Blockchain specs are highly complicated and are often completely misunderstood. It’s extremely hard to find specification explanations that are written in laymans english. This is a great chance to show why Vertcoin is built the way it is.
‘Marketing speak’ has currently ruined the Cryptocurrency space. The space full of people who have no clue what they’re talking about…talking about specs of which they have no idea the implications of. Most of these people would probably try to sell you a blockchain toaster and convince you it’s a good idea.
tldr: 99% of people in the crypto space have no idea what they’re talking about, which makes cryptocurrency a much scarier place than it already is.
Guide: If you have any further questions, talk to anyone on Discord, they'd be happy to talk technicals.
A blockchain by itself is a very awkward way of storing data, by itself it’s fairly useless. Everything a blockchain can do by itself, a central database can do better.
The paired consensus/security mechanism is the interesting part. This mechanism allows a decentralization of trust in the network ie: having many people validate and store history of the history of events.
However, this decentralization is not automatic. Over time is it paramount that these systems are made to diverge their trust over time to as many people as possible. Systems that converge over time place more power in the hands of a few people. There are quite a few different consensus mechanisms, we’ll try to cover them here.
tldr: Blockchains by themselves are useless. The valuable part is the paired consensus mechanism which must diverge ownership over time to be effective.
Proof-Of-Work is one of the aforementioned consensus mechanisms. It is also highly misunderstood.
Proof-Of-Work ensures the blockchain security through users putting energy in to solve crypto graphic proofs, this energy cannot be cheated which is why Proof-Of-Work is so good when it comes to security.
On top of this, Proof-Of-Work operates in a permissionless manner which is important long term to ensure divergence of trust.
tldr: Proof-Of-Work + Blockchain is a bigger deal that you think it is.
At first glance new people to the space often see mining as a simple distribution method however this is only half the picture. Mining can be considered a ‘spade’ and a ‘voting tool’ simultaneously, so it’s extremely important long term that no one gains excess amounts of control.
If mining was purely just a distribution method then people should be able use the most powerful equipment which would be an ASIC. Vertcoin exists as a long term bet that mining trust through higher hashrate devices will never achieve an appropriate level of decentralization due to their manufacturing situation of such devices.
The optimal device would be a tool that is already widely available and produces a fair amount of hashrate. The device that fits this bill currently manifests itself as a Graphics Card.
CPUs would be great too but unfortunately, viruses exist that take over hundreds of thousands of computers called Botnets, making CPUs almost as bad as ASICs on a mining network.
tldr: Vertcoin did not choose GPUs out of equality. They were chosen because they are the only long term trustless method that will diverge network ownership over time, which is the most important aspect in a distributed system.
Lyre2rev2 is 5 mining algorithms mixed into one. The initial version was overcome by CPU botnets, which still plague every CPU based coin today. Lyre2rev2 is designed to be flexible so that if an ASIC comes along, the algorithm will be easy to change, making the ASIC useless. Our new algorithm, Verthash will continue in this direction, focusing on Nicehash/FPGA resistance.
Interesting Fact: Lyre2rev2 was made by Vertcoin and is used by many other coins.
Vertcoin uses Kimoto Gravity Well for its difficulty adjustment which adjusts mining difficulty every block. As a coin with a smaller hashrate it’s important to adjust difficulty every block to avoid hashrate attacks. Cryptocurrencies like Bitcoin can afford to use slower difficulty adjustments.
tldr: Difficulty adjusts every block to stop mining abuse. Bitcoin can afford a slower adjustment as it is has a larger hashrate.
There is an optimal block time for coins that sits between 2-5 minutes, any faster than 2 minutes you risk blocks orphaning due to consensus lag time across the system nodes. This results in miners losing fees by finding the same block simultaneously which means one of the miners will lose money as only one can take credit for finding the block. This will discourage miners long term and dampen profits, therefore decreasing security.
The other aspect, is blockchain size. If you have a high blockrate, your blockchain size will start increasing extremely quickly in size. A larger blockchain will mean that less people want to host a full node, which will significantly decrease network security, opening up the possibility of a malicious actor introducing hundreds/thousands of fake nodes into the system.
tldr: if your block time is too short, your miners will lose profits long term, decreasing network security. Secondly, less people will run a full node which will centralize and open up attack vectors for fake node attacks, ie: fake history/ledgers.
All distributed systems are a pick two scenario and find solution to the third work without violating the two you have already chosen. Solutions to the bottom two aren’t physically possible without violation of 1⁄2, however virtual patch through the use of lightning network virtualises micro-transactions taking load off the system. This is not in essence a fix to the first layer so it cannot be called a real solution to this problem, hence the name layer 2.
tldr: This diagram is a fun one. It underpins every distributed system in existence. You’re allowed to pick 2 attributes out of the 3 for your base protocol. Achieving all 3 on your base protocol is a violation of physics.
Fun exercise: Pick two attributes out of the three and try to guess which coins have taken that particular route.
On-chain voting with Proof-Of-Work is quite an interesting proposal. The problem with this one is that the early adopters will have the most voting power in the blockchain. A project like this would need to be mature enough price wise to avoid all coins being maliciously bought up. The other issue is that this would be a permissioned system ie: you need permission from a holder to participate in consensus ie: buy their coins. Using commodity based hardware to vote enables everyone to participate and vote, making something like Vertcoin a permissionless system rather than a permissioned system.
tldr: on-chain voting is better than most systems, however, it fails in the permissioned/permissionless area.
The goal of every cryptocurrency should be to avoid short & long terms forces that centralize voting power and authority on the blockchain. Masternodes do exactly this and should be avoided.
Blockchain specifications exist in a balance, at both extremes problems start to appear and effect different parts of the build. Vertcoin exists in its current form due to this balance. If extremes are chosen it will introduce irreversible damage long term. It is important to get this balance right.
tldr: rock solid first layer specifications are key. Understanding how these specifications interact with each other is vital for long term health of the system.
Vertcoin had no premine, airdrop or ICO. Vertcoin is grounded as being a solid fundamentals cryptocurrency. Developers or founders owning massive amounts of coins through unfair advantage goes completely against the cryptocurrency ethos & is fraudulent to a degree. There is also the question of legality. Doing any sort of premine, airdrop or ICO puts you at risk of being labeled an illegal financial security.
LIT is a lightning network implementation separate from LND/Eclair (Bolt Family) etc so it differs in the way its built. Instead of having a bunch of different lightning networks, one for each coin LIT implements all the coins into a single protocol making a single unified multicoin lightning network, rather than a fragmented subset of lightning networks. LIT is actually the original code by the co-author of the whitepaper, but that’s a long story in itself.
tldr: LIT is a lightning network implementation separate from the bolt family that differs by using multicoin architecture achitecture at its base rather than connecting separate LN’s together.