In a recent criticism of cryptocurrency, Choi, J (2014) stated a logical fallacy that the three independent goals of security, environmental protection, and decentralization cannot be accomplished in a cryptocurrency ecosystem. This fallacy, or myth is predicated on the assumption of network participant competition at the core protocol level of all cryptocurrency ecosystems. This assumption holds true for Bitcoin and all of its alt-coin clones because they are based on Proof of Work (PoW) competition between network participants. 100% Proof of Stake (PoS) Nxtcoin network participants do not compete at the core Nxt protocol level for scarce resources.
The Nxt cryptocurrency ecosystem provides incentives to maintain a secure, efficient, and decentralized network. A distinction is made between NXT, the currency and Nxt, the ecosystem to avoid confusion. The Nxt core code has been developed to improve upon the functionality and security of Bitcoin (BTC), the pioneer of the blockchain technology. The size of the Bitcoin blockchain has swelled to over 16 GB of data in five years time since the casting of the Bitcoin Genesis Block, and includes photos of Nelson Mandela, wikileaks, Python software and more (Shirriff, 2014). This enormous chunk of data must be downloaded and verified by a traditional end user client before the end user can send BTC. In contrast, the Nxt blockchain is approximately 110 MB and the Nxt core is designed to scale efficiently with the addition of more applications and users.
As a result, blockchain bloat has become a major problem for Bitcoin. As the bloated blockchain grows larger, the barrier to entry to new end users rises. Bitcoin enthusiasts may use a light client such as the Mycelium wallet, but these users do not help secure the network. The incentive to secure the Bitcoin network exists in the form of mining new Bitcoins earned competitively through Bitcoin mining with specialized power hungry Application Specific Integrated Controllers(ASICs). This competition to secure the Bitcoin network has led to an unsustainable and irresponsible use of electric energy to maintain the security of one blockchain.
Blockchain bloat and a geometrically increasing power requirement are not the only fatal flaws in the implementation of the Bitcoin protocol. The concept of a decentralized blockchain that utilizes competition to provide security at the blockchain protocol layer is destined to fail. Competition between Bitcoin miners has led to dangerous concentrations of Bitcoin mining power in vast mining pools, physically represented as server farms. The concentrated mining pools securing the Bitcoin blockchain (and all Bitcoin alt clones) present a real hazard to the security of the Proof of Work networks in the form of selfish mining.
In a research paper published by Eyal and Sirer (2013), titled “Majority is Not Enough: Bitcoin Mining is Vulnerable”, a successful selfish mining attack succeeds with control of far less than 51% of the Bitcoin network hash rate. This attack is based on the colluding selfish mining pools building a longer transaction chain of successfully computed blocks, then intentionally delaying the release of the solved blocks which causes the attacking pool to gain control of the network due apparent production of a longer chain. Please read the excellent research paper written by Eyal and Sirer here and blog here for more details and mathematical proof of the specified attack method.
The 100% Proof of Stake Nxt network prevents the possibility of selfish mining attacks by encoding transaction incentives in a non-inflationary cryptocurrency system. Transactions (blocks) on the Nxt network confirm every minute versus every six minutes on the Bitcoin blockchain. Every minute, the Nxt network nodes reach consensus through the design of the Nxt protocol and designate a specific Nxt node to confirm each block of transactions. The consensus requirement of the Nxt ecosystem stands in contrast to the competition of Bitcoin nodes. This consensus allows one node to perform the cryptographic calculations of each block rather than having every node on the network attempt to solve the same cryptographic calculation at the same time.
This important distinction in the difference of the function of the Nxt blockchain saves vast amounts of energy by not repeating the same work globally on every block. The Nxt network enables a new generation of sustainable, secure distributed applications to be deployed on the low power requirement Nxt ecosystem. By optimizing the Nxt core code for security, efficiency, and speed, the Nxt network offers the ideal platform to deploy new applications utilizing the innovative blockchain technology.
Nearly any low-power device can use and secure the Nxt blockchain such as Raspberry pi, laptops, Udroids, Cubietrucks, and desktops, etc. A byproduct of designing efficiency into the core code of the Nxt cryptographic ecosystem is protection of the environment through low energy consumption of the network. Only 3 ½ months old, the Nxt cryptocurrency ecosystem enjoys a geographically disbursed decentralized network. This network has grown to over 26,000 accounts and hundreds of Nxt nodes providing a fully redundant and robust cryptocurrency network. Full source code has been released for the Nxt core and the public, researchers; in fact anyone at all is invited to examine, compile, hack, fork, and/or redistribute the Nxt core code.
Picard, J. (2014). Retrieved from https://bitbucket.org/JeanLucPicard/nxt/src
Eyal, I.,& Sirer, E. (2013). Majority is not enough: Bitcoin mining is vulnerable. Retrieved 3/10/2014 from http://arxiv.org/abs/1311.0243v5
Shirrif, K. (2014). Hidden surprises in the Bitcoin blockchain and how they are stored: Nelson Mandela, Wikileaks, photos, and Python software. Retrieved 3/10/2014 from http://www.righto.com/2014/02/ascii-bernanke-wikileaks-photographs.html
Choi, J. (2014). The impossible trinity: Security, environment protection and decentralization. Retrieved 3/10/2014 from http://bitcoinmagazine.com/10829/impossible-trinity-security-environment-protection-decentralization/
Sirer, E. (2013). Bitcoin is broken. Retrieved from http://hackingdistributed.com/2013/11/04/bitcoin-is-broken/
Linder, B. (2013). Cubietruck dev board with Allwinner A20 dual-core CPU now available for $89. Retrieved 3/10/2014 from http://liliputing.com/2013/10/cubietruck-dev-board-allwinner-a20-dual-core-cpu-now-available-89.html