They say proof of stake is insecure and scare you with academic jargon like “nothing at stake attack”, “long range attack”, “mining on all branches” and “the need to use some external resources to maintain consensus”. We have all heard this again and again.
Then some say, well, maybe proof of stake can be safe, but the specific NXT proof of stake algorithm has some issues like the “block skipping attack” and instead they offer a complex theoretical solution that is almost impossible to implement in practice.
Do not be scared, NXT uses a simple variant of proof of stake that anyone can understand. It has been used in production since November 2013. It is open source, so anyone can validate that it indeed works as designed.
In practice, none of the scary “attacks” described by academic research have materialized into a real threat. Simple measures were taken to refute some of these attacks; other attacks turned out to be nothing more than scare tactics.
NXT’s proof of stake does have significant practical advantages compared to the Bitcoin proof of work network, which is predicted to consume the amount of electricity consumed by the state of Denmark in the near future, and the Ethereum network which will follow suit. The whole NXT network currently consumes as much electricity as a well-heated household in the state of Denmark. Furthermore, the proof of work consensus algorithm does not make sense in a permissioned blockchain environment. In contrast, the NXT proof of stake consensus allows you to initialize a small number of account balances and launch a new blockchain in a matter of minutes.
So, let’s distinguish between theoretical problems and practical solutions. NXT proof of stake works and works well. In fact, it works so well that the Ardor platform security model is also based on the same algorithm.