How does NXT do 100% POS with or without Checkpointing, does anyone know…if without, then how is it done?
EDIT
This Thread has gone of topic to some extent. I was after the specif algorithm and an examination of that between PeerCoin and NXT.
I note some of this seems to be discussed tangentially ITT
I guess checkpointing is just additional layer of security.
But Nxt mechanism for minting is better and more secure for one thing: they are paying users for securing network and not for “what is fair” like ppc does.
If we have 2 PPC accounts with same amount of coins with one user constantly minting and contributing to security, and another one is just holding coins most of the time in cold storage. They will have roughly same reward and that’s bad.
In PPC we think that it is fair that everybody gets 1% per year no matter did they contribute to security or not. Only reason for inflation should be to pay for network security when fees alone can’t cover it, and it should go to the ones who provide that security not the ones we think should be fair.
Petar87
May I clarify? My understanding is that, until the peercoin developers can enable cold storage coins to mint, peercoins in cold wallets do not get 1% interest - is that right, or am I not understanding correctly?
Thanks
[quote=“petar87, post:2, topic:2211”]I guess checkpointing is just additional layer of security.
But Nxt mechanism for minting is better and more secure for one thing: they are paying users for securing network and not for “what is fair” like ppc does.
If we have 2 PPC accounts with same amount of coins with one user constantly minting and contributing to security, and another one is just holding coins most of the time in cold storage. They will have roughly same reward and that’s bad.
In PPC we think that it is fair that everybody gets 1% per year no matter did they contribute to security or not. Only reason for inflation should be to pay for network security when fees alone can’t cover it, and it should go to the ones who provide that security not the ones we think should be fair.[/quote]
no, peercoin caps out at 30 or 60 days. & NXT you have to have your wallet on as well or you don’t get anything. So same thing.
I was interested in the Algorithim comparison.
The coin age that is modifying the minting probability caps out at 90 days (at Peercoin). The coin age on which the reward gets calculated doesn’t get capped.
But you lose compounded interest if you don’t mint continuously with your Peercoins. So the best case is just like with Nxt: always mint 
sent by Tapatalk
[quote=“masterOfDisaster, post:5, topic:2211”]The coin age that is modifying the minting probability caps out at 90 days (at Peercoin). The coin age on which the reward gets calculated doesn’t get capped.
But you lose compounded interest if you don’t mint continuously with your Peercoins. So the best case is just like with Nxt: always mint
sent by Tapatalk[/quote]
Yes you would lose compound interest but that’s it and it is to low cost almost zero difference. With nxt if you mint 50% of time you’ll get 50% of maximum reward. With ppc if you mint 1 day in a year you get roughly the same amount as if you were minting whole time.
[quote=“RobertLloyd, post:3, topic:2211”]Petar87
May I clarify? My understanding is that, until the peercoin developers can enable cold storage coins to mint, peercoins in cold wallets do not get 1% interest - is that right, or am I not understanding correctly?
Thanks[/quote]
Yes you are correct that’s also my understanding. Problem is that only while you are minting actively you are helping to secure the network. So why would you mint whole year with your laptop on if you can turn on minter once in 2 years and collect interest? I’m doing exactly that with my ppc keeping them in cold storage and when I decide to use them I’ll mint only then, whole time I’m not contributing at all to ppc security.
But don’t ge me wrong nxt also has some flaws with design of it’s inflation and transaction fees which would show up long term and even maybe short term as it’s security is now artificially maintained by early adopters. I would build my perfect coin fixing those flaws but I think that would be a bit out of my league and probably waste of time, so I’ll have to sit and wait some more for better pos implementation 
When talking about economical incentives, I need to put that into focus:
the real incentive for taking part in the minting process is not the 1% annual reward.
Each one who has understood that PoS secures the network, will participate in PoS simply to preserve the security and hence the value and not for being rewarded with 1% per year.
Or to back it up with numbers for one year minting:
[ul][li]taking part in the PoS process secures 101% of your coins[/li]
[li]not taking part in the PoS process risks 100% of your coins[/li][/ul]
Even without the annual reward there would be a crystal clear economical incentive to do minting…
[quote=“masterOfDisaster, post:8, topic:2211”]When talking about economical incentives, I need to put that into focus:
the real incentive for taking part in the minting process is not the 1% annual reward.
Each one who has understood that PoS secures the network, will participate in PoS simply to preserve the security and hence the value and not for being rewarded with 1% per year.
Or to back it up with numbers for one year minting:
[ul][li]taking part in the PoS process secures 101% of your coins[/li]
[li]not taking part in the PoS process risks 100% of your coins[/li][/ul]
Even without the annual reward there would be a crystal clear economical incentive to do minting…[/quote]
This makes a great sense!! I will mint once Sunny add the cold lock minting feature to the new client. I will mint as long as it is risk free. I do not care much about the 1% reward.
But by saying that, if Sunny could adjust the protocol to increase the incentive for people to mint then that is even better.
[quote=“Percy520, post:9, topic:2211”][quote=“masterOfDisaster, post:8, topic:2211”][…]
[ul][li]taking part in the PoS process secures 101% of your coins[/li]
[li]not taking part in the PoS process risks 100% of your coins[/li][/ul]
Even without the annual reward there would be a crystal clear economical incentive to do minting…[/quote]
This makes a great sense!! I will mint once Sunny add the cold lock minting feature to the new client. I will mint as long as it is risk free. I do not care much about the 1% reward.
[…][/quote]
You might have missed the most important point: the real incentive is not the annual reward, but the fact that minting helps securing your coins. If you don’t mint yourself, you completey rely on others that mint.
The more people that mint, the more secure the network is.
And as long as I’m the only person that is really interested in using PoW for securing the network as well, “ordinary” security is only granted by the PoS process (amongst the “extraordinary” security by the checkpoints).
By minting you might put your coins at risk (e.g. by theft).
By not minting you might put your coins at risk (by not sufficiently securing the network against attacks).
Have you considered minting with parts of your coins to split the risk?
Anyway - it’s your choice what risk you’d rather take.
Please take into consideration that minting not only secures your own coins (and rewards you with more coins), but all other people’s coins as well. One might say with a great number of coins comes a great resonsibility
That is not purely altruistic as you have some gain. But you shouldn’t ignore that you help others as well.
And that is one of the main differences between PoW and PoS!
If you don’t hold coins of a special kind , but do PoW mining that coins, you do it almost only for your direct financial gain.
If you do PoS minting, you do that for a little gain, but much more for sustaining value (of your and all other coins!).
Interestingly you need a part of what you want to preserve.
[quote=“masterOfDisaster, post:8, topic:2211”]When talking about economical incentives, I need to put that into focus:
the real incentive for taking part in the minting process is not the 1% annual reward.
Each one who has understood that PoS secures the network, will participate in PoS simply to preserve the security and hence the value and not for being rewarded with 1% per year.
Or to back it up with numbers for one year minting:
[ul][li]taking part in the PoS process secures 101% of your coins[/li]
[li]not taking part in the PoS process risks 100% of your coins[/li][/ul]
Even without the annual reward there would be a crystal clear economical incentive to do minting…[/quote]
No it’s doesn’t work like that by no mean… You personally have to have incentive to mint. Why would I mint if somebody else is already minting. Even though we all share gains I’m better of with others minting instead of me.
Similar to communism why would I work hard if we all share gains? So in a way ppc can be viewed as socialist coin, we all together should be doing something against our self-interest to achieve benefit to all of us.
Anyway it’s called tragedy of commons http://en.wikipedia.org/wiki/Tragedy_of_the_commons
[quote=“Percy520, post:9, topic:2211”][quote=“masterOfDisaster, post:8, topic:2211”]When talking about economical incentives, I need to put that into focus:
the real incentive for taking part in the minting process is not the 1% annual reward.
Each one who has understood that PoS secures the network, will participate in PoS simply to preserve the security and hence the value and not for being rewarded with 1% per year.
Or to back it up with numbers for one year minting:
[ul][li]taking part in the PoS process secures 101% of your coins[/li]
[li]not taking part in the PoS process risks 100% of your coins[/li][/ul]
Even without the annual reward there would be a crystal clear economical incentive to do minting…[/quote]
This makes a great sense!! I will mint once Sunny add the cold lock minting feature to the new client. I will mint as long as it is risk free. I do not care much about the 1% reward.
But by saying that, if Sunny could adjust the protocol to increase the incentive for people to mint then that is even better.[/quote]
Minting will always carry risk. It is like that in ppc, nxt or any other pos. Of course nothing is 100% proof but minimal risk is when you are holding coins in paper wallet. When you chose to import those private key in your wallet on general purpose laptop and mint online for days you are risking…
[quote=“petar87, post:11, topic:2211”][quote=“masterOfDisaster, post:8, topic:2211”][…]
Even without the annual reward there would be a crystal clear economical incentive to do minting…[/quote]
No it’s doesn’t work like that by no mean… You personally have to have incentive to mint. Why would I mint if somebody else is already minting. Even though we all share gains I’m better of with others minting instead of me.
Similar to communism why would I work hard if we all share gains? So in a way ppc can be viewed as socialist coin, we all together should be doing something against our self-interest to achieve benefit to all of us.
Anyway it’s called tragedy of commons http://en.wikipedia.org/wiki/Tragedy_of_the_commons[/quote]
I respect you opinion, but need to disagree. This has nothing to do with communism nor with tragedy of commons.
[communism part]
We don’t all share gains if only few (Peercoins) actively mint and the networks security is lower compared to lots of Peercoins being actively minting. We risk the whole concept by staying away from minting.
You might count on “the others”, but that is more risky than doing your part!
If all did think “let the others mint…” the system would be doomed. Gladly it isn’t, because people are minting. And I, for one, can’t imagine that this is mainly because of the 1% annual reward. Seriously - there are better investments in terms of annual reward…
[/communism part]
[tragedy of commons part]
Regarding the tragedy of commons (I consider this the important part):
“individuals, acting independently and rationally according to each one’s self-interest, behave contrary to the whole group’s long-term best interests by depleting some common resource”.
There’s no depleting some common resource and especially not by acting according to each one’s self-interest.
Peercoin is designed as a backbone currency, a savings concept, a store of value. Once you share a part of it, you do well (=you have a self-interest) making sure that Peercoin stays secure.
That’s why you have an incentive to mint. You want to keep it secure. You want to maintain the value of your Peercoins.
The 1% is just an eye-catcher or an incentive for those who haven’t understood what Peercoin is (plus it is an extra incentive for those who do )
By following your self-interest (mint!) you don’t behave contrary but are in line with the whole group’s long-term best interests.
Not minting is contrary to your self-interest, because you risk the value that is represented by your Peercoins!
[/tragedy of commons part]
The level of security can be improved, though. There will be next steps of security development, but the security level can already be quite high. Steps that can now or soon be taken to enhance security (this list is not complete; consider it a brainstorming):
[ul][li]use a dedicated trustworthy device as minter (imho linux preferred) to which you alone (or trusted people) have physical access[/li]
[li]have only the absolutely necessary services running[/li]
[li]keep the system up to date[/li]
[li]have only the necessary ports open; firewall the rest[/li]
[li]make regular backups[/li]
[li]unlock the (encrypted!) wallet for minting only[/li][/ul]
and now some things that are already on Ben’s agenda and will be available sooner or later in the Peerunity client:
[ul][li]Multi signature addressing (that way you can make sure the coins can’t be transferred even if a cracker did manage to install a keylogger and retrieve the wallet password)[/li]
[li]2FA (once you need a 2FA for executing transactions etc. it will become very difficult to attack one’s wallet)[/li][/ul]
If you own only Peercoins worth a little of money, you might ignore all this and risk only little money.
But once you have a decent amount, you do well to understand how the system works and where the risks are, because more is at stake (or should be: at proof-of-stake )
Thanks for engaging in discussion, still I remain unconvinced.
I thought like this regarding tragedy of commons:
So if everybody follows they self-interest everybody will lose but that’s the thing with tragedy of commons.
To make parallel if we are all hunters eating meat and everybody hunts on their own, it would not be in our interest to kill to much animals and extinct them. But it is in interest of each hunter to kill more animals then he really need.
That’s why I think minting should be something that will be beneficiary to minter in the first plan not the whole community. Of course as side effect community would then benefit.
Petar, in a perfect world you are for sure wrong. But since our world is not perfect I agree with you.
Posted using Tapatalk for Android.
I can agree with that model - partly…
Let me focus on one aspect.
Self-interest is more complex, than shown in your model.
It has to do with securing the owned Peercoins from loss/theft by not minting (potential total loss with unknown individual risk).
And it has to do with securing the owned Peercoins from loss in value by helping to secure the network through minting (potential total loss with unknown individual risk).
Both aspects are obviously contrary to each other as they require opposite actions.
And you can’t omit that second aspect of self-interest.
But which one is more important?
Well, that seems to be a highly subjective thing…
People sometimes seem to have a bad feeling for risks or a bad risk management and that might be the reason to ignore the threat to the owned Peercoins by not minting and focussing only to the risk of theft.
But a game theoretical approach needs to take both of the aspects into consideration.
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[quote=“masterOfDisaster, post:16, topic:2211”]Self-interest is more complex, than shown in your model.
It has to do with securing the owned Peercoins from loss/theft by not minting (potential total loss with unknown individual risk).
And it has to do with securing the owned Peercoins from loss in value by helping to secure the network through minting (potential total loss with unknown individual risk).
Both aspects are obviously contrary to each other as they require opposite actions.
And you can’t omit that second aspect of self-interest.
But which one is more important?
Well, that seems to be a highly subjective thing…[/quote]
I would like to offer small analysis on this. I agree with petar87 that there is tragedy of commons problem in minting, since it is rewarded only by compound interest. The conflict of the two contradicting self-interests posed by masterOfDisaster can be resolved if we show that the self-interest to secure the network suffers from the Dinner’s dilemma.
Core argument
I see Dinner’s dilemma daily on my dormitory, where lives more than 1000 people and the utilities are completely included into rent. (Last remnants of communism 25 years after its fall in my country.) If I decide to use water and electricity without any considerations, I will monthly consume about $50 more in utilities. Of course, my actions raise the rent in long term, but my contribution to the rent raise is divided among 1000 people, so my would-be resource-wasting is penalized only by $0.05 - totally worth it. (Of course if everybody does that, the rent will be $50 higher - but the responsibility is shared - I cannot really affect what other’s do, unless I start anti-wasting campaign, or something like that.) How does this relate to the self-interest to secure the network?
The probability that actively minting wallet is hacked is constant for most stake-holders. Let us denote it pH. (If you are BIG stakeholder, you could be targeted specifically by the hackers, so pH would increase, but this only supports result of this analysis as I will show later, let us assume pH constant for now.)
Your contribution to overall security (probability of no successful attack against the network happens, pS) is proportional to (~)
pS ~ $ value of your stake / market capitalization
It is harder to raise the network minting rate by 1% if the money supply is higher. Now, you could argue that your stake simply increases cost of the attack by the price of your stake. While this is certainly true (and at first look it would seem that the factor 1/market capitalization should not be there), we mustn’t forget that the motivation to attack directly increases with market capitalization. So bigger network also faces bigger attacks. Your contribution to the security is relative to market capitalization.
You will mint simply if pS > pH. We can immediately see that if somebody owns 70% of all PPC, or maybe even 30% of all PPC, he will have strong motivation to mint even in absence of reward (or if he/she is rewarded only by compounding). But if lot of PPC is owned by small stake-holders (hard to say how small is the critical amount), their gain by the security increase is not worth the risk of being hacked.
One can also see, from the condition pS > pH, that if pH is higher for big stakeholders as they can be specifically targeted by hackers, it will only worsen the Dinner’s problem here, since it could also demotivate the big stake-holders from minting, even if they would have motivation to mint to secure the network under normal circumstances.
1% reward?
We can ask ourselves, what would happen if we had true 1% reward. If you are rewarded by
R ~ $ value of your stake * 1%,
you will mint if pS * ($ value of your stake) + R > pH * ($ value of your stake). Why is that? pS and pH are probabilities, but your gain/loss is multiplied by the $ value of your stake - if you own more, you lose more if the attack is successful. We can eliminate the stake value and write the condition for minting as:
pS + 1% > pH
Clearly, for small stake-holders, pS is very small, but if 1% > pH, they will still be motivated to mint, while they wouldn’t, if it was only for their self-interest to reduce the attack risk. (The estimates for pH are, of course, highly subjective and there will always be people who prefer high security of a paper wallet. We shouldn’t force anybody to mint too harshly.) I hope the argumentation is not confusing with too many equations. (Or flawed.)
Looks to me that NXT is not secure at all and a complete joke.
Consider the you own split into many accounts and wait until “transparent forging” gives me a sequence of blocks that I will forge with my account. Once time comes and I get a sequence of my accounts forging (They know that in advance) I double spend big on exchanges. The more coins you own the faster a sequence of blocks with your accounts will come with absolute certainty at some point in the future.
On top of that worse POS system ever invented this guy http://87.230.14.1/nxt/nxt.cgi?action=3000&acc=4747512364439223888 mined 23298 out of total 127960 blocks which is the definition of centralization. Who knows also how many other accounts he/she holds that are forging?
Also rewards are zero for many blocks in a sequence. Why should people forge? Where are the incentives?
Can you explain how this is different then ppc pos? The more coins you own the faster you will get chance to double spend in ppc also.
[quote=“IAmNotMickey, post:18, topic:2211”]On top of that worse POS system ever invented this guy http://87.230.14.1/nxt/nxt.cgi?action=3000&acc=4747512364439223888 mined 23298 out of total 127960 blocks which is the definition of centralization. Who knows also how many other accounts he/she holds that are forging?
Also rewards are zero for many blocks in a sequence. Why should people forge? Where are the incentives?[/quote]
I agree that incentive for forging is zero and network security is maintained artificially by that guy forging not for fees but just to keep network secure. If you ask me it would have more sense to have some fix block reward first couple of years and then to move to just fees. ppc also suffers from single point of failure.
I run an NXT blockexplorer and use a very small sample of 100 blocks (NXT has 800 blocks a day at 2min/block) to find that this account produces 10% blocks. Another one 17%. Yet another 13%. They each own about 3-5% of all NXT. Like it is the case with Peercoin, NXT only has a fraction of its coins participating in minting (called forging). However double spend attack using accidental chains of self-found blocks remains difficult because NXT has 10-block confirmations. That makes a huge difference compared with Peercoin which has 6. It has been reported that NXT has many long forks because someone was experimenting.