Wednesday, July 9, 2014

What is Nxt Economic Clustering?

This concept is a development of the idea of Economic Majority introduced by Meni Rosenfeld.

In his notes BCNext states that EC solves the most critical flaw of Proof-of-Stake concept, according to the description this flaw is what others call "Nothing-at-Stake" problem. The 3rd part of the Plan contains such the words:
Mining in Nxt relies on cooperation of people and even forces it

That was said about EC.

The concept of economic clustering is quite simple. Words "economic majority" say enough to explain how it works. From technical point of view it means that if someone decides to rewrite the history of the blockchain he won't be able to include transactions of those who don't take part in the attack, because every transaction contains the id of one of the recent blocks. When Alice sends money to Bob in exchange for something she'll get what she wants only if Bob validates the transaction. And this can happen only if they are both on the same branch.

Forgers can't forge all branches at once, they are faced with a choice, an attempt to forge more than one branch will lead to their exclusion from one of the clusters.

The proposed technical solution will also be used for analysis of transactions to detect forks. This is one of the reasons why I decided to implement part of EC without waiting for complete TF. Another reason is that proposed solution should be peer reviewed. Recent hot debates on BitcoinTalk regarding Nothing-at-Stake show that people are paying a lot of attention to PoS cryptocoins. This is a good opportunity to get a lot of reviews.

Extra consensus rule mentioned in the 1st part of the Plan is a rule that defines choice of an economic cluster a node sticks too. I can't reveal all the details yet, we still need to build infrastructure of nodes and hubs and (this is more important) to form such a cluster...

By: Come-from-Beyond,

Monetary System will allow to create currencies on top of Nxt. In the very beginning only basic operations like money transferring will be available for such subcurrencies. At some point (BCNext wanted this to happen when market capitalization of Nxt == capitalization of Bitcoin with 21'000'000 coins) the community will allow to use subcurrencies for all other things - trading assets on AE, buying goods on DGS, etc. This is supposed to slow down the deflation caused by limited supply of NXT. We don't need Antideflation* right now, but it's better to have it ready earlier than later, coz some non-revealed features of Nxt may lead to explosive growth of the userbase.


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