BCNext is the pseudonym used by the creator of Nxt on the Bitcointalk forum in posts made between September 28, 2013 and November 8, 2013. His post history can be found here.
Over the course of Nxt's development and evolution, it has been revealed that there are three parts to BCNext's overall plan for this crypto. These components are being revealed slowly, over the span of about six months. As they are revealed, they will be recorded here.
Posted here by Come-from-Beyond on December 9, 2013
This is a short description of the Nxt mining system. The description is based on text written by BCNext, paraphrased in Come-from-Beyond's words [and grammar-corrected by Joefox] to protect BCNext's real identity against text style analysis (as was agreed).
I want you to pay attention to a paper titled Decentralised Currencies Are Probably Impossible But Let’s At Least Make Them Eﬃcient.
The author writes:
- To match this to the notion of “decentralised” (i.e. lacking central authority), the consensus group must be, at least, all participants in the currency. This does not present any real problem when that group is known. For example, it would be possible to define the group as “all people currently in the United States”– where the currency would be something akin to the US Dollar. Assuming the majority decide to behave honestly (as seems likely, after all, that is what happens now), then they should have no difficulty in forming consensus on who has how much money at what time. However, the most general notion of decentralisation does not admit such re-strictions. After all, in some sense, placing any such restriction simply pushes the central authority back a layer: instead of controlling the currency, the authority controls membership of the consensus group. A system like this must allow any entity to participate, and to join and leave the scheme at will. And here lies the problem. If you can never know who is in the scheme (bear in mind that knowing who is in is also a consensus problem!), then you can never get agreement.
In Nxt this problem doesn't arise because all participants (miners) are known. This is a side-effect of being a 100% proof-of-stake currency. So, let's move to the most interesting part.
As you may know, Bitcoin et al. can be attacked by an entity that possesses 51% of hashing power. Two main scenarios are possible:
- Some part of the miners leave the "legitimate" branch of the blockchain and start mining their own branch.
- Someone buys/produces mining equipment and starts mining a secret branch.
The second scenario can't be applied to Nxt, because no Nxt tokens exist outside the network. Let's look closer at the first scenario.
On December 8, 2013 average base target was ~700%. This means that only 1/7 of all stakeholders were generating blocks. We can't say if the other 6/7 were hit by bus or were trying to fork the Nxt blockchain. This is the state of current Nxt implementation [as of December 9, 2013]. BCNext is satisfied with the results shown during the last two weeks and now is going to adjust the mining algorithm a little bit to make it more transparent.
What does this transparency mean? It means that anyone can predict (with very high probability) who and when will generate the next block(s). This gives us several superior advantages:
- Transactions can be sent directly to the miner who will mine the next block (if he decides to reveal his location on the Internet). This savies traffic and allows Nxt to come much closer to VISA/MasterCard processing volumes.
- Blocks can be generated in advance, and sent to most of the miners before they become valid (timestamp validation). This greatly reduces the rate of orphaned blocks.
- Due to the ability to predict the timestamps of future blocks (and therefore the rate of generation 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).
- Most importantly, 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 legitimate branch because he won't be able to compete against 100% mining power with his 90%. As a result, he decides to "skip" his turn to generate a block. The remaining 10% of the network detects this and penalizes the adversary by setting his mining power to zero and distributing his power among all of the other miners. Now the network is back to 100% power because everyone else got a ten-fold increase. The adversary can mine another branch in a secret place, but it won't be able to replace the legitimate branch. Of course, the second branch will have 100% "hashing" power tied to it as well, because the attacker will get his 90% bumped to 100%... but this can be counteracted by some mechanisms of advanced consensus (which are still not revealed).
As a 100% Proof of Stake currency, Nxt is protected against a wealthy entity that could buy/produce a lot of ASICs. With transparent mining it's even protected against someone buying most of the coins.
So, what does make Nxt a really next-generation currency? Not nice features like a decentralized exchange, decentralized DNS, or a decentralized app store. The transparent mining algorithm does, and this is only the 1st part of BCNext's plan.
Posted here by Come-from-Beyond on February 10, 2014
This is the second part of BCNext's essay on Nxt's transparent mining (or "transparent forging") system. The description is based on text written by BCNext, paraphrased in Come-from-Beyond's words [and grammar-corrected by Joefox] to protect BCNext's real identity against text style analysis (as was agreed).
Nxt mining simulates Bitcoin mining by pretending that each coin is a small mining rig. BCNext decided to go this way instead of introducing his own approach because the Bitcoin community is conservative and wouldn't adopt a system with radical differences. Now that Nxt has grown its own community, it's time to get rid of the facade and reveal true properties of Transparent Mining. These properties are obvious to everyone who spent some time analyzing Transparent Mining, but still...
Nxt mining uses a deterministic lottery that grants the right to mine the next block. The generation time of each next block is determined by the time of the previous block, and by the base target value. The base target is a part of the Bitcoin legacy that should be left behind. It doesn't make sense to wait until next block is mined because we already know who will do it. And we can mine blocks at a fixed rate – for example, every 60000 ms (exactly 1 min). When the Internet is faster we can switch to a smaller gap between blocks (10 seconds, for example).
Mining rewards are also obsolete. The true reward for supporting the Nxt network comes from services that use Nxt. For example, someone who owns a currency exchange and mines blocks to keep his business running; someone who owns a shop and mines blocks to keep his business running; someone who owns a software company that develops programs for Nxt-based services and mines blocks to keep his business running. Selfish miners (those who only mine to earn fees) should be "removed" from the system. They are not interested in the success of Nxt and only want to cash out. If a clone of Nxt appears, these kinds of people will likely "jump ship", and this is fine since they add very little value to Nxt anyway. None of this means we should get rid of fees completely: we still need them as a countermeasure against spamming.
Regarding NXT as coins: NXTs are not coins... or at least the creator of Nxt didn't want them to be seen as coins. They are tokens that grant privileges for supporting Nxt.
Deflation is not much better than inflation. "Real" coins should be created on top of Nxt, and be issued in quantities that keep their value constant. BCNext understands that this is very arguable. The community should decide if it wants to follow the path showed by him, or stick to the Bitcoin legacy of an unchangeable supply of coins with which people hope to become rich by doing nothing.
Trust no one. This is a very important principle. Nxt doesn't rely on trust, but solves the problem of trust in another way. It evolves to a system that doesn't care about trust because everything will be very clear. Transparency extended to its absolute end leads to an inability to cheat. This removes necessity of wondering if anyone should trust anyone else.
The list of these properties can be extended, and BCNext wants the community to do it.
Bitcoin was a genius invention, but its implementation became corrupted by people whose aim was to make money – not bitcoins, but dollars.
BCNext was working on a project that required special conditions for its existence. He hoped that Bitcoin would change society and prepare ground for the project. Half a year ago it became crystal clear for him that Bitcoin, as an idea of trustless money, had failed. A fix was required, and it came in the form of Transparent Mining. "Transparent" is the key word here: it changes the focus from "trust no one" to "don't let anyone cheat", because any cheating becomes obvious very quickly (as soon as allowed by network latency).
Nxt is just a work-around. It was launched to win more time, and to conduct an experiment that was supposed to show if society is ready for BCNext's main project. He thinks that society can't be completely decentralized, and Nxt will help to measure the level of decentralization after which a society can't function as a whole. Bitcoin relies only on math, but math can't solve problems arising because of the illogical nature of the man. Mining in Nxt relies on the cooperation of people, and even forces it. Without cooperation, Nxt becomes weak and can be easily attacked. It's like a system in unstable equilibrium. If people stop caring about cooperation, Nxt will fail very quickly.
Now that you know why Nxt was created, you should choose which path to follow. The easiest one is to repeat the history of Bitcoin in the hope that something will change. The alternative is to implement Transparent Mining and try to handle people's imperfections. The latter can't be done with pure math, and even if you manage to find some applicable laws, you can't be sure that those laws won't change in the future.
BCNext has departed permanently. He doesn't feel responsible for the future of Nxt. He implemented an idea that was obvious, but nobody else tried to do it (maybe because the creation of a Bitcoin clone was much easier). One day he will return with his main project, under his real name. Don't try to learn the real identity of BCNext. He intentionally copied the styles and ideas of different people. If you think you've found him, you are likely wrong. BCNext never existed. This "sock puppet" was created only for Nxt, and will never appear again.
The plan always was very simple - to show a path that very obvious but was avoided for some reason. BCNext doesn't pretend that he possesses sacral knowledge and knows what is awaiting in the end. You are left on your own. Good luck.