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Many people talk about NXT Proof of Stake (PoS) being insecure due to the "nothing at stake" problem. I read up some posts about nothing at stake, but I still do not understand how it works. Can someone explain how the "nothing at stake" works in laymen terms and how it affects Proof of Stake coins like NXT?

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Essentially, PoS' nothing at stake problem is that you don't lose anything by mining. In Bitcoin, you lose the money you spent on energy to power your miners. Thus, in bitcoin mining you want to make sure you are mining on the correct chain all the time so that you have the best possible chance of your solved block being accepted by the network. In PoS coins, for the most part, there is no incentive to just mine on one chain. That is, a rational miner will mine on all chains that he/she knows about, because it doesn't cost them anything to mine on them (just a few CPU cycles) and they maximize their profit by mining on multiple branches. But since everyone mines on multiple branches, no one can come to a consensus!

  • so why isn't someone mining on all chains to destabilize the PoS network? – Patoshi パトシ Sep 30 '14 at 23:43
  • How do you know someone isn't? We only know that a large portion of people are not doing this because PoS coins are still achieving a consensus. – morsecoder Sep 30 '14 at 23:46
  • so your saying when someone does do it. the PoS coin will not achieve consenses? i'm guessing 1 node wouldn't be able to do this alone, how many would be needed then? – Patoshi パトシ Sep 30 '14 at 23:49
  • To be honest, though, I'm not actually sure if this is one of those theoretical 'could happen' attacks or if someone is actually doing this. I would guess that someone has been able to make it work, though. – morsecoder Sep 30 '14 at 23:49
  • One node would be able to do this alone just fine, they just mine on multiple chains whenever they hear about them. And it would take more than just one someone to throw the network off, you'd probably need a good chunk of the nodes on the network actually mining on multiple chains before you'd see any instability. – morsecoder Sep 30 '14 at 23:50

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