Author Topic: Transactions as Proof-of-Stake & The End of Mining  (Read 56722 times)

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Offline fuzzy

Competition is decentralization and everything else is centralized.   Based upon this insight I believe that we should redefine our goals for DACs:

1) Public Ledger that is easily migrated between competing Cartels
2) Each cartel should have many servers, owned by different people, in as many jurisdictions as possible
3) Many Parallel Alt-DACs powered by different Cartels

As a whole the ecosystem would be entirely decentralized and impossible to shutdown.  It would also be entirely transparent. 

With this understanding we have an entirely different approach to security with a focus on making competition as fierce as possible.  This means the following goals:

1) API Standardization
2) Merchant solutions should be designed to accept a new DAC's BitUSD with a click of a button so merchants can simply support "EVERYONE" and thus anyone can rapidly gain the network effect.
3) DACs should be as easy to build and deploy as possible
4) Cross-DAC trading needs to be made easy.

With these things in place, competition will force fairness and openness. 

So by making it easy to compete, you ensure that the Cartels running each DAC either support their community or their version of a DAC will fade into the background. If every one of these DACs honors PTS at a minimum of 10% of the total then PTS holders could end up very wealthy from all the shares they'll get in all these different DACs! :)

Heck yeh...but at that point, the greatest thing about it will be how diversified your DACFolio will be :D

WhaleShares==DKP; BitShares is our Community! 
ShareBits and WhaleShares = Love :D

Offline vikram

Transactions as Proof-of-Work & The Start of Mining: http://pastebin.com/index/w4UMGmGp  ;)

Interesting read in light of all the improvements being made for BitShares.

Offline bytemaster

Not a competitor in my view.

Their interest system is similar to the original BitShares dividend system and merely masks a stock-split with 0 real economic impact aside from perception. 
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Offline hasher

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Nxt's transparent mining is good but not the best because it still involves mining and is still CENTRALIZED one-block at a time.  It is also still block based.

With what we are planning you get Ripple style confirmation speed and no ONE node can specify the block contents.   This means that no one node can use their opportunity to generate a block to manipulate the on-chain market.

The space is heating up.

bytemaster, what about emunies, are they serious rival to Bts?
____________________
Transactional Model

Originally the eMunie transaction model shared a lot in common with the Bitcoin design, single chain, in and out transactions cross signed using ECDSA scripts and other similarities. From day one, this did not "feel" correct, it is limiting, it is susceptible to 51% attacks via forking and while its design is acceptable to a minor currency implementation, moving forward, it does not scale well enough to be considered a "fiat" challenger.

We decided to redesign 70% of our transaction model and refactor our code.

So how does it work now?

Confirming transactions continues to operate in much the same manner, a forward and back search of the block chain is performed, verifying that the current transaction dependencies are legitimate and continuing in a recursive fashion until an eMu generation block is encountered, or the genesis. Coupled with our efficient POW algorithm (although slightly revised which I'll get into later on) this original method is still the basis of our transaction confirmation functionality and processing.

The main changes are in the "block chain" itself, and the way that transactions are recorded and stored.

eMunie now uses multiple chains, think of the ledger as more of a block tree, than a block chain. There may be many 1000's of small, interconnected chains, all holding valid transactions, and all able to validate transactions across other chain sections. "Forks", or new chains in eMunie are good, they strengthen the system and make a 51% attack impractical if not nigh on impossible, as there are so many chains, taking them all over is rather difficult. Transactions are verified in multiple blocks, with many "hatchers" (or miners as is the lingo here) in the system verifying the same transaction over and over and including a reference to that transaction in many blocks, within many chains.

Double spends are also EXTREMELY difficult with eMunie, as the system now favors a rolling balance over a "transaction in/out" method such as Bitcoin. As soon as you create a transaction, that transaction is distributed to the network as an intention, and it is logged. All nodes now know about this intended transaction and will include it in any subsequent balance calculation should they need it.

Upon the transaction clearing, that transaction is included in 1 or many blocks, and your rolling balance will calculate to the same as when performed using the transaction intention.

Transaction intentions take huge priority over other system messages, so to perform that double spend would require you to be very targeted in where it is sent to, know all about the current network position (its very dynamic) and sent immediately after the original transaction. Should you successfully achieve a double spend, soon after your rolling balance when calculated by nodes in the system will enter a negative balance, that peer and wallet address will then be immediately blacklisted forever.

Supply, Demand & eMu Generation

Currencies, or money supply, work with reliance to supply and demand, the more demand the more supply, the problem is of course, that in the fiat world, this is manipulated by the central banks to their own agenda, and dilutes the fiat supply... or inflation.

A stable currency needs a stable value, and a stable value can only be achieved with a solid supply and demand model that doesn't dilute the already in circulation money supply. If it does, new money steals the value from your current money supply and thus is devalued, as it has not "earned" its own value yet.

With eMunie we have looked at these issues in great detail, and believe we have a solution, that will ensure a fair, stable, honest currency value that does not dilute the holding of any single person in the system anywhere.

Save for the details of the mathematics (which will be in the white paper), demand is simply a call for new eMu, whether that be new accounts with new people coming on board, or regular users of eMunie wanting to have more of a holding.

Demand in the system is always closely chased, via an trailing elastic supply model, so there is just enough eMu in circulation to almost meet to the current demand trends....unless demand comes to a halt or is exceeded by supply. When this happens, no more eMu is created until the current excess supply available is used by demand. This recognition of excess supply happens quickly, so the excess will always be a very small percentage of the entire money supply, thus the effect of this supply will be nominal at best.

Where does the supply come from you ask? It comes from the hatchers. Hatchers perform work while clearing transactions, the amount of work any single hatcher in the system does, is easily calculated from the block tree, and thus, a % portion of the work done by that hatcher in a specific time period can be determined. A hatcher will then receive that % portion, of the systems calculated supply of new eMu required from the current demand.

eMu can not be spent from a hatcher account, it can only be transferred to either an exchange account, or a regular eMu wallet via a mediator. This mediator records the movement of supply eMu into the system and is included in future supply calculations. Hatcher owners are then free to do with the eMu as they so wish, hopefully, trading some or all of it out into the system.

These generated eMu's will have "value" as the hatchers have performed real world work to acquire them, however, a caveat of this, is that as the system load increases, and more work is done by more hatchers, these eMu's increase in deemed value, thus devaluing the already present eMu's in the system....and thus acts like traditional INFLATION.

Interest

To combat this inflation due to the effect of the increasing work in the system, a portion of the supply eMu's are passed to the accounts already holding eMu as "interest". Interest is calculated as the current annual % increase in eMu supply, as per demand, plus a % increase to ensure equilibrium. This ensures that while the new supply of eMu entering into the system may have higher "value" due to more work done to achieve them, all other eMu's in the system, while worth less, are topped up with new, more valuable eMu to guarantee that stake holder of current eMu does not loose out.

Interest is ALWAYS higher than new supply %, even if just marginally, except in the event, that demand ceases to exist, or is 0. Interest is then also 0 to ensure the equilibrium and solidify the value of all eMu in the system.
______________________
http://forum.emunie.com/index.php?/topic/139-emunie-latest-technical-and-feature-set-ramblings-29th-june-2013/

Offline bytemaster

Nxt's transparent mining is good but not the best because it still involves mining and is still CENTRALIZED one-block at a time.  It is also still block based.

With what we are planning you get Ripple style confirmation speed and no ONE node can specify the block contents.   This means that no one node can use their opportunity to generate a block to manipulate the on-chain market.

The space is heating up.
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Offline hasher

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i just want to add 1 cent here,
besides Ripple consensus mechanism, its loyalty and compatibility with mainstream financial system give it advantage in short term to adapt Ripple technology to banking system network. (Seems like its not our case..)
Its not unusual, because one of the cofounders of Ripple is MtGox alumni..

Regarding Nxt, here is old kinda "whitepaper" of how nxt mining innovate the mining process, idk if you already read this, they called it transparent mining:
____________________
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...
________________________
https://bitcointalk.org/index.php?topic=364218.0;all
« Last Edit: January 01, 2014, 04:23:24 pm by hasher »

Offline Troglodactyl

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For determining who could broadcast a block, why not aggregate the transaction source addresses and hash that aggregation, then require that the broadcaster's public key hash be within n units of it in order to broadcast, where n is the number of coin days he is destroying, and the magnitude of the unit increases with time since last block?
« Last Edit: December 28, 2013, 04:42:46 pm by Troglodactyl »

Offline luckybit

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The only thing that underpins the value of all crypto-equities is the market consensus and network effect.  Bitcoin would rapidly lose value if the self-appointed cartel started to implement tainted coins or otherwise manipulate the blockchain.  The same is true for any DAC.

Today Bitcoin would lose value. In 5 or 10 years the demographic of users will be entirely different and Bitcoin might gain value.

With BitShares the level of competitive pressure increases dramatically because every chain can have its own BitUSD regardless of the network effect and from a user's perspective it doesn't matter if the value of the BitShares backing it are $1 or $1000 so long as it is not 0.  This means that the dominate BitShares chain must behave or else the market will quickly appoint a new cartel to manage the chain and honor all positions from the previous chain. 

Competition is decentralization and everything else is centralized.   Based upon this insight I believe that we should redefine our goals for DACs:

How can we avoid the network effect with the cartels? We need to do everything we can to strategically decrease the power that cartels have. Cartels should have a specific function and it's power should not leak or transfer to anything beyond that specific function. To be simple how do we contain the power of cartels beyond competition which doesn't seem to work very well in the real world for containing the power of banks.
« Last Edit: December 25, 2013, 07:50:24 pm by luckybit »
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Offline Brekyrself

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Why not a hybrid POW and POS solution?  Use momentum 2.0 for distribution of coins eventually tapering off to a small amount per year just to account for lost or destroyed coins etc...

Merry Christmas

Offline phoenix

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Competition is decentralization and everything else is centralized.   Based upon this insight I believe that we should redefine our goals for DACs:

1) Public Ledger that is easily migrated between competing Cartels
2) Each cartel should have many servers, owned by different people, in as many jurisdictions as possible
3) Many Parallel Alt-DACs powered by different Cartels

As a whole the ecosystem would be entirely decentralized and impossible to shutdown.  It would also be entirely transparent. 

With this understanding we have an entirely different approach to security with a focus on making competition as fierce as possible.  This means the following goals:

1) API Standardization
2) Merchant solutions should be designed to accept a new DAC's BitUSD with a click of a button so merchants can simply support "EVERYONE" and thus anyone can rapidly gain the network effect.
3) DACs should be as easy to build and deploy as possible
4) Cross-DAC trading needs to be made easy.

With these things in place, competition will force fairness and openness. 

So by making it easy to compete, you ensure that the Cartels running each DAC either support their community or their version of a DAC will fade into the background. If every one of these DACs honors PTS at a minimum of 10% of the total then PTS holders could end up very wealthy from all the shares they'll get in all these different DACs! :)
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Offline bytemaster

Failure to agree is agreeing to fail, or such is the nature of the marketing behind Ripple.

Given the Unique Node List (UNL) only works when it is cyclic, ie: the nodes trust each other directly or indirectly, this creates a potential for a group of nodes to collude and keep new nodes from joining the inner circle.   No outside party can come along and force their way in.  This provides security while potentially resulting in centralization if the UNL is short.

The defense against this is that it is very easy to launch a clone of the DAC with a more open UNL that follows the social consensus to include all valid transactions in a timely manner. 

Each node in the UNL gets one vote on which transactions to include and once 80% of the nodes are all voting the same way a block is added.  The question becomes who gets to vote?   The most basic version is a single node produces all blocks and everyone has a UNL list that trusts that node.  There is not enough redundancy there, so you spawn 2 nodes that add each other to their UNL (owned by different people).  If these nodes don't add anyone else to their UNL then only their consensus matters. 

Ultimately control will reside in an inner circle which may be 1000 companies sharing a UNL.  These companies are like the Trustees in my Proof of Stake system, except they could form a cartel.    Even with Trustees elected via CDD you can still end up with a cartel because those 'in power' get to control what votes go into the block chain. 

My ultimate conclusion from all of this is that the market is the only thing that is truly decentralized and that competition among DACs each with a different set of gatekeepers is what ultimately protects the little guy. 

Proof-of-Work is costly, less secure, and ultimately results in a self-appointed cartel of individuals willing to destroy the most wealth
Proof-of-Stake is better, but has longer verification times depending upon transaction volume, identifies the best chain, but fails to decide who gets to add blocks. 
Ripple Consensus results in a cartel of merchants and banks.

The only thing that underpins the value of all crypto-equities is the market consensus and network effect.  Bitcoin would rapidly lose value if the self-appointed cartel started to implement tainted coins or otherwise manipulate the blockchain.  The same is true for any DAC.

With BitShares the level of competitive pressure increases dramatically because every chain can have its own BitUSD regardless of the network effect and from a user's perspective it doesn't matter if the value of the BitShares backing it are $1 or $1000 so long as it is not 0.  This means that the dominate BitShares chain must behave or else the market will quickly appoint a new cartel to manage the chain and honor all positions from the previous chain. 

Competition is decentralization and everything else is centralized.   Based upon this insight I believe that we should redefine our goals for DACs:

1) Public Ledger that is easily migrated between competing Cartels
2) Each cartel should have many servers, owned by different people, in as many jurisdictions as possible
3) Many Parallel Alt-DACs powered by different Cartels

As a whole the ecosystem would be entirely decentralized and impossible to shutdown.  It would also be entirely transparent. 

With this understanding we have an entirely different approach to security with a focus on making competition as fierce as possible.  This means the following goals:

1) API Standardization
2) Merchant solutions should be designed to accept a new DAC's BitUSD with a click of a button so merchants can simply support "EVERYONE" and thus anyone can rapidly gain the network effect.
3) DACs should be as easy to build and deploy as possible
4) Cross-DAC trading needs to be made easy.

With these things in place, competition will force fairness and openness. 






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 itnom

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I believe that the Ripple algorithm can be used to build blocks, and transactions as proof-of-stake can be used to slowly ratify those blocks over time.   Your transactions would confirm almost instantly and once enough CDD have passed the state is beyond reproach in the event all of the major UNL are taken down (internet Kill switch) and the network must restart on the other side.

bytemaster, this makes a lot of sense to me, however, the rapid block generation would break the promise of bitshares being human tradeable, wouldn't it? How many transactions could be included in such a block?

From a systems engineering point of view such a web of trust would need additional functions such as a solid reputation system with a 0 tolerance level for double spends.

Additionally, to make things more equal, I could really see some sort of randomized block generation mechanism whereas any node with a sufficient reputation level can create a block during some intervals out of its web of trust. The chain with the most blocks stacked on top of it would become the official ledger. Other nodes with enough reputation could then look into the broadcasted blocks and determine any double spends, not relaying those, and somehow killing the dishonest nodes' reputation.

However, such a system would make upgrading the entire system almost impossible unless at least 51% of all block generating nodes decide to switch *at once*.
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Offline arkanaprotego

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What I don't like in Ripple is that most people cannot become validators because you need a reputation for that. And it doesn't matter who you trust, what matters is who trusts you: if everybody noticed more than half the nodes of the default UNL were subverted by some entity, no one would be able to help it, because no one would trust each other. Worse yet, the honest validators would validate the dishonest ledgers in the name of consensus.

But on the other hand I am beginning to be convinced that securing economic infrastructures with money only (in the form of ASICs, electricity, shares... you name it) is not so great, because it is quite cheap for a powerful attacker as long as the community is growing.

So distributed trust might be the safest solution for the moment... But definitely not the one I like most.

Offline phoenix

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The problem with all existing systems (except Ripple) is that blocks are 'centralized' in who defines the block.  When you add markets to a blockchain this becomes a problem.

The Ripple algorithm allows many nodes to reach consensus and provided you have a solid set of Unique Nodes you don't have to trust any one node.

I believe that the Ripple algorithm can be used to build blocks, and transactions as proof-of-stake can be used to slowly ratify those blocks over time.   Your transactions would confirm almost instantly and once enough CDD have passed the state is beyond reproach in the event all of the major UNL are taken down (internet Kill switch) and the network must restart on the other side.

Why should we try to replace something Ripple has already solved?   

So you're proposing a hybrid system, that's a combination of Ripple's consensus algorithm, and transaction POS? I think this could work very well, and I like the idea of combining the fast confirmation time of Ripple with the added security of POS

Keyhotee helps build a darknet of solid UNL based upon all of your friends and family.  Tie in a couple of 'super nodes' from major businesses and exchanges and the network consensus would be very robust.

So the more widespread Keyhotee is, the more secure the network is? Everything seems to hinge on widespread adoption of Keyhotee...
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Offline luckybit

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The problem with all existing systems (except Ripple) is that blocks are 'centralized' in who defines the block.  When you add markets to a blockchain this becomes a problem.

The Ripple algorithm allows many nodes to reach consensus and provided you have a solid set of Unique Nodes you don't have to trust any one node.

I believe that the Ripple algorithm can be used to build blocks, and transactions as proof-of-stake can be used to slowly ratify those blocks over time.   Your transactions would confirm almost instantly and once enough CDD have passed the state is beyond reproach in the event all of the major UNL are taken down (internet Kill switch) and the network must restart on the other side.

Why should we try to replace something Ripple has already solved?   

So you're proposing a hybrid system, that's a combination of Ripple's consensus algorithm, and transaction POS? I think this could work very well, and I like the idea of combining the fast confirmation time of Ripple with the added security of POS

Keyhotee helps build a darknet of solid UNL based upon all of your friends and family.  Tie in a couple of 'super nodes' from major businesses and exchanges and the network consensus would be very robust.

I think you may be onto something. Is there a way to make sure the nodes are geographically diverse? Probably not because we'd have no way of knowing that but that would be the only way I could think of to improve on it.
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