitshares - Just an Idea for Consideration
« Reply #6 on: August 18, 2014, 09:02:45 PM »
Wanted to ask the same question ever since the incident happened:

If the BTSX on BTER had been stolen, what would we do?

Would you have offered (the software for a fork) and would you have expressed opinion for/ against fork?

After all the rumor is NXT was as exposed, as probably BTSX and other coins on bter.

My opinion is that majority should decide so that the developers are not put in the position to answer this question ;)
For the latest updates checkout my blog: http://bytemaster.bitshares.org
Anything said on these forums does not constitute an intent to create a legal obligation or contract between myself and anyone else.   These are merely my opinions and I reserve the right to change them at any time.

Offline bytemaster

Re: Nxt Rollback & Bitshares - Just an Idea for Consideration
« Reply #7 on: August 18, 2014, 09:05:41 PM »
What would prevent a government to pay delegates to retrieve funds identified as tax evaders' possession?

Their is always the option to hard-fork if delegates are corrupted in such a manner.  Delegates can be voted out as well.  Also, the amount in question must be above a certain threshold before it can even be considered.  Ie: a government couldn't bribe delegates to go after the little guys. 

For the latest updates checkout my blog: http://bytemaster.bitshares.org
Anything said on these forums does not constitute an intent to create a legal obligation or contract between myself and anyone else.   These are merely my opinions and I reserve the right to change them at any time.

Offline luckybit

Re: Nxt Rollback & Bitshares - Just an Idea for Consideration
« Reply #8 on: August 18, 2014, 09:09:46 PM »
There comes a point in every crypto-currency's life where a major hack threatens the health of the system.   It is always possible for major stakeholders (miners) to hard-fork in order to correct the problem, but hard-forks are messy and ugly.

The options for a network are:

a) never reverse transactions, to hell with the share price
b) permit bailouts with consensus

If the BTSX on BTER had been stolen, what would we do?   It would certainly be within our power to reverse it with a single update pushed to the delegates.  It could potentially "fork" the network if the delegates disagreed with the process.

Given that forks are "difficulty but possible" it sets a certain threshold that must be reached before it would be considered.  I think that it may be best to recognize that sometimes a network needs to come to consensus about this stuff and design it in ahead of time so that there are no hard forks.   

Fortunately we have delegates and thus we can design a process something like this:

Step 1)  Pay a large fee to propose reallocating funds from a set of addresses to a new set of addresses.
Step 2)  Delegates have 48 hours to approve the reallocation during which time the funds are frozen.
Step 3)  Require 51% of the delegates to approve it.
Step 4)  Like the pay-rate, delegates can campaign on a platform of always voting NO and this campaign promise can be enforced.
Step 5)  The amount in question must be greater than X% of the shares, and the fee should be very high.

Potential Problems:
1) Someone could attempt to "bribe the delegates" by proposing a massive reallocation to the delegates as part of approving the process....
   a) someone could also do this to bribe miners, forgers, etc to mine on the fork

Bottom line is this:  if it is possible to implement via a hard fork and there are cases where people would choose to hard fork, then perhaps we should formalize the process and prevent the hardfork and overall disruption.   The mere presence of such recourse is likely to prevent many large thefts in the first place.

Thoughts?

Permit bailouts with consensus. Our network has delegates which we select so we have the power do to do it democratically. But it should require 70% yes vote to do it and it should be very limited in how far it can roll back. No more than 48 hours.

What if the nightmare scenarios happen where hackers or even governments confiscate our digital property?

I think it's something worth debating for a while. We should spend a few months debating the political consequences and find a way to do it in a way which makes it harder for property to be confiscated by Mallery or Gordon.

« Last Edit: August 18, 2014, 09:12:07 PM by luckybit »
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Offline yellowecho

Re: Nxt Rollback & Bitshares - Just an Idea for Consideration
« Reply #9 on: August 18, 2014, 09:13:44 PM »
Hmmm... this might be a dumb idea but...

What if there was a process in place where users could vote to burn stolen BTSX or automatically transfer stolen BTSX to an insurance account?  If 51% consensus is reached, the registered account could be flagged and any BTSX sent from the account would be automatically redirected into the insurance fund.  In the event that the flagged account tries to distribute the stolen funds to other accounts, the other accounts could also flagged and fined based on the transaction amount.
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Offline bitmarket

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Re: Nxt Rollback & Bitshares - Just an Idea for Consideration
« Reply #10 on: August 18, 2014, 09:17:21 PM »
We have the power to elect Congressman and they have the power to bailout.   How did that work for us?

Plus the cost of security is transferred from the ones who should pay to the innocents (cost of software updates). 

The too big to fails are not properly incentivized to have security, because they are likely to get bailed out.

Lets not start singing Kumbaya and get all soft and mushy now.   Because if we do, 200 years later the constitution of this great experiment will falter.
« Last Edit: August 18, 2014, 09:28:52 PM by bitmarket »
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Offline BldSwtTrs

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Re: Nxt Rollback & Bitshares - Just an Idea for Consideration
« Reply #11 on: August 18, 2014, 09:18:42 PM »
What would prevent a government to pay delegates to retrieve funds identified as tax evaders' possession?

Their is always the option to hard-fork if delegates are corrupted in such a manner.  Delegates can be voted out as well.  Also, the amount in question must be above a certain threshold before it can even be considered.  Ie: a government couldn't bribe delegates to go after the little guys.
Right now we are between people who understands that government are evil, but that's situation is temporary.

Let's suppose Bitshare is mass adopted, a delegate who comply with a western government query will not be perceived by the majority as corrupt, not more than a corporation is perceived as corrupt when it abides by the law of its country.

Historically people are voting to make taxes higher, there is no reason to assume that in a world where BitshareX is mass adopted their opinion regarding taxation will change.

If you implement this kind of tool within the system, people and government will use it.

PS: the treshold is not a security either, let's say it is 10%, if I am a politician who want to redistribute wealth, I can propose to take 10% of the XTS from the richer to give to the poorer.
 
« Last Edit: August 18, 2014, 09:29:38 PM by BldSwtTrs »

Offline gamey

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Re: Nxt Rollback & Bitshares - Just an Idea for Consideration
« Reply #12 on: August 18, 2014, 09:19:42 PM »
THis *really* needs to be discussed.  As far as we know, this was a test by bter to see what would happen. 

If an exchange sees that there will be no rollback, there is a huge incentive to take the bank and run.  This happens so often.  Rollbacks go against the idea of what cryptos are for and blockchains etc, but IMO it is really needed.  Yes, we need our own bailouts to protect users.

For bter.com a rollback protects users from a malicious exchange, even if it is put forward as a 'bailout' for the exchange.  In fact, it might not even be a bailout for an exchange, it could be something that hurts their plan. (fake hack)

If it is possible with Titan, there definitely should be a plan of action here.
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Offline bytemaster

Re: Nxt Rollback & Bitshares - Just an Idea for Consideration
« Reply #13 on: August 18, 2014, 09:24:49 PM »
We have the power to elect Congressman and they have the power to bailout.   How did that work for us?

Key is competition... there can be many competing BTSX chains... you can sell shares in one and move to another with smarter owners.

You don't want any crypto to get to the size of the USD.
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Anything said on these forums does not constitute an intent to create a legal obligation or contract between myself and anyone else.   These are merely my opinions and I reserve the right to change them at any time.

Offline tonyk

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Re: Nxt Rollback & Bitshares - Just an Idea for Consideration
« Reply #14 on: August 18, 2014, 09:30:56 PM »

Now that my BTSX are safely out of bter.com....

I have NO IDEA which is the smaller of the 2 evils.

On that day if it was BTSX instead of NXT I know what I would have done. Be it wrong or right in the long run....
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

 

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