Re: Delegated Proof of Stake (DPOS) White Paper by Daniel Larimer

Can they collude? Assuming they did collude the only thing they could do is block transactions and it would be instantly detected by all peers. A fork would be launched immediately with these delegates stripped and the two chains would compete against each other in the market. Assuming the delegates were just random people that attempted to screw with the system then consensus would be maintained.

What happens if somebody sets up 51 delegates, provides incentives to get the votes, and then takes over? Its much easier than trying to get 51% of the mining power.

First of all someone with 51% of the delegates only has one power: to exclude transactions or to stop producing blocks.

If they gain 51% of the delegates and fail to include transactions that would vote them out then it will be very obvious to everyone on the network, the blockchain will be hard-forked by some developer and the network will continue to function. You see what binds a network is not the software rules, but the social contract among the community. It is almost inconceivable that in the event 51% of the delegates stop including transactions that the community would sit back and take it for long.

Competition among chains and no barriers to entry or forking keeps people honest because there is NOTHING to gain by a 51% attack.

Note that these 51 delegates would have to pretend not to see blocks from the other 49 delegates and thus the attack would be so obvious and disruptive that it wouldn't last more than 24 hours before community members took action.

Is it just stop including transactions or putting in some dubious ones too? I can see how a 51% attack can benefit someone trying to manipulate big money. You will be running banks, lotto etc so the incentive is there.

wouldn't last for 24 hours doesn't look too good if bitshares is aspiring to replace the big financial institutions we all hate now.

They cannot produce dubious transactions... if they double sign then that is incontrovertible proof the delegate should be fired and is easily detected by all nodes on the network. In less than 50 minutes every delegate should have confirmed your transaction and a 51% attack / double spend becomes impossible. So large financial institutions have nothing to fear if they wait just 1 hour... not even bitcoin has this level of security... it takes 6 blocks and even then a fork could result in a doubles spend.

All clients automatically recognize when a block has been missed and the 'confirmation window' is automatically lengthened and wallets are warned. No one would lose money... everyone would immediately see that 49% of the blocks are being dropped despite being produced on time. The client would view this as a network-split at least and automatically inform everyone to stop trading until the fork is resolved. Under normal conditions the network would reconnect and all delegates would start producing blocks again and the fork will be considered resolved. Under an attack the 'fork condition' will remain until the attacker can get enough votes to fire the other 49%.... this could take a while and may be impossible once people realize what was happening. The minority (good) delegates and majority (good) clients would manually flag the attackers blocks to be ignored. In a relatively short period of time the attacker's delegates would be voted out of the minority fork and it will quickly regain its title of being the longest chain.

So as you can see there is a simple algorithm in place that allows the good majority of shareholders to quickly recover control from an attack. No funds can be stolen in this process unless people choose to ignore the automatic chain fork detection warnings.

Sounds quite good. Do you have anything running or is this all just hypothetical at the moment? You speak as if you have the algorithm working and have survived through attacks.