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Solidcoin takes the following approach to preventing the 51% attack:

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.

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.

So, who controls these ten special purpose accounts? And are they supposed to be disbanded when real millionaires come around?

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    As it is, I guess this site is the best resource for Solidcoin questions as well. Unless you want to rely on the FAQ on solidcoin.info, which has such gems as "Q: Will Solidcoin replace Bitcoin? A: Almost certainly".
    – Thilo
    Oct 29, 2011 at 0:30
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    But this implies that solidcoin is a legit currency when in fact it's controlled by one person.
    – tysat
    Oct 31, 2011 at 18:27
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    What better place to discuss these concerns and potentially warn people than here?
    – Thilo
    Nov 1, 2011 at 3:34

3 Answers 3

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RealSolid controls those accounts. He claims that he has selected several trusted people to operate them, but we have no way to know if this is true or not.

There also seems to be a somewhat fundamental flaw in the reasoning. If we trust people because they have the most to lose, why should we trust people who have unspendable coins? Unspendable coins don't reflect having anything to lose at all.

It should also be pointed out that those with more than a million coins have complete control over the transactions included in the chain and who gets all of the mining rewards. They have merely to announce blocks in pairs -- everyone who doesn't control a million coins can be completely locked out by those who do.

Also, I think "the poor can trust the rich because they have the most to lose" fails the giggle test. (That is, you can't say it with a straight face, so it's probably not even close to true.)

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  • +1. Solid Coin "scheme" obviously provides no security so the question is how/why do it. Parsing words, and pices bits together it becomes clear that the "trusted nodes" and "even blocks" are merely a wealth transfer mechanism. They transfer 10% of all coins even mined directly to RealSolid personal account. A tax for the king if you will.
    – DeathAndTaxes
    Oct 17, 2011 at 12:42
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    One thing I would also add is that the 10 trusted nodes will be anonymous. The trusted nodes are currently controlled by RealSolid. In the "future" (ambigously defined) he states they will be controlled by 10 different people. 10 random people or 10 people who do what Real Solid says? Since Real Solid has copies of the private keys how can the trusted nodes ever be trusted do not be under Real Solid's control? If the 10 unique persons are annonymous how can it be verified that RealSolid didn't simply say he handed over control of the 10 nodes and instead retain control over all 10?
    – DeathAndTaxes
    Oct 17, 2011 at 12:52
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Although the idea of having 10 guardians sounds good in theory, in practice this is probably not the case, with it being one person controlling the 10 millionaire accounts. This person also has the ability to hold all solidcoin owners to ransom, as they can effectively shut down the network, unlike bitcoin, where anyone can mine, solidcoin is dependant on the millionaire accounts to mine every other block. If they shut down (which, being controlled by one person, they could easily), then the network shuts down, and everyone loses access to their bitcoins. In fact, with solidcoin, this has already happened once so far. It's a nice idea, and sometimes a nice idea is all that some people need to make an investment, whereas others (myself included) prefer to do a little risk assessment also. Those people, I suspect, don't own any solidcoins.

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David Schwarz is partially correct. If the 10 trusted accounts are used in a "coordinated" manner then they can indeed control which transactions get put in. This is why 10 separate people will be chosen to operate them. It may be possible that one or two of them may at some point either be hacked or turn malicious, but for all 10 to go that way is highly unlikely.

A trusted node does not have to necessarily have to accept another trusted nodes solution, and we are adding functionality that a majority of trust can overcome such situations.

Another thing to remember is rewriting the chain is pretty much impossible with SolidCoin, so even if for some short term a trusted node turns malicious it only means they can favor certain block winners or control which transactions they accept. Your coins will still be valid and the network can carry on fine, so the biggest Bitcoin flaw has been overcome and people can place almost as much trust in the system as they can with other traditionally secure payment methods.

People who want a 100% decentralized solution, which has numerous known flaws, can choose Bitcoin, we recommend them to do so if they want that and don't mind running the security risk. SolidCoin with it's 5% economic centralization (CPF) and secure p2p cryptocurrency protocol is for people who desire security and coin growth. Up to each user to decide what they want.

Please read our FAQ if you have any more questions. http://solidcoin.info/faq.php

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    So, will the 10 accounts be phased out when real millionaires step forward?
    – Thilo
    Oct 17, 2011 at 4:02
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    "These are special accounts that cannot be spent on the network". How can their account balance drop then?
    – Thilo
    Oct 17, 2011 at 4:08
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    Sorry I misread your question. To write a trusted block onto the network a special transaction is required, this transaction requires them to lose 5% of the last blocks generated value. So everytime a node writes a trusted block they lose a little money, about 2SC currently.
    – RealSolid
    Oct 17, 2011 at 4:12
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    @Thilo. The special accounts can't be spent on the network but every block they transfer ~1.6SC to RealSolid personal wallet (where they can be spent). This is on top of another ~1.6SC tax minted out of thin air. Essentially the trusted nodes exist to pay RealSolid 3.2SC every even block roughly 1.12M SC per year.
    – DeathAndTaxes
    Oct 17, 2011 at 12:46
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    Since RealSolid has all ten keys and will be adding code to allow him to move coins amongst the trusted accounts, it sounds like there is no actual distribution of trust. RealSolid could drain the accounts of anyone who didn't do what he wanted. Also, you don't need to compromise all accounts. You just need at least one of them plus 51% of the hashing power the other nine account holders have. I'm not sure which is scarier, the trusted people holding lots of hashing power as well or them not holding much.
    – David Schwartz
    Oct 17, 2011 at 17:09

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