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Application Level
Other schemes beyond POS can be implemented at the application level of the NXT system. These other schemes, Proof of X (POX, where X is some variable), need not be utilised exclusively to secure a network. POX can be utilised for some other representative purpose. E.g. POX could be utilised for proportional representative voting, allocation of dividends, application of user ratings in various categories, lottery reward distribution, macro-economic influence of token distribution, manipulation or stabilisation of token price etc. Such POX schemes will have different levels of accountability and trustworthiness (discussed below) which will affect their practicality, application, scope and usefulness.
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What is X?
A facetious answer is that X can be anything. The following non-exhaustive list might highlight some of the more obvious or relevant substitutions for X with regard to the NXT system. Proof of Work Proof of Stake Proof of Burn Proof of Isolation Proof of Excellence Proof of Contribution Proof of Support Proof of Charity Proof of Raspberry-Pi-Deployment Proof of
An important factor of what X is, is whether or not X can be verified. And how unambiguous and trustless can the verification be. Can Proof of Work be verified? Yes, for certain types of work. Can Proof of Support be verified? Yes, for certain types of Support (e.g. total uptime supporting the security of the NXT network, regardless of block reward probability). A Proof of X scheme should be expensive to the user involved (e.g. expense of time and/or money), but it should also be cheaply and easily verifiable by every other user on the network.
Strong POX
The following two POX schemes are important in the NXT system because they are unambiguously algorithmically verifiable. Verifiable Proof of Burn Proof of Burn (POB) is a scheme where a user destroys coins (or equivalently renders them un-usable or inaccessible). In the NXT system, one could burn tokens/coins by sending them to a verifiably inaccessible account. Thus, NXT coins/tokens can be entirely irreversibly removed from circulation. This must be implemented carefully as the action cannot be undone (or if it can be undone then the security of the entire NXT system will have already been undermined). A verifiably inaccessible account can be generated in a number of ways. A simple way would be to gather entropic data from multiple users and combine it to form a new account number. E.g. asking 10 NXT users for single random numeric digits might result in receiving the numbers 2,4,2,6,7,2,8,1,7,5. Now simply send some NXT coins/tokens to account number 242678175 and they can be considered verifiably burned. Verifiable Proof of Isolation Proof of Isolation can be defined as verifiably removing NXT coins/tokens from the potential forging pool. This can be done by demarcating them into Silos. Another way to conceptualize Proof of Isolation is as Proof of Burn-of-Stake. The stake is effectively being waivered or burned. A Silo is simply an account/address which contains the isolated coins/tokens. Proof of Isolation can affect the AVG_BASE_TARGET value/calculation by making it more probable for every other user to forge a block.
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The single input constraints of both the Strong and the Weak Silos could be relaxed. However, accounts which have no outputs (outgoing transactions) are not made known to the NXT blockchain until they make their first outgoing transaction. This could make it computationally intensive to search the entire blockchain for multiple inputs to the same address. An outgoing transaction could be sent to the entity who requires Proof of Isolation from the Silo account, to identify the Silo and consequently to make the Silo known to the blockchain allowing for additional inputs to compound the isolated funds and presumably increase the earned reward (economic or otherwise).
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Weak POX
The cases for the following POX schemes are not as strong as the previous two. However, they highlight some use cases of the NXT system at the extremes of its constraints. Proof of Time-Locked Cold Storage Time-locked Cold Storage Accounts could be implemented within the NXT system in a number of ways. For example, to lock an investment away for a certain period of time the passphrase for the account in which it is stored could be chosen in such a way that it would take an approximately known length of time to brute force the passphrase by someone who does not already know the passphrase. Proof of Work Consequently, for those nostalgic for mining, a POW scheme could be constructed to determine the passphrase for and accordingly unlock the time-locked cold storage accounts. The criteria of the passphrase would determine the passphrase mining strategy and ultimately the type of POW scheme employed. Proof of Excellence A true Proof of Excellence scheme ought to involve producing some quality output which was previously unknown to or previously unachievable/unattainable by others. This is difficult to implement and to verify, however. An approximation of Proof of Excellence could be implemented in the form of Proof of Pre-Defined-Excellence. Scheme 1: In this case an actor could solve a difficult problem and store a bounty in an account with a checksum of the solution as the passphrase to the account. Then the actor could set a challenge for another user to replicate the solution of the problem to retrieve the bounty from the account. Scheme 2: In a related case, the user could perform increasingly excellent work to determine one passphrase after another in a chain of tasks. This could involve designing new algorithms to solve problems in ever more intricate or more elegant ways. Temporal elements could be added to these aforementioned schemes to achieve a truer Proof of Excellence implementation. For example, in Scheme 1, the reward could diminish over time. In Scheme 2, a race between competitors could be organised where the victor earns the entirety or proportion of the reward. A key point to note here is that, in the case of Pre-Defined-Excellence, the solution and its corresponding checksum are what unlock the account containing the bounty. The method of solution might be wildly different to the initial reference solution. Consequently, new and potentially better approaches to solving real world problems could be discovered.
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Miner 1 Ratio
Miner 1%
Miner 2 Output
Miner 2 Ratio
Miner 2%
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The following Economic Measure Antagonistic Pairs have been identified in the NXT system:
Pair 1 1. Proof of Generation 2. Proof of Burn (POG) (POB)
Proof of Burn is the Antagonist to the Proof of Generations Agonist. Every complete system should be prepared for the possibility of its own demise. At the time of demise the system should fail gracefully. In the case of the NXT system, all NXT tokens could be verifiably burned to reduce the effective usefulness of the system towards zero. It would be prohibitively expensive to burn all the NXT tokens as this would most likely require one individual or organisation to purchase all of them. Pair 2 1. Proof of Stake 2. Proof of Isolation (POS) (POI) or alternatively Proof of Burn-of-Stake
Proof of Isolation is the Antagonist to the Proof of Stakes Agonist. A hybrid POS/POI scheme could be implemented in the NXT system with little or no change to the system. Incentives (economic or otherwise) can be devised to reward those actors who isolate NXT tokens from the potential forging pool. The purpose of a POS/POI hybrid scheme is not to prevent forging or to stifle decentralisation. Instead it is an attempt to avoid the pure POS scheme running out of control. Free market behaviour would allow users to perform their optimal strategy or ratio of forging and isolating to maximise their return. Pair 3 1. Proof of Work 2. Proof of Cold Storage ((POW) with the possible inclusion of Proof of Excellence (POE)) (POCS)
Proof of Cold Storage is the Antagonist to the Proof of Works Agonist, in this particular scenario. As outlined earlier, this pair of schemes could enable practical real world problems to be solved in new and exciting ways.
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Implications
The implications of additional Proof of X schemes being employed in the NXT system are far reaching and may be intractable: only time will tell how they develop. Some of the implications are as follows: It is possible to manipulate the total number of tokens in circulation It is possible to incentivise against forging (by offering a better alternative) It is possible to incentivise for isolating
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Summary
Ultimately the wider NXT economy and its actors will decide what to do with any Proof of X scheme (if anything) at the application level (or indeed at the protocol level if there is sufficient motivation to build-in another fundamental POX). It would be interesting to embed the Proof of Isolation scheme deeper into the protocol level to successfully counterbalance the current Proof of Stake economic measure monopoly. Exploring the available economic measure antagonistic pairs may greatly enhance the longevity of the NXT system. It is a testament to the NXT project, developers and community that the NXT system can inadvertently harbour such immense extensibility and flexibility in addition to all the deliberate and powerful features it inherently possesses. If Bitcoin has been described as decentralised programmable money, NXT then can be described as something akin to a decentralised programmable economy.