An example of a nothing at stake attack is an attacker buying lots of “old stake” from users inexpensively inexpensive to users who no longer have stake in the currency. This can be made convenient by offering small payments to users for uploading their wallet.

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Eventually after accumulating enough “old stake”, the user can begin creating blocks and destroying as many or more coin days than the network was at that time. This block generation can be repeated until it catches up to and beats the current main-chain very cheaply. There are also “stake grinding” attacks which require a trivial amount of currency. In a stake [2] grinding attack, the attacker has a small amount of stake and goes through the history of the blockchain and finds places where their stake wins a block.

In order to consecutively win, they modify the next block header until some stake they own wins once again. This attack requires a bit of computation, but definately isn’t impractical.

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Because these attacks exists, including Peercoin [3] and Blackcoin [4] proof of stake cryptocurrencies have “master” public keys that control the blockchain. This class of cryptocurrency is either insecure or centralized, however proof of stake based on a PoW currency is useful in some systems because gaining stake is costly, but it isn’t workable for bootstrapping distributed consensus.

It is an application layer protocol and tools can be built on it like websites can be built on HTTP. There is a class of cryptocurrencies that promise features like casino websites and exchanges and anonymity protocols to be built on top of them. When creating a new website, one doesn’t make a new protocol unless it is necessary. When creating an app such as ” DarkSend “, one doesn’t need to make a new protocol such as “Darkcoin”.

Because Darkcoin is by far the most popular cryptocurrency of this class, the Darkcoin example will be covered in this section. The Darkcoin devs created a tool called DarkSend. DarkSend is an implementation of coinjoin an anonymity feature originally implemented in Bitcoin [5] which utilizes the Darkcoin network to organize the coinjoins.

If DarkSend becomes open source and is useful, it will be ported to Bitcoin with a few small modifications. These changes won’t be a hardfork, they will likely involve the masternodes being paid by those they are coinjoining for rather than the block reward, which is already possible and implemented for Bitcoin.