Author Topic: Transactions as Proof-of-Stake & The End of Mining  (Read 28158 times)

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Offline alexkravets

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Re: Transactions as Proof-of-Stake & The End of Mining
« Reply #60 on: December 09, 2013, 04:23:46 am »
Why not simply adopt Ripple's consensus algorithm ?  It's open source and easily formalize-able into a page of pseudo-code (it will have lots of company-sponsored and independent academic backup soon)
 
If mining is now understood to be unnecessary for security and only serves to create viral adoption, why not decouple mining from the consensus agreement in exactly the same way as Ripple did ?

Until recently b/c it required and used no mining Ripple was considered not viral enough, however that changed once Ripple Labs instituted a http://computingforgood.org/ where impossible-to-scam currency distribution and viral adoption has been completely decoupled from day-to-day operation of the network. A few weeks into the program there's 7000+ mining participants growing at over 50% per week https://secure.worldcommunitygrid.org/ms/team/viewMyTeam.do

Notice, that all the immense advantages of Ripple's Consensus over block-chain-based systems will apply
https://ripple.com/wiki/Introduction_to_Ripple_for_Bitcoiners#Ripple_is_a_Payment_System

Offline bytemaster

Re: Transactions as Proof-of-Stake & The End of Mining
« Reply #61 on: December 09, 2013, 04:26:17 am »
Why not simply adopt Ripple's consensus algorithm ?  It's open source and easily formalize-able into a page of pseudo-code (it will have lots of company-sponsored and independent academic backup soon)
 
If mining is now understood to be unnecessary for security and only serves to create viral adoption, why not decouple mining from the consensus agreement in exactly the same way as Ripple did ?

Until recently b/c it required and used no mining Ripple was considered not viral enough, however that changed once Ripple Labs instituted a http://computingforgood.org/ where impossible-to-scam currency distribution and viral adoption has been completely decoupled from day-to-day operation of the network. A few weeks into the program there's 7000+ mining participants growing at over 50% per week https://secure.worldcommunitygrid.org/ms/team/viewMyTeam.do

Notice, that all the immense advantages of Ripple's Consensus over block-chain-based systems will apply
https://ripple.com/wiki/Introduction_to_Ripple_for_Bitcoiners#Ripple_is_a_Payment_System

I have looked into Ripples algorithm and that is the fallback... I still do not like the Unique Nodes List...
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Offline Lighthouse

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Re: Transactions as Proof-of-Stake & The End of Mining
« Reply #62 on: December 09, 2013, 04:29:07 am »
I'm glad to see Ripple found a way to distribute XRP, that was for sure their biggest problem.  Do you know what % of ripple labs holdings will be distributed in this way?
Before you say the price of PTS is too high, take a look at theThe Reason.  Protoshares are an entirely new type of Cryptocurrency, one that pays to hold.

Offline alexkravets

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Transactions as Proof-of-Stake & The End of Mining
« Reply #63 on: December 09, 2013, 06:23:19 am »
I have looked into Ripples algorithm and that is the fallback... I still do not like the Unique Nodes List...

Yes, it took me a while to wrap my head around the concept too, despite being advertised as trust-free Bitcoin and all other blockchain-based systems which are pool mined ( which is an unavoidable outcome of competition ) actually all have One Giant Unique Node List today, namely ALL Bitcoin users trust top handful of pools not too collude and none of them to become too big.

What ripple does differently is to formalize exactly what such trust entails, namely only not to conspire and unlike Bitcoin, any node gets to maintain its own, not necessarily pulicised ensures that no Sybil attacks or conspiracies are feasible not only because they are exceedingly unlikely, but also because all consensus proposals must be signed by nodes private keys, any attempt at validating invalid transactions or omission of valid ones leads to immediate smoking-gun incontrovertible evidence against attackers at which point they can be dropped automatically from everybody's UNLs

Key difference is that unlike in Bitcoin, participating nodes have key pairs which must be used and which provide strong reputational naming fir the rest of the network, compare to any other coin, where participating nodes are essentially fully anonymous and therefore have many more ways to misbehave.

Meta remark: One of the attractions of the DAC concept is that it's a much higher level layer "application software"
Just like meatspace corporations can change their physical infrastructure, a DAC should be abstracted away from its consensus level "wiring" its operating activities should use higher level primitives and not be commingled with low level p2p consensus.

Should we call it VDAC for Virtualized DAC ?

I'm thinking of creating a "consensus isolation layer" akin to to hypervisor between a collection of DACs and underlying "hardware of consensus" from this point of view for example, Ripple is a cross currency, distributed market based payment DAC *commingled*  with a cryptographically secured p2p avalanching-consensus-based database toolkit.


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« Last Edit: December 09, 2013, 06:32:18 am by alexkravets »

Offline alexkravets

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Transactions as Proof-of-Stake & The End of Mining
« Reply #64 on: December 09, 2013, 06:28:57 am »
I'm glad to see Ripple found a way to distribute XRP, that was for sure their biggest problem.  Do you know what % of ripple labs holdings will be distributed in this way?

They keep tuning things as they go along, their initial experiments were failures because of scams and other social factors, this mode of distribution as reward for helping cure cancer etc seems to be at least as viral as bitcoin if not more so and immune from accusations of waste.

My guess is that they will greatly expand the giveaway once they get all the kinks out to billions of XRPs and a million people.

There is also talk of including grid computing clients in upcoming iOS and android versions of the client to rule out scams while expanding the giveaway to a billion non-geek smart phone users


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« Last Edit: December 09, 2013, 06:33:31 am by alexkravets »

Offline boshen1011

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Re: Transactions as Proof-of-Stake & The End of Mining
« Reply #65 on: December 09, 2013, 07:58:13 am »
@alexkravets,  thank for your suggestion.  Would you please continue to share us with your thoguths.  :)

RL does need trust from community.

1>Ripple founders and RL will keep 45%, 5% percentage goes to rewarding system.  Is it fair?

Suppose it is fair, and 45% of xrp is deserved for their great ideas and hard works.

2> Another 50% xrp goes to giveaways' distribution system. I have asked many people, some of them are RL employees...GIVEAWAY > 

give people for free.  Correct me if my bad English leads me to a bad understanding.

In other words, another 50% xrp belongs to other people EXCEPT RL, however RL did not keep its word.

The problem is that RL has been selling xrp to people who suppose to get xrp for free as planned.

RL is rewarded 45% of xrp, how could it look at others' xrp, cashed out xrp for other people, then put the cash into its own pocket?

That is BIG centralized problem, seems like the BD of RL is the chairman of FED in digital space, even much worse...

NOTE: I still think Ripple system has a best solution for financial market in the digital space until today. But the whole business theory and logics is totally wrong if RL want to play in the decentralzed digital space. The exit strategy for RL is to be acquired by a big bank one day.


« Last Edit: December 10, 2013, 06:34:42 pm by boshen1011 »

Offline MrJeans

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Re: Transactions as Proof-of-Stake & The End of Mining
« Reply #66 on: December 10, 2013, 01:10:41 pm »
It looks like the top dogs are talking on this thread so excuse my comments if they seam newbie.

I dont like the idea of mining as it only really benefits the people who mine early on. This is fine at the start when everyone has the hardware to mine and mining can therefore be decentralized.

However, as difficulty increases, mining becomes more centralized (due to technology/know-how constraints on the masses).

I like proof-of-stake as this rewards the persons who are investing in the idea/network/currency. Persons should simply be rewarded for holding the coin  allowing for a steady inflation. If inflation is low enough over the 12 years then the value of each coin should increase over time as the value of the service increases faster than inflation.

This will allow for a decentralized way of distributing new BitShares.

Mining can be used for the processing of transactions and securing the network.

Alternatively why have inflation at all. Why not distribute all BitShares to protoshare holders in one go. People can then mine for transaction fees. (I see how this alternative could be problematic but its something to think about). 

Offline arkanaprotego

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Re: Transactions as Proof-of-Stake & The End of Mining
« Reply #67 on: December 10, 2013, 04:22:21 pm »
I recently came up with another system that could work, though I am not fully sold on it.

What if the share holders elected people who would sign blocks?   You vote for the signers with CDD. When they sign they spend the CDD they accumulated from people voting for them.  No one would be allowed to sign more than 1 in 100 blocks. 

This plan has many potential problems, but I thought I would add it to the idea pool.

Wouldn't that generate an awful lot of network spam? At each block, each node would have to know what each other node has voted?


I have an idea based on a lottery system.

It requires the introduction of another type of coin-days that are reset after each block. I'll refer to as BCDs, for Block Coin-Days.

After a node receives a block, it takes the hash of the block and the hash of its Bitshares address, and applies a binary AND on them. The result is a speed of BCD gain per coin.
The node can then compute the number of BCD held by its address as a function of time: BCD = time_since_last_block * (block_hash AND address_hash) * number_of_coins.
It will broadcast a block when the amount of BCD reaches a target set by the protocol, depending on previous blocks. The block must reference the outputs used to generate the BCDs.


The idea is that the node with the highest BCD gain speed ((block_hash AND address_hash) * number_of_coins) will win. As time passes, it is more and more likely that someone will meet the target (like PoW), and the randomness prevents the biggest stake-holders from always publishing the block. They still have more chance of meeting the target though, since the expected value of the BCD gain speed is proportional to the amount of resources owned (also similar to PoW).
Unlike some other lottery systems addresses, this does not reward splitting your funds into multiple addresses.

Difficulty target can be initialized analytically to target a specific block generation time, as the distribution of Protoshares can be calculated at the genesis of Bitshares. However, I think target adjustment would have to be completely empirical afterwards (increase if blocks are generated too fast, decrease if too slow).
To help constrain block generation time, I think a polynomial weighting of time could be used (e.g.: use time_since_last_block^4 instead). If time_since_last_block < 1, it is harder to reach the target. If time_since_last_block > 1, it is easier. Stronger degrees increase this effect.

Latency is not an issue, given that if you receive two blocks, you can easily see which one met the target first. However, this implies using the sum of BCDs to determine the main chain (at least to some extent).

Offline gloine

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Re: Transactions as Proof-of-Stake & The End of Mining
« Reply #68 on: December 14, 2013, 11:32:32 pm »
Hi,

I want to point out one aspect of Proof-of-Stake system. It is vulnerable to physical attacks on major shareholders.

You can easily control the system by hacking or spoofing the computers of major shareholders, or just bringing a gun to their home and threatening them to do transactions on the attacker's behalf. In case of PoW, the damage is limited to the attacked person only, but in case of PoS, the whole network is damaged.

So unless major shareholders are rich enough to defend all the physical attacks on themselves (which could be true for crypto-coins but not for DACs), it would be safer to rely on PoW systems to protect the network. In other words, those who 'work' for the network should be distributed and 'replaceable', unlike shareholders.

On a side note, PeerCoin has a vesting period of 30 days and a maximum coin age of 60 days (numbers could have been changed, but it does have them).

Regards,
Gloine

Offline bytemaster

Re: Transactions as Proof-of-Stake & The End of Mining
« Reply #69 on: December 15, 2013, 01:07:11 am »
At the Inside Bitcoin conference in Las Vegas the CEO of Butterfly Labs did a presentation on “The Future of Mining”.   In his presentation he pointed out that about 5 people collectively control 75% of the hashing power behind Bitcoin and 2 people control over 51%.   He then made the case that this centralization was good for Bitcoin because it means they could coordinate to rapidly resolve unexpected forks such as the one that occurred in March 2013.     According to Sonny Vleisides, without this centralization in mining Bitcoin would have died 9 months ago as decentralized clients would have been unable to reach a consensus on which fork to follow in a timely manner.

Whether or not you agree that Bitcoin would have died,  Sonny Vleisides has effectively admitted that Bitcoin has become centralized, that a small handful of powerful pool operators can unilaterally decide which block chain fork is the “official” fork, that they all know each other and that they effectively vote on which chain to support.   The session ran out of time before I had an opportunity to publicly ask the following question:  “If a small handful of self-appointed people have taken it upon themselves to decide which chain to officially support, then why should the Bitcoin ecosystem spend $1 billion dollars per year in electric costs to provide the same effective security as having 2 or 3 signatures on every block that costs next to nothing while providing infinitely more security?” 

Whether signatures or hashing power, the regular Bitcoin user has no more control over the official block chain policy than the regular Federal Reserve Note user has over official monetary policy.   Their only way to ‘vote’ is to switch to another currency which will have a smaller network with fewer exchanges, products, and services available to it. 

The fact that mining results in centralization should not have been a surprise to those who understand economies of scale.  Mining profitability is a function of efficiency and large centralized mining farms powered by the latest capital-intensive ASICs packaged and cooled in an industrial setting will eventually push all profitable mining into the hands of a single player.  Effectively, mining means that consensus is defined by an organization that can derive profits from alternative revenue streams such as taxation, tainted coins, or limiting transactions to privileged players.   It means that in the name of ‘progress’, these large miners will support other changes to the protocol that also benefit from economies of scale such as reducing block intervals, increasing block sizes, and offering instant transaction validation services.   
We have come to the conclusion that there is no traditional proof-of-work system that can provide security and decentralization at the same time.  A new approach is needed.
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: Transactions as Proof-of-Stake & The End of Mining
« Reply #70 on: December 15, 2013, 01:26:38 am »
Decentralized Continuous Election of Trustees

Suppose we were to accept the notion that it may be beneficial to have a handful of “trusted” individuals around to certify the official block-chain.   We would want to ensure that these trustees are indeed trust-worthy and not simply self-appointed opportunists who had enough capital to corner the voting market.   Everyone should have a an opportunity to vote without having to purchase special hardware or spend billions every year in electricity just to cast their vote.  Lastly, only those who currently own the currency should have a vote proportional their investment in the currency instead of giving the vote to foreigners who have no current interest in the currency.

Fortunately such a voting system is easy to setup by utilizing a concept known as coin-days-destroyed by a transaction to vote for trustees.  Coin-days-destroyed is calculated as your account balance multiplied by the length of time you have held that balance.    When you create a transaction to make a purchase you also include the address of the Trustee you would like to vote for using the coin-days destroyed by the transaction.

Each trustee would accumulate coin-days-destroyed in their voting balance, and when they vote on a block they consume some of their accumulated coin-days.  The best block is the one which has been voted upon by the most trustees.    While Bitcoin block creation is centralized in one person at a time, this new system would require several unique individuals as elected by the shareholders to approve every block.  As a result not even a single block is centralized into a single user.

The trustee’s could use a consensus model based upon the Ripple algorithm to agree on which blocks to create.    This means that in theory blocks could be produced multiple times per minute.   

Trusting the Trustees in an otherwise Trust-less system. 

The major innovation of Bitcoin was that it claimed to create a trust-less currency; however, as we have seen recent developments have reintroduced trust focused on the mining pools.   Does electing Trustees to certify the network open the network up to abuse of power?  In our opinion there is no such risk as the Trustee cannot create transactions that violate the rules of the block-chain and they have their signature on every block they produce.  Any trustee that signed two different blocks that would result in a double spend could be held accountable and of course as long as there are more honest trustees than dishonest trustees this is not a problem.
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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: Transactions as Proof-of-Stake & The End of Mining
« Reply #71 on: December 15, 2013, 01:31:02 am »
I recently came up with another system that could work, though I am not fully sold on it.

What if the share holders elected people who would sign blocks?   You vote for the signers with CDD. When they sign they spend the CDD they accumulated from people voting for them.  No one would be allowed to sign more than 1 in 100 blocks. 

This plan has many potential problems, but I thought I would add it to the idea pool.

Wouldn't that generate an awful lot of network spam? At each block, each node would have to know what each other node has voted?


I have an idea based on a lottery system.

It requires the introduction of another type of coin-days that are reset after each block. I'll refer to as BCDs, for Block Coin-Days.

After a node receives a block, it takes the hash of the block and the hash of its Bitshares address, and applies a binary AND on them. The result is a speed of BCD gain per coin.
The node can then compute the number of BCD held by its address as a function of time: BCD = time_since_last_block * (block_hash AND address_hash) * number_of_coins.
It will broadcast a block when the amount of BCD reaches a target set by the protocol, depending on previous blocks. The block must reference the outputs used to generate the BCDs.


The idea is that the node with the highest BCD gain speed ((block_hash AND address_hash) * number_of_coins) will win. As time passes, it is more and more likely that someone will meet the target (like PoW), and the randomness prevents the biggest stake-holders from always publishing the block. They still have more chance of meeting the target though, since the expected value of the BCD gain speed is proportional to the amount of resources owned (also similar to PoW).
Unlike some other lottery systems addresses, this does not reward splitting your funds into multiple addresses.

Difficulty target can be initialized analytically to target a specific block generation time, as the distribution of Protoshares can be calculated at the genesis of Bitshares. However, I think target adjustment would have to be completely empirical afterwards (increase if blocks are generated too fast, decrease if too slow).
To help constrain block generation time, I think a polynomial weighting of time could be used (e.g.: use time_since_last_block^4 instead). If time_since_last_block < 1, it is harder to reach the target. If time_since_last_block > 1, it is easier. Stronger degrees increase this effect.

Latency is not an issue, given that if you receive two blocks, you can easily see which one met the target first. However, this implies using the sum of BCDs to determine the main chain (at least to some extent).

I really like this approach and am attempting to internalize it.
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 Lighthouse

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Re: Transactions as Proof-of-Stake & The End of Mining
« Reply #72 on: December 15, 2013, 01:46:57 am »
Agreed, that is a REALLY interesting proposal. 

Trustees are tempting but I think taking that shortcut will bite us.
Before you say the price of PTS is too high, take a look at theThe Reason.  Protoshares are an entirely new type of Cryptocurrency, one that pays to hold.

Offline phoenix

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Re: Transactions as Proof-of-Stake & The End of Mining
« Reply #73 on: December 15, 2013, 01:54:24 am »
Agreed, that is a REALLY interesting proposal. 

Trustees are tempting but I think taking that shortcut will bite us.

I think that it wouldn't actually bite us to much, since if there was any attempt to manipulate the block chain, people would stop voting for the Trustees responsible for the manipulation, and then they would quickly lose power, and things would continue just fine.
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Bitmessage: BM-NBrGi2V3BZ8REnJM7FPxUjjkQp7V5D28

Offline Lighthouse

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Re: Transactions as Proof-of-Stake & The End of Mining
« Reply #74 on: December 15, 2013, 01:57:02 am »
I mean Trustees as central points of failure.  Even with 100 trustees, that's only 100 private keys to capture to completely control the network.
Before you say the price of PTS is too high, take a look at theThe Reason.  Protoshares are an entirely new type of Cryptocurrency, one that pays to hold.