SolidCoin - Officially the most secure P2P currency
51% protection algorithm
Pretext
Trying to solve the 51% attack issue inherent in cryptocurrency designs like Bitcoin is quite challenging. On the one hand it is fantastic having thousands of nodes around the world processing transactions, on the other it is also quite the security issue. In his Bitcoin paper, Satoshi identified several issues, with the 51% attack being the greatest.
So what is the 51% attack? To understand that you have to understand how Bitcoin works. Essentially Bitcoin is a collection of nodes performing "virtual work", the more work you do the higher your rating on the network. So what happens when malicious users get together and manage to do more "virtual work" than the "good people" ? Well that is the 51% attack, and it basically means you can wake up tomorrow with zero Bitcoins in your wallet. It means any business that accepts Bitcoins can get robbed and have all their goods taken with fake Bitcoins. It also means if they wanted, governments, large corporations or hackers can "shut down the network" by refusing to accept any new transactions. Complete network shutdown. Can't do anything with your Bitcoins, neither can anyone else.
Now obviously Bitcoin proponents will say things like "Yes well we just need to pool together the good users" or "it's unlikely anyone will have that much network power" . Yet as this article is being written one person (deepbit) controls nearly 50% of the Bitcoin network. One person. Could you operate a Bitcoin business in conditions where you the only thing standing between you and complete bankrupty is words like "well only if" or "it's sort of unlikely, but" ? Will any serious business open themselves up to a group of hackers able to steal millions of dollars from them? The short answer of course is NO.
Obviously to reach the next evolution of p2p cryptocurrencies we cannot sit around holding hands and praying that nefarious people don't attack the network. We know they will, it's human nature. Furthermore serious businesses will not accept a cryptocurrency until it's easy for them to implement, secure for them to do so and they can be sure their funds are as secure, if not more secure than funds in the traditional banking system.
How SolidCoin 2.0 solves it
SolidCoin takes a basic human trait found in many communities and systems. The more investment someone puts into a system, the more they want to protect that community or system. Pretty simple theory that most of us are familiar with, yet how does this relate to SolidCoin?
As with existing cryptocurrencies, SolidCoin 2.0 stores transactions in a "block chain" which is essentially what it sounds like. Transactions go into a block, nodes do work on that block to verify it, and if the work is good enough they can submit it to the rest of the network. SolidCoin 2.0 then comes into action, every _other_ block in the chain must be worked on by someone with at least a million (1,000,000) SolidCoins in an account.
Why can you trust someone with a million dollar account? Simply because if they have that many coins they are well invested into the SolidCoin system, if they tried to attack the network they would obviously devalue a great amount of their assets. But it's not just this simple, multiple people can have million dollar accounts so how do we sort out who is "more right" if they submit blocks at the same time? We trust the person with the most money, as they have the most to lose.
Some may say "but now you have only a few nodes on the network susceptible to being hacked". Well this is somewhat correct, however nothing is limiting the placement of the million dollar accounts on multiple nodes, therefore making the pinpointing harder. A new feature is being added to SolidCoin which also allows you to proxy where a block will "come out" onto the network, making identification of trusted nodes nearly impossible.
Unlike the Bitcoin model where Satoshi falsely thought you could rely on this relationship of CPUs being humans, with money accounts you can be pretty sure it is. The network is no longer susceptible to botnets, hackers, or even governments. The only way to attack the SC2.0 system is try to become the two or three largest account holders, and how would that happen? They'd have to buy SolidCoins just like everyone else, driving price up insanely in the process, that's even if people were willing to sell them enough SolidCoins.
One initial problem with this p2p security feature is SolidCoin only had 1.112 million coins prior to this security feature being implemented. To solve this, 10 accounts of 1.2 million were created in the genesis block. These are special accounts that cannot be spent on the network, effectively making them "Null accounts used for special purposes", until SolidCoin does have real millionaires.
With this new 51% protection feature there is a finally p2p cryptocurrency large businesses and users can rely on. Protected from major threats and attacks by governments, corporations and hack groups.
