Largest Bitcoin Mining Pool Pledges Not To Execute '51% Attack' 351
An anonymous reader writes "Bitcoin transactions are confirmed by performing complex calculations, also known as 'mining.' If a single mining pool gains 51% of the overall computational power in the network, various forms of transaction manipulation become possible. Only a few years into Bitcoin's existence, this existential threat appears to be at hand, with Bitcoin mining pool ghash.io approaching 51% of mining power. ghash.io has now assured the Bitcoin community in a press release (PDF): 'GHash.IO does not have any intentions to execute a 51% attack, as it will do serious damage to the Bitcoin community, of which we are a part.' But can a network relying on such assurances survive in the long run?"
If you're concerned... (Score:5, Insightful)
Add more compute power to a different pool.
Re:If you're concerned... (Score:4, Insightful)
Or more cheaply .. don't use/trust bitcoin.
Re:If you're concerned... (Score:5, Funny)
Re:If you're concerned... (Score:5, Insightful)
It is secure against manipulation
Did you even read the headline or summary?
Re:If you're concerned... (Score:5, Informative)
Re:If you're concerned... (Score:5, Insightful)
Somewhere around the ankles. There comes a point when satire is so realistic, the difference hardly matters.
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Going where electricity is cheapest hardly equates to no environmental impact - in fact the cheapest electricity is typically generated from burning coal, which is by far the dirtiest option in terms of toxic waste, in terms of CO2 emissions, and in terms of radioactive waste released into the environment without even attempting to capture it.
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Looks like it's not that much decentralized.
To Big to Fail, Redux (Score:3)
This souncs a lot like the too big to fail issue with our financial systems dependence on the sound judgement and intentions of banks. This banking problem arose when glass-stegal's repeal essentially deregualted banks and let them manage their own affairs.
But acutally it harkens back much further. In the early days of the US there was no common currency. banks issued their own script and this failed when the banks manipulated it. Later on after we had a common currency, we still had too much exposure t
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I don't know if you noticed, but the point here is that there is a group in a position to manipulate bitcoin and the only security against that manipulation is the pledge of that group, an organization that no one outside of the bitcoin community has ever heard of.
It may or may not impact the environment (my uneducated guess is it may well be more efficient in terms of energy than the portion of traditional financial services it could replace), but that has little to do with whether people use cheap or expe
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More trustworthy to who? Personally I know no one who would rather be paid in bitcoin than good old greenbacks.
Re:If you're concerned... (Score:5, Interesting)
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Re:If you're concerned... (Score:4, Interesting)
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Some people are philosophically against Science, that doesn't mean we should take their viewpoint into consideration when planing scientific things.
Re:If you're concerned... (Score:5, Interesting)
It depends which "us" we're talking about.
People who should like inflation:
- People with fixed-rate home mortgages
- People currently holding gold (not because gold is a great investment - it loses to stocks and real estate - but because fear of inflation drives demand for gold)
People who shouldn't care much:
- People who are holding stocks or real estate
- People living on government programs with automatic cost-of-living adjustments, like Social Security.
- White collar and unionized workers who get annual raises to offset the effects of inflation.
People who should oppose inflation:
- People who have cash stuffed in their mattress
- People living on fixed nominal incomes (this is fairly rare, but exists)
- People making minimum wage, but only because Congress hasn't tied increases in the minimum wage to inflation like they should have decades ago.
But you're right that typically moderate inflation isn't a problem, and in fact the Federal Reserve targets inflation at somewhere around 2% for a whole slew of good reasons.
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It takes 51% of the network to manipulate bitcoin.
What % of control do you think regular banking systems have and how much is required to manipulate that?
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What percentage of banks had to work together to manipulate LIBOR?
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It takes 51% of the network to manipulate bitcoin.
What % of control do you think regular banking systems have and how much is required to manipulate that?
Any individual bank? Not very much. Nowhere near 51%. Government, though, do have that control but tend to act in their own self-interest, which is to keep the economy running so that they can continue to collect taxes. See how that works out nicely? No need to trust in altruism.
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So you're saying that most people are just leeches on the system. It like the average bitcoin user has no idea what kind of infrastructure it takes - or doesn't care - in keeping an independent currency afloat.
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Actually most people just pay the tiny voluntary transaction fee....which the miners scoop up. It is actually a massive implementation not only of a digital economy but of a microtransaction based gift economy as transaction costs are voluntary but default so people do actually pay them.
Last bitcoin transaction I made, I actually double checked the fee.... it worked out to about 50 cents on $100. Seemed quite worth it to me given that paypal would have taken more.
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> From my understanding, it's always the same amount, no matter how much you transfer.
Don't get confused.... the amount defined as the default in the client doesn't change. However, it is a setting. You can, if you like, set it to 0 and pay no fee at all, or you can lower it. Depending on the client this might be a global setting or might be able to be overridden on a per transaction basis. Either way, it is always reconfigurable.
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This attack is not an all-or-nothing thing, either. 51% is just the threshold to be able to guarantee success. Controlling 40% of the mining capacity is enough to be able to double-spend a transaction that's been confirmed 6 times with 50% confidence.
Re:If you're concerned... (Score:4, Informative)
Sure except for the fact that I don't believe this is actually an accurate description of the 'control' a mining pool actually has. Generally people go get their client and join the pool. This sort of control would require that everyone (or most anyway) who joins the pool uses a specialized client designed specifically to ignore the rules of bitcoin and work on a fraudulent block chain.
It can't be done by just pooling together people running the normal clients that everyone else uses. Doing it via a pool like this would either mean tricking lots of people, some of whom are technically saavy and have a vested interest in bitcoin prices not being destroyes so the pool owners can cheat...or by having everybody be in on it... either way making it unlikely they would get away with it unnoticed.
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Odd, especially since it would be trivial for the mining client to do a double check. In fact, all it needs to do is to track the current block chain length and last block hash, which has to be the same as the one in the header of whatever block you are currently working on, whether it is in a pool or not.
If the client just kept track of that, cheating should be impossible for the pool admins.
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Right, I think we need a government body to maintain this so we don't have to worry about things like this. All mining pools should have to pay into some sort of reserve just in case there's a crash... lets call it the "Federal bitcoin reserve" Then they can control how many bitcoins are mined and... oh wait
A promise only goes so far (Score:2)
Re:A promise only goes so far (Score:5, Insightful)
Also, you could just as easily read this the opposite way: "Nice cryptocurrency you have there. It would be a real shame if we got to the point where we could completely control its value in other currencies and reap huge profits while doing so. Not that we'd ever dream of doing that - we promise that we're not even really considering the possibility."
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Except it is only a perception. How would they pull off such an attack unless the majority of the pool was running a hacked client that specifically ignored the rules? I have mined in a pool (briefly back before ASICs) and the pool doesn't actually have the kind of control over its members, who download their own software and set it up...and then join the pool.
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If they were serious about this, Why not fork into two separate pools?
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Sorry but being a smart miner you will avoid the situation when 51% becomes possible. The moment it is, market plummets and all your hard-mined and double-spent bitcoins become worthless. In essence, 51% is not "earn a lot of money" attack, it's a "murder the network" attack. Miners don't want the network murdered.
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Cant be worse (Score:2)
Re:Cant be worse (Score:5, Insightful)
The US government makes no such promise, and investors know it. Slow, long-term inflation is part of the instability prevention plans of most currency issuing nations.
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You've got 3 schools of criticism there. In order of frequency,
A. Vaguely conspiratorial accusations centering around the fed and/or federal government(but never states, oddly) that are completely unhelpful. Typical quote: "Quantitative easing is stealing money"
B. Austrian school whining about Chicago school being the de facto source of understanding. Typical quote: "But our assumptions say all regulation is bad."
C. Actual scholars and sane economists highly detailed concerns about specific courses of
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Oops, it looks like your agreeing politely with another poster on the internet is "flamebait." I mean, I try not to get too tied up in how people moderate me, but there really is a kind of paranoid delusion of oppression from people in column A, that they fight with whatever power they happen to have.
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And we have a little bit of column A from my post below as real-world sample.
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Comment removed (Score:5, Insightful)
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Yes, well, insofar as the US Government promises not to substantially manipulate the dollar, the dollar is stable. Insofar as they don't, the value of the dollar falls relative to other, more trustworthy currencies (and commodities) and people demand higher interest for government bonds, loans, and similar instruments, to compensate for the decaying value of the dollar.
(Of course, some "manipulation" is necessary to match fluctuations in the overall state of the economy and achieve a stable dollar. But e
Re:Cant be worse (Score:5, Insightful)
I wish people who didn't understand basic economics wouldn't post like they did.
Deflation makes an item worth $1000, worth $990 later. It hurts people with assets. However, if you have cash, that same amount of cash will buy more as deflation continues. Deflation is bad because SMART people stop buying things that will be cheaper tomorrow and inventory in shops is a bad thing because you pay interest on holding it while it reduces in value.
Inflation does not allow a country to deficit spend forever. Inflation allows paying off debt at a future time cheaper only if you ignore the interest on the debt. Usually interest on debt is higher than inflation, so that doesn't work.
What you were attempting to say is a fiat currency can never go bankrupt. If they country cannot pay debt they can print money until they can pay debt, that is the cause of hyper-inflation.
Please stop posting explanations of things that you don't understand.
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But you can still get monetary shocks even if you don't depend on fiat currency: read up on the inflationary consequences of the gold rush of 1849 [eh.net] on the (gold-back
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Depending on who you believe.
http://www.shadowstats.com/article/no-438-public-comment-on-inflation-measurement [shadowstats.com]
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Re:Cant be worse (Score:5, Insightful)
Who does GHash.IO answer to?
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More importantly, the government has to answer to the people who hold the money. Fiat currency (or, as normal people call it, "money") has two things going for it: 1. The issuing government has tight control over it; 2. The government has strong incentives to keep the currency stable. Yeah, it's a sketchy system, but it has a much better track record than Bitcoin.
Re:Cant be worse (Score:5, Insightful)
Theoretically at least, the US Government has to answer to its citizens
ahahahahahahahahahha
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You've basically proven my point. The US dollar has been used world wide for such a long time because it is a relatively stable currency. Yes, the Federal Reserve manipulates the dollar but it does so knowing there are consequences.
Mass change to other currencies would have dire consequences for the US and so there is an incentive or "check" if you will, to behave. You don't recall all the freaking out that was going on a
Re:Cant be worse (Score:5, Insightful)
That's utterly backwards.
The US dollar works because the Federal Reserve promises to manipulate it.
Yes, I Pinky Swear (Score:2)
...I will Do No Evil(tm).
Laws and pledges will inevitably be broken inversely proportional to the enforcement and proportional to the benefits of breaking your word and how many people are involved. So Bitcoin is good, no one involved is trying to make money for nothing.
Assurance is good, control ist better. (Score:2)
I'm probably going to regret this post (Score:5, Funny)
Libertarian currency in "falls into monopoly" shock.
Re:I'm probably going to regret this post (Score:4, Insightful)
I am not afraid of the Monopoly, as much as I am over reaching governments. Monopolies will eventually fail, over reaching governments just keep over reaching.
Yet somehow the East India companies managed to impoverish the larger part of humanity for over three centuries and have a run of over a century each. Monopoly and government are the same thing. Only American Libertarians think they live in a world where economic and political power have nothing in common and can't reenforce each other until the fundamentals of the economy turn against them.
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imagine the NSA doing it (Score:2)
double and triple spending the same coins
So let me get this straight (Score:5, Interesting)
Let me get this straight. In order to use Bitcoins, I don't have to trust any government ... but I *do* have to trust a group of random people on the Internet who have a massive stake in the market and say they would never manipulate that market.
Choose your poison, I guess.
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Alternative phrasing, modern post-industrial economies always depend on you dealing with other people, some of whom will benefit from screwing you.
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Hence the phrase, "Choose your poison."
Alternate phrasing - Damned if you do, damned if you don't.
Shorter version (Score:2)
"[E]conomies always depend on you dealing with other people, some of whom will benefit from screwing you"
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Indeed, I've found that to be the logical conclusion of my premise as well, but it doesn't sit well with the neoclassicalists, so I thought I'd let the premise stand on its own.
Re:So let me get this straight (Score:5, Informative)
This has nothing to do with the market in bitcoin speculation. It's about the fact that a majority of the cryptographic network (which is what bitcoin miners are) has to concur for a transaction (sending money to someone else) to be considered valid. When you control 51% of the computing power, you can start faking transactions.
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One can counter this by increasing the requirement from 50% confidence (or whatever) to 75% (or whatever). Further, this is solvable by replacing Mining operations with plain old processing for a fee operations. From what I understand, one does not have to "mine" coins to process transactions, one can simply process for a part of the transaction, as a fee. Higher Fees mean faster transaction processing. (and if it isn't part of the protocol, it should be)
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Indeed, a free currency needs more fees. Want to pay? Pay for the paying. Don't forget a fee for the pay for the pay...
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When you control 51% of the computing power, you can start faking transactions.
Not fake transactions, but control which transaction get in and rollback the recent past. So you can spend some coin to the recipient's satisfaction, then undo that transaction and spend your coin somewhere else.
I assume by "faking transactions" you mean forging other people's signatures to spend their coins. You can't do that, but you can prevent them from spending their coin.
re: trust (Score:4, Insightful)
In order to use any of the current breed of crypto-coins, I think you have to trust quite a few "random people on the Internet" anyway?
For starters, you have to put some trust in whoever developed the coin you're using -- because let's face it. The entire thing is just a piece of software that someone wrote. Did the developer pre-mine a bunch of coins that he/she is hoarding up secretly, waiting for everyone else to "establish" the coin as a viable currency, only to dump all of it in the future and crash the market -- walking away with the loot? Is there some sort of "back door" designed into a particular crypto-coin so the developer has a way to "cheat" and obtain coins more quickly than everyone else, bypassing the usual rules for mining one?
You have to put a lot of trust in the people running the currency exchanges. These places typically want you to transfer (sometimes relatively large) sums of crypto into wallets maintained on their servers, just so you can conduct a trade with that money. THEN, you have to further trust that they'll properly handle any withdrawal requests you make.
To a lesser extent, anyone in ANY mining pool has to put trust in the pool operator. While sure, most competent pools provide all sorts of statistics so you can see how your returns are being calculated and what they estimate your "hash rate" is? It's not out of the realm of possibility that one of these places could "skim off the top" by shorting you just a tiny little bit of hash rate that you wouldn't even notice. Multiplied by all of the miners using the pool, though, it amounts to a lot of CPU time the owner could be redirecting towards coins mined into his own personal wallet someplace?
If you want to talk about trusting government instead? Now you're talking about a very small group of elite, powerful individuals who call all the shots for a given currency. There's no "moving mining to another pool" if you don't trust the first one here.
So yeah, it really is a "choose your poison" situation -- but IMO, my own government has proven itself shady, not at all trustworthy, and relatively inept at accomplishing stated goals in a timely manner and under budget. By contrast, the people running the mining pools and exchanges I've used are still more of an "unknown" - but ones who so far, appear to have treated me fairly. So I know which one I'd rather place trust in right now.
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Perfect analysis. I prefer random people to organized crime .... er ... government. Thank you.
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Before someone jumps the gun, no I don't mean that we should be allowed to do anything we want. Don't even bother suggesting it as a retort; it's ridiculously cliche.
Another Bitcoin story (Score:4, Insightful)
So many Bitcoin stories. This one asks questions like,
"Can we trust them?!?"
"Are these assurances enough!?!"
Same answer to both: "Who cares anymore?!?"
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Editorial agenda.
govt takedown (Score:4, Interesting)
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Nice theory. Except the Silk Road bitcoins have been sitting doing nothing in the wallet the FBI transferred them to.
Bitcoins weakness (Score:5, Insightful)
The problem here is that mining these days requires custom ASICs made to compute the double SHA-256 used by Bitcoin as the proof of work, CPUs and GPUs just don't cut it. ghash.io is the pool attached to the larger manufacturer of them, and as its always more profitable to mine using your ASICs than sell them, you can't just buy a bunch for anywhere near the cost price and mine yourself.
Solving this will require someone to make and sell the mining hardware at near the cost price instead of using it themselves. They may lose a bit of profit but in the long run the network will be better off.
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Solving this will require someone to make and sell the mining hardware at near the cost price instead of using it themselves.
Or moving to a Proof Of Stake system and ASIC/GPU resistant algorithm (eg memory-bound):
https://en.bitcoin.it/wiki/Proof_of_Stake
https://bitsharestalk.org/index.php?topic=1138.0
However current GPU/ASIC/miners are dead-set against this as it will make their hardware much more uncompetitive vs normal computers.
Also the only thing that keeps mining profitable (Score:2)
How long until someone starts using bitcoin mining instead of storage for temporary overproduction of solar power?
Good article with several solutions (Score:3)
Bitcoin Magazine has a good article on this subject: Mining Pool Centralization At Crisis Levels [bitcoinmagazine.com]. It also suggests a number of solutions.
The primary solution is for miners to switch to a peer-to-peer mining pool. In these the control is decentralized, just like the Bitcoin network itself. Even if such a pool hits 51% market share, it will not be able to actually block or reverse transactions, since the mining pool is decentralized and so its power is vested in the network as a whole.
Exchanging one set of masters for another? (Score:5, Insightful)
I don't have strong feelings about Bitcoin either way, but as I understand it some folks support Bitcoin because it isn't controlled by a central bank or government.
Except it seems that one large mining pool -- or a consortium of smaller ones seeming independent but in truth acting together -- can game the system in certain ways. In short, controlling it. And given that large sums of money are on the line already, is Bitcoin really that different from any other currency?
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Why not? (Score:2)
But can a network relying on such assurances survive in the long run?
Are there other networks we use that rely on such assurances? ICANN comes to mind.
Not without regulation (Score:3)
But can a network relying on such assurances survive in the long run?
Answer: NO!
And, here comes the bear trap that any sane person knew was coming for this unregulated currency. Regulations will have to be put in place, which means govts will have to get involved in order for it to survive, and that has been the central reason why I and many others have remained skeptical and completely wary of this cryptocurrency from the beginning. Markets don't self regulate. It's a lie, a myth and history has already demonstrated numerous times that when there's money involved there's corruption involved. Take away any sane regulations and you have a major ripoff in the making. I am never going to deal in BitCoins, ever. Won't have any, won't take any. Give me money backed by a central reserve bank, thank you very much. Take your unregulated, make believe currency somewhere else.
P.S. It is make believe because it only has value to those who use and accept it. That it shares with real currency, except BitCoin is backed by dubious sources, at best. Again, no thanks. My $0.02/£0.02/€0.02.
We promise we'll be good (Score:3)
GHash.IO does not have any intentions to execute a 51% attack
Yeah, and that Level 18 stronghold on Game of War: Fire Age promised not to attack me either. I don't need to tell you how that worked out.
GHASH.IO already did an attack (Score:2, Interesting)
There is very clear evidence that ghash.io ALREADY used their hashing power to execute a double-spend attack on the network (at less than 50% hashing power):
https://bitcointalk.org/index.php?topic=327767.60
I wouldn't trust them an inch. Now the question is whether Bitcoiners are the same kind of sheeple that believe in the good intentions of governments. With ghash.io being a part of the new government of the Bitcoin world.
I have the impression the miners are stupid enough to not care, to not switch, and Bi
Bad Summary (Score:2)
We have put a plan in place to see that 51% of all hashing power, will not be maintained by Ghash.IO by executing the following actions
- We will temporarily stop accepting new independent mining facilities to the Ghash.IO pool.
- We will implement a feature, allowing CEX.IO users to mine bitcoins from other pools. So when they purchase GH/s they can put it towards any pool they choose.
So they are actively trying to prevent 51% monopolization of the network, not just asking us to trust them.
If you're really concerned you could use a distributed pool [p2pool.info]. Which is probably what everyone should be doing anyways.
Now compare to the Federal Reserve (Score:2)
Why would it be worse, than the traditional fiat-money systems? Where the government prints — and spends — melting out people's savings...
Control of Bitcoin (Score:3)
Ghash.io's press release indicates that they have some ideas on where they want Bitcoin to go. [ghash.io] They now have enoug power to force changes in the system.
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Or possibly this:
1. Find (or create through other agents) an index fund tied to the value of BTC.
2. Short BTC.
3. Use your mining pool's 51% position to compromise the BTC network, driving participant confidence (and hence value down).
4. Profit.
Illegal? Oh, probably. That doesn't seem to dissuade people.
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How on earth do you short BTC?
It's not like BTC is currently traded by brokers and I don't know anybody who is selling BTC future contracts.
If you know a way to do this, let me know.. There is serious $$ to be made here.
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I put it in as Step 1: Find (or create through other agents) an index fund tied to the value of BTC.
Yeah, overly simplistic I know, but the OP said that it wouldn't be in any mining pool's interest to devalue Bitcoin, so my mind went to a scenario where that mining pool first converts its entire BTC holdings to something like USD, then wagers heavily with those USD that BTC will crash, then crashes BTC. Profit.
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So "profit" step is pretty much not going to happen because the first step is not going to happen.
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How on earth do you short BTC?
It's not like BTC is currently traded by brokers and I don't know anybody who is selling BTC future contracts.
If you know a way to do this, let me know.. There is serious $$ to be made here.
bitfinex.com
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Yea, it wouldn't take that much $$ to pretty much sink BTC, at least from the perspective of a government that borrows 1 Trillion a year. Once you sink BTC, you can hand the assets over to the NSA for breaking crypto or take on some other crypto currency.
Seriously, I don't think the government cares about BTC, at least while you don't use it to break the law (not reporting income, laundering money etc).