NXT For Investors #13 – What Is The Difference Between The Bitcoin (BTC) Blockchain Vs. The Nextcoin (NXT) Blockchain?

Tai Zen: This is Tai Zen and Leon Fu and we’re excited to have with us here today Aaron. He is one of the most popular and prolific Nextcoin ambassadors on BitcoinTalk and on all the Nextcoin forums.

Aaron: There’s one interesting thing NXT doesn’t use. A lot of people who understand the currencies will make the argument against NXT that it’s trivially easy to make a longer blockchain, right?

That’s true. It makes blockchains a zillion blocks long of the computer in two seconds. NXT doesn’t actually use the longest blockchain to figure out which ones are legitimate. It uses the one that has demonstrated the greatest involvement, the greatest stake involvement in its creation, right?

Whichever one has had the most stake involved in the process of creating. So you could, in theory, have someone relay a chain to you say “No, this is the right chain and shorter than the one that you have.” and then have your client switch to that and say, “Okay, this is the legit chain, even though it’s short.”

So that’s different from Bitcoin, right? Bitcoin is the longest chain remains, right

Tai Zen: Yeah. The longest hashing chain is that what you’re talking about?

Aaron: Yeah. With Bitcoin, the longest chain wins. With NXT, it’s not the longest chain. Longest doesn’t matter, it’s which one has demonstrated the greatest stake involvement in its creation.

Leon Fu: And how do you demonstrate that?

Aaron: Well, what you do is you just go back through and calculate. So there’s a threshold for acceptable submission of your stake. And as time passes, that threshold grows until it passes where you’re allowed to write.

Then you can look at the blockchain you can say, “Okay, this is the account that gets to do it first.” Then the time comes and goes. “Okay, well, no, he wasn’t there.” So more time passes third. “Okay, well look there, it’s there. So we’ll go with him.” And so you can look and say is “Okay on this block, was it the first account that was allowed to do it, that made it? Or the second or the third?

And you can imagine that the one that showed that the first person who was eligible to offer that block claimed it would demonstrate the involvement of more stake. Then it changed where the third, fourth, fifth or 100th person was the one who ended up claiming the right to that block and that’s sort of confusing.

But what you can do then is add all the stuff then you can say, “Okay, whichever has the largest number, now here you run into a problem, well what if they just go way off into the future in the year 3333, and so look at how much stake is involved?

So what you do in order to check for that is you just make sure that they’re not claiming their chain teleported back in the future. As long as they aren’t making that claim, then you can look which one has the most stake involved.

Leon Fu:  Okay. Okay. Sounds like it’s more about like which node has been involved in the network that they own. Right. That’s what, that’s how I seem to be understanding you.

Tai Zen: It is that correct? The time that you have, not just the size of your stake, but the length of time of your stake also contributes to it.

Aaron: Just selecting which changes is the right chain, right? Because the shorter the amount of time, the more likely it was that more total amount of stake was involved in the creation of that block. So you can see the merit of having that chain that had the most stake working on it as being the right one. Right. That intuitively makes sense. Right?

Tai Zen: So, let’s say if Leon had a million Nextcoins in his account, but he’s only had that for one week and I have 100,000 Nextcoins…

Aaron: That’s not what I’m saying, I’m saying for each block that’s forged, right? So for each block that’s forged, time is important. As time passes, there’s a number called the “hit”, the numbers is called the hit and it grows as time passes

Eventually when it gets large enough, then your private key holding your stake is considered acceptable for making the block right. It has to pass that threshold. And then as it grows, so supposed you’re not there, it’s going to keep growing.

Well, now somebody else’s stake is acceptable. Well, if he’s not there, that number’s going to keep growing and keep growing. Right?

And your private key times your stake, right? It’s not exactly how the math works, but it’s a simpler way to think of it, right?

That number keeps growing then eventually it will be large enough to where someone is available in the network to forge that block and it passes that threshold where he can do it right, but the less time that’s needed in order for the right to claim of block or the right to offer a block to be claimed.

The less time that’s needed, that’s strong anecdotal evidence that a greater total amount of stake was involved in trying to forge that block. Does that make sense?

Tai Zen: Okay, it’s a little bit technical for me to understand, but what is the advantage that this has over the Bitcoin blockchain? What advantages that give…

Aaron: There’s no advantage. It’s just different, it’s how we can make it work, it’s part of the process that makes that possible. So the advantages are that what I already described enough the advantages of transparent forging, this makes that possible.

Don’t focus on how we think to figure out which chain demonstrated the greatest involvement of stake. Just focus on the abstract idea that whichever chain did involve, did have the greatest amount of state involvement. You can see why that would be the chain you would want to go with, right?

Just like with Bitcoin, it’s the one that has the greatest amount of hash. Okay. What I just described is just how we figure that out, how we figure out which chain.

Leon Fu:  Yeah, you’re trying to figure out like the process of who has the most stake and it’s not just a how many coins alone, right.

Aaron: It’s the process of figuring out which one of these two alternate blocks you’ve got to forge, right? Which one of those two had the most stake in the network they had been trying to make?

Leon Fu: Sure.

Tai Zen: So basically this is the algorithm that determines… because we have, you know, thousands of nodes across the network trying to produce the next block. So the process that you’re describing basically determine which is the next block that goes on top of the blockchain, gets added to the blockchain basically. Is that…

Aaron: Also describing how a lay observer knows which chain is a legitimate change, how we probably leverage that process in order to make that determination.

Tai Zen: Okay. So that if you have two blocks coming in at the same time, you would be able to determine which is the correct one or which should be the correct one.

Aaron: Or two block chains. Right. So you’ve got to split, there are 6 extra blocks on this one and six blocks pointing off on that one. Which one do we go with?

Tai Zen: Okay. That makes sense.

Tai Zen: You have a lot of articles out on the internet about NXT and then you have a lot of writing out there, now does someone have to contact you in order to use those articles or they are welcome to use your articles and it’s okay and they just need to reference you, what’s the policy on that?

Aaron: Information is nobody’s property.

Tai Zen: So you have no problems with people using your articles on their websites or their blogs or anything like that

Aaron: You can do anything other than changing it and say that that’s what I wrote.

Tai Zen: So as long as they use it in your words—

Aaron: Or change the words and say that they change the words.

Tai Zen: As long as they’re clear that they re-edit it and which portions re-edit it.

Aaron: As long as they don’t say that I said something that I didn’t say, everything else is fine.

Tai Zen: I would also like to add to anyone watching this that I have included the bottom of all these videos in this interview with Aaron here and you know I’m grateful that he took the time to answer a lot of our questions here.

I’m including his NXT address below, if you guys want to make donations for his efforts directly to him, be aware that the address below and I will make the mark it very clear that they belong to him so you can donate directly to him, even though the videos are on my blog and I guess if you have a Bitcoin address you can include it down there too and post it down there too.

Okay, I hope this video is able to help you understand more about NXT and we’ll look forward to seeing you guys in the next video. Thanks.


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