Transparent Forging Dissected

Review of one of the most promising features of NXT

In the hectic days following the November 24th, 2013 launch of NXT, one of the most future looking features of NXT and probably one of the reasons for it’s spectacular price increase was Transparent Forging. Let’s revisit this feature, see how it has developed and look at some future applications.

What is Transparent Forging (TF)?

The NXT blockchain relies on the proof of stake (POS) consensus algorithm, the process of generating new blocks is called “Forging” and the block generators are named “Forgers”. A unique property of the NXT POS algorithm is that given the existing block signature and account balances and public keys, all are publicly available for each node, the identity of the next block generator (a.k.a forger) can be calculated in a split second. The term describing this interesting property is “Transparent Forging”.

Why is this important?

In a typical Blockchain or DAG structure, wallets submit transactions to their own full nodes or to a random remote node, these transactions propagate between nodes through the network until they reach the node which would generate the next block. This process is very inefficient since its speed is limited by the latency and bandwidth of internet communication. This overhead, increases as the blockchain network grows.

Transparent Forging, promises to solve this problem by allowing wallets to identify the account who is about the generate the next block, then find the address of the node on which this account is forging and submit the transaction directly to this node. This saves the need to propagate transactions through the network and also reduces the chances of honest forks at the top of the blockchain since the forging node has better view of the unconfirmed transaction pool.

What are the tradeoffs?

There are few problems with Transparent Forging that makes it less appealing for public blockchain usage:

  1. Knowing the node address of the next forger allows attackers to launch denial of service attack against it.
  2. Large NXT stake holders may not want to reveal the identity of their node in order not to leak information about themselves.

What is the status of TF?

At the moment TF is partially implemented on the NXT blockchain, the NXT wallet shows the next forger account and the time until is can generate the next block with reasonable accuracy. However forging accounts cannot be associated with their forging node for security reasons and therefore the wallet does not attempt to submit transactions to the next forger node.

Therefore, TF while being an interesting concept, currently, is not being used in practice on the NXT public blockchain.

Transparent Forging in Private Permissioned Blockchain

The problems which restrict the adoption of TF in public blockchain environments does not affect private permissioned blockchain environments. In this configuration nodes are associated with their account by default and denial of service attacks can be mitigated using off the shelf hardware or software solutions.

This makes TF a very attractive solution for scaling private blockchains and provides private blockchains based on NXT and Ardor technology a significant advantage over other private blockchain solutions.

Summary

The NXT POS algorithm has unique ability to predict the node which will generate the next block a.k.a Transparent Forging, TF has the potential to significantly improve transaction propagation speed and reduce forking. TF is not implemented on the public blockchain due to security reasons. TF is ideal for improving the scalability of private blockchains.