New trends in cryptocurrencies: 100% proof-of-stake and Nxt
What are we all about bitcoins, but about bitcoins? New developments in the field of cryptocurrency do not stand still. On Habré, the concept of Proof of Stake, which is intended to fill the shortcomings of the traditional Proof of Work, has not yet been covered in detail. But she is already more than two years old.
In this article I want to tell you about:
For mining Bitcoin, the concept of Proof of Work is used , in which the network security is guaranteed by the computing power of the participants. The probability of generating another block from a single miner is directly proportional to its computing power. The network can be attacked 51%, if you get hold of the computing power, which is 51% of the total power of all the miners in the network. This, for example, happened with FeatherCoin (Bitcoin fork). The 51% attack does not destroy the network, but undermines trust in it: it allows the attacker to use the same tools twice at the moment of generating the “wrong” block.
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An alternative approach - Proof of Stake - was proposed back in July 2011. Here, the miner is the more likely to generate a new unit in a common chain, the more currency he has in his wallet. This approach is used, for example, in forks: PeerCoin, NovaCoin, YaCoin. It is used in combination with the main one - Proof of Work - to increase the network resistance to attack by 51%.
Until recently, there was no cryptocurrency with the implementation of pure Proof-of-Stake. The first such currency was Nxt (pronounced "next"). It was written by the author from scratch, as opposed to countless Bitcoin forks. First announced in September 2013.
Nxt features:
What are the benefits of a clean PoS system? First of all, it is high energy efficiency. If, in the case of Bitcoin, miners burn gigawatts of energy in the process of selecting hashes, in the case of Nxt we can mine in general on any device with a slight load. Here resources are spent only on servicing the transactions themselves. Practice shows that such a system is quite capable of not losing integrity, and even, perhaps, more resistant to attacks.
Low energy costs for network operation provide cheap transactions in the long term. If we consider Bitcoin, the issue of currency decreases with time, and the main reward of miners are commissions for transfers. Since the profitability of mining Bitcoin and so constantly decreases, by this time the cost of equipment and electricity per generated unit will be a significant amount of money. This means that in order to pay back, the miners will have to take only transactions with a correspondingly large commission. Thus, most likely, working commissions in the Bitcoin network will grow significantly over the years. As for Nxt, the minimum cost of transfers will always remain at the cost of transaction processing, which is generally close to zero. For example, now the minimum transfer fee is 1 NXT, and I see no reason for the growth of this value.
How are things going with network security on pure PoS? 51% attack becomes possible if the miner takes possession of most of the coins. At first glance, this may seem ridiculous, but think about it: almost always buying 51% of all coins is much more expensive than buying iron at 51% of the network’s power. And in the event of a successful attack and undermining the credibility of the network, the exchange rate drops significantly, and the attacker remains with a huge amount of coins, now worth a penny. As a result, the costs of an attack are much higher, and the point in it is much less. As the power of a PoW network grows, the likelihood that someone will succeed in turning this attack decreases, and with the distribution of coins among many users of the PoS network, the likelihood that someone will manage to get half of all the coins decreases.
Brainwallet is a way to store a wallet, in which you do not depend on files in principle. All the necessary information for full access is stored in your head. This is not a new, but in its own way a concept of life. It works as follows. You come up with a very long password, create your wallet, and now with this password you can enter this wallet absolutely from any client of the network. The password you have selected is uniquely converted into a private key, with which you get access to the wallet. Thus, absolutely nothing is needed to be stored on any carrier - all your money is safely stored in the cryptocurrency network, and the password to access it is only in your head. Only the password needs to be thought out really long. Do not use phrases that have ever been published. It is recommended to pick up a long phrase that you can easily remember and change it in an unexpected and silly way. For example, add extra letters, punctuation marks, any other information. The main thing is to make sure that you do not forget the invented one. :)
The Nxt client is an application written in Java with access via a web interface. The easiest way to run an Nxt wallet is to use a public client. For example: https://nxtwallet.com:7875/ or https://162.243.232.67:7875/
A network client is running on the server and you can use it to enter your wallet. To do this, click on the lock symbol in the upper left corner and enter your very long password. So access to the wallet. If you do this for the first time, the wallet is automatically created. Whatever client you use - public or locally running - it will be the same wallet if you enter the same password.
At the same time, if you use a public server, then the security of your wallet is limited by your trust in this public server. I do not recommend storing large stocks of funds in those wallets that you have ever logged in from a public server. For this purpose, it is better to launch the network client locally and create a wallet there, after making sure that there are no Trojans on your computer.
Detailed Russian instructions for running a wallet on a local machine are here: bitcointalk.org/index.php?topic=345882.0
Public opening of the currency will occur in early January 2014, when the author opens the source. He does not open them in advance simply so that the currency is not forked ahead of time. In this it is easy to understand.
In a sense, it can be considered a new generation of cryptocurrency, since we have received a fundamentally new level - now the cryptocurrency network successfully and safely operates without heating the air in vain. This advantage is both ecological and economic. Will this new generation survive or discover a fundamental breach? This we have to learn.
In the future, the author intends to launch a decentralized exchange based on the Nxt network and a number of other services. It can be as revolutionary and interesting as the cryptocurrencies themselves.
The block explorer of the Nxt network is here: 87.230.14.1/nxt/nxt.cgi?action=10
Official bitcointalk branches: bitcointalk.org/index.php?topic=303898.0 and bitcointalk.org/index.php?topic=345619.0
So far, the only exchange NXT / BTC: dgex.com
By the way, over the past week or two of his course on this exchange has grown about 10 times.
UPD:
Everyone has a question about the distribution of the originally generated billion coins. I forgot to cover this question. It was in this topic at the very first cryptocurrency announcement that a public distribution of all the coins to those who supported the development of the system was announced. The maximum amount of transfer was limited to 1 BTC (which is only ~ $ 150 at the time), the amount of NXT received by the depositor is proportional to the contribution share of the total amount. In total, ~ 21 BTC from ~ 70 people were collected, any person could participate in it. After that, the entire billion from the first block went to these 70 participants. By the way, I am not among them: I learned about Nxt just a week ago.
I believe that this approach is much harder to blame for the thirst for profit than, for example, the same Ripple or Quark, in which more than 90% of the coins continue to be held by the creators. 21 BTC is not such a big fee for real innovation and the work the author does, in my opinion.
UPD2:
I came across a video with a nice Nxt presentation:
In this article I want to tell you about:
- the concept of Proof of Stake (PoS) and defense against attack 51%
- 100% PoS and mining from any device that does not depend on computing power
- cryptocurrency Nxt, written from scratch and implementing this concept
- not new, but not mentioned before on Habré chip - brainwallet
- prospects for a new approach
Introduction
For mining Bitcoin, the concept of Proof of Work is used , in which the network security is guaranteed by the computing power of the participants. The probability of generating another block from a single miner is directly proportional to its computing power. The network can be attacked 51%, if you get hold of the computing power, which is 51% of the total power of all the miners in the network. This, for example, happened with FeatherCoin (Bitcoin fork). The 51% attack does not destroy the network, but undermines trust in it: it allows the attacker to use the same tools twice at the moment of generating the “wrong” block.
')
An alternative approach - Proof of Stake - was proposed back in July 2011. Here, the miner is the more likely to generate a new unit in a common chain, the more currency he has in his wallet. This approach is used, for example, in forks: PeerCoin, NovaCoin, YaCoin. It is used in combination with the main one - Proof of Work - to increase the network resistance to attack by 51%.
Nxt: 100% Proof of Stake
Until recently, there was no cryptocurrency with the implementation of pure Proof-of-Stake. The first such currency was Nxt (pronounced "next"). It was written by the author from scratch, as opposed to countless Bitcoin forks. First announced in September 2013.
Nxt features:
- client is written from scratch in Java
- clean proof-of-stake
- total amount of coins - 1 billion
- block generated once a minute
- all coins are created in the very first block, there is no issue
- miners earn commissions
Benefits
What are the benefits of a clean PoS system? First of all, it is high energy efficiency. If, in the case of Bitcoin, miners burn gigawatts of energy in the process of selecting hashes, in the case of Nxt we can mine in general on any device with a slight load. Here resources are spent only on servicing the transactions themselves. Practice shows that such a system is quite capable of not losing integrity, and even, perhaps, more resistant to attacks.
Low energy costs for network operation provide cheap transactions in the long term. If we consider Bitcoin, the issue of currency decreases with time, and the main reward of miners are commissions for transfers. Since the profitability of mining Bitcoin and so constantly decreases, by this time the cost of equipment and electricity per generated unit will be a significant amount of money. This means that in order to pay back, the miners will have to take only transactions with a correspondingly large commission. Thus, most likely, working commissions in the Bitcoin network will grow significantly over the years. As for Nxt, the minimum cost of transfers will always remain at the cost of transaction processing, which is generally close to zero. For example, now the minimum transfer fee is 1 NXT, and I see no reason for the growth of this value.
Persistence
How are things going with network security on pure PoS? 51% attack becomes possible if the miner takes possession of most of the coins. At first glance, this may seem ridiculous, but think about it: almost always buying 51% of all coins is much more expensive than buying iron at 51% of the network’s power. And in the event of a successful attack and undermining the credibility of the network, the exchange rate drops significantly, and the attacker remains with a huge amount of coins, now worth a penny. As a result, the costs of an attack are much higher, and the point in it is much less. As the power of a PoW network grows, the likelihood that someone will succeed in turning this attack decreases, and with the distribution of coins among many users of the PoS network, the likelihood that someone will manage to get half of all the coins decreases.
Brainwallet
Brainwallet is a way to store a wallet, in which you do not depend on files in principle. All the necessary information for full access is stored in your head. This is not a new, but in its own way a concept of life. It works as follows. You come up with a very long password, create your wallet, and now with this password you can enter this wallet absolutely from any client of the network. The password you have selected is uniquely converted into a private key, with which you get access to the wallet. Thus, absolutely nothing is needed to be stored on any carrier - all your money is safely stored in the cryptocurrency network, and the password to access it is only in your head. Only the password needs to be thought out really long. Do not use phrases that have ever been published. It is recommended to pick up a long phrase that you can easily remember and change it in an unexpected and silly way. For example, add extra letters, punctuation marks, any other information. The main thing is to make sure that you do not forget the invented one. :)
How to try
The Nxt client is an application written in Java with access via a web interface. The easiest way to run an Nxt wallet is to use a public client. For example: https://nxtwallet.com:7875/ or https://162.243.232.67:7875/
A network client is running on the server and you can use it to enter your wallet. To do this, click on the lock symbol in the upper left corner and enter your very long password. So access to the wallet. If you do this for the first time, the wallet is automatically created. Whatever client you use - public or locally running - it will be the same wallet if you enter the same password.
At the same time, if you use a public server, then the security of your wallet is limited by your trust in this public server. I do not recommend storing large stocks of funds in those wallets that you have ever logged in from a public server. For this purpose, it is better to launch the network client locally and create a wallet there, after making sure that there are no Trojans on your computer.
Detailed Russian instructions for running a wallet on a local machine are here: bitcointalk.org/index.php?topic=345882.0
Sources
Public opening of the currency will occur in early January 2014, when the author opens the source. He does not open them in advance simply so that the currency is not forked ahead of time. In this it is easy to understand.
Perspectives
In a sense, it can be considered a new generation of cryptocurrency, since we have received a fundamentally new level - now the cryptocurrency network successfully and safely operates without heating the air in vain. This advantage is both ecological and economic. Will this new generation survive or discover a fundamental breach? This we have to learn.
In the future, the author intends to launch a decentralized exchange based on the Nxt network and a number of other services. It can be as revolutionary and interesting as the cryptocurrencies themselves.
useful links
The block explorer of the Nxt network is here: 87.230.14.1/nxt/nxt.cgi?action=10
Official bitcointalk branches: bitcointalk.org/index.php?topic=303898.0 and bitcointalk.org/index.php?topic=345619.0
So far, the only exchange NXT / BTC: dgex.com
By the way, over the past week or two of his course on this exchange has grown about 10 times.
UPD:
Everyone has a question about the distribution of the originally generated billion coins. I forgot to cover this question. It was in this topic at the very first cryptocurrency announcement that a public distribution of all the coins to those who supported the development of the system was announced. The maximum amount of transfer was limited to 1 BTC (which is only ~ $ 150 at the time), the amount of NXT received by the depositor is proportional to the contribution share of the total amount. In total, ~ 21 BTC from ~ 70 people were collected, any person could participate in it. After that, the entire billion from the first block went to these 70 participants. By the way, I am not among them: I learned about Nxt just a week ago.
I believe that this approach is much harder to blame for the thirst for profit than, for example, the same Ripple or Quark, in which more than 90% of the coins continue to be held by the creators. 21 BTC is not such a big fee for real innovation and the work the author does, in my opinion.
UPD2:
I came across a video with a nice Nxt presentation:
Source: https://habr.com/ru/post/207120/
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