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Bitcoin The Almighty Buck Technology

Largest Bitcoin Mining Pool Pledges Not To Execute '51% Attack' 351

Posted by Soulskill
from the currency-with-an-option-for-hostile-takeover dept.
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?"
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Largest Bitcoin Mining Pool Pledges Not To Execute '51% Attack'

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  • by egcagrac0 (1410377) on Friday January 10, 2014 @10:20AM (#45916591)

    Add more compute power to a different pool.

  • by Bill, Shooter of Bul (629286) on Friday January 10, 2014 @10:22AM (#45916627) Journal

    Or more cheaply .. don't use/trust bitcoin.

  • by dkleinsc (563838) on Friday January 10, 2014 @10:25AM (#45916667) Homepage

    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."

  • Re:Cant be worse (Score:5, Insightful)

    by i kan reed (749298) on Friday January 10, 2014 @10:29AM (#45916721) Homepage Journal

    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.

  • by Notabadguy (961343) on Friday January 10, 2014 @10:32AM (#45916761)

    So many Bitcoin stories. This one asks questions like,
    "Can we trust them?!?"
    "Are these assurances enough!?!"

    Same answer to both: "Who cares anymore?!?"

  • Re:Cant be worse (Score:5, Insightful)

    by unimacs (597299) on Friday January 10, 2014 @10:41AM (#45916883)
    Theoretically at least, the US Government has to answer to its citizens and there are a couple hundred million of us. Further, even though the US is a "super power", there are still serious consequences for mucking with the dollar too much.

    Who does GHash.IO answer to?
  • Re:Cant be worse (Score:5, Insightful)

    by Sarten-X (1102295) on Friday January 10, 2014 @10:42AM (#45916893) Homepage

    That's utterly backwards.

    The US dollar works because the Federal Reserve promises to manipulate it.

  • re: trust (Score:4, Insightful)

    by King_TJ (85913) on Friday January 10, 2014 @10:44AM (#45916925) Journal

    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.

  • Bitcoins weakness (Score:5, Insightful)

    by RalphSleigh (899929) on Friday January 10, 2014 @10:49AM (#45916985) Homepage

    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.

  • by omnichad (1198475) on Friday January 10, 2014 @10:53AM (#45917053) Homepage

    It is secure against manipulation

    Did you even read the headline or summary?

  • by QilessQi (2044624) on Friday January 10, 2014 @10:55AM (#45917075)

    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?

  • Re:Cant be worse (Score:5, Insightful)

    by Anonymous Coward on Friday January 10, 2014 @10:57AM (#45917103)

    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.

  • by Immerman (2627577) on Friday January 10, 2014 @10:57AM (#45917105)

    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.

  • by Anonymous Coward on Friday January 10, 2014 @11:00AM (#45917155)

    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 expensive energy to do the mining.

  • by Anonymous Coward on Friday January 10, 2014 @11:10AM (#45917299)

    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.

  • by CensorshipDonkey (1108755) on Friday January 10, 2014 @11:24AM (#45917507)
    I don't really understand what the problem with quantitative easing is. Inflation is running at record low levels, and beyond that inflation in the 2-5% regime can actually be desirable for us.
  • Re:Cant be worse (Score:3, Insightful)

    by i kan reed (749298) on Friday January 10, 2014 @11:39AM (#45917725) Homepage Journal

    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 action within one department they're familiar with, that usually reflect incremental improvements on economic planning. Typical quote: [actually the media never covers this sort of thing, except, oddly, the Volcker rule]

  • Re:Cant be worse (Score:5, Insightful)

    by squiggleslash (241428) on Friday January 10, 2014 @11:51AM (#45917871) Homepage Journal

    Most people don't have significant amounts of wealth stored as piles of green paper. Your home, your shares, your land, etc, are not "devalued" in any way, shape, or form by inflation.

    Do you know, however, what most people have that is devalued by inflation? Debt.

  • Re:Cant be worse (Score:5, Insightful)

    by dpidcoe (2606549) on Friday January 10, 2014 @12:07PM (#45918047)

    Theoretically at least, the US Government has to answer to its citizens

    ahahahahahahahahahha

  • by omnichad (1198475) on Friday January 10, 2014 @12:14PM (#45918121) Homepage

    Somewhere around the ankles. There comes a point when satire is so realistic, the difference hardly matters.

  • Re:Cant be worse (Score:2, Insightful)

    by AthanasiusKircher (1333179) on Friday January 10, 2014 @01:29PM (#45918991)

    I can't believe it's still considered informative to say "Deflation is bad because SMART people stop buying things that will be cheaper tomorrow". Consider the price of computers.

    Consider the price of a house, which is one of the largest purchases most people will consider in their lifetimes. You're absolutely right that when you're talking about an industrial product, gradually lowering the price is often useful and represents more economic efficiency in the process.

    Deflation is great for single products -- but here we're talking about deflation in the economy as a whole. That means that your wages are likely to go down too, as prices go down. It's not like you magically get to keep getting raises as prices go down, or even likely that businesses will be able to keep affording paying you want you do get. So you won't really be able to take advantage of those falling prices, since you'll bhe getting less and less in your paycheck too.

    And talking about durable goods and property is a different story. Why would anyone except rich people with money to burn ever buy property or a house? With deflation going on, mortgages and loans are a TERRIBLE thing, since the principal owed stays the same as value goes down and your salary goes down. Meanwhile, your mortgage payment stays the same, so your loan costs more and more and more. To avoid loans, your average person would have to save for many years, maybe decades, to buy a house outright ... only to -- wait for it -- depreciate like mad. Or, stupid people might still take out loans and all end up instantly underwater.

    I can hear your response now: "But wait, people buy cars, and they rapidly depreciate!" Yes, but cars are treated as disposable for most people -- they expect to buy another one in a decade or so anyway. AND most people spend maybe 10 times or more on a house than they would on a car. It's a significant portion of a life's savings to buy a house. Nobody wants to save all that up just to throw it into something that's instantly going to start losing value... particularly as wages are plummeting due to deflation.

    So, the real estate market collapses. Your wages are going in the toilet. But we're just getting started.

    The fact is that prices going down is *not* in and of itself a bad thing. This is what you want - it generally means the economy is getting more and more efficient and that the wealth of the nation is increasing. As time goes on, in a free market, generally the quality of goods will increase and the prices will go down.

    Yeah, I think you don't really understand what real deflation is. You think it's just increasing economic inefficiencies to introduce lower prices for some small subsets of goods. REAL deflation is pervasive in the economy and causes all sorts of values to drop everywhere -- wages, property values, etc. You won't be able to take advantage of those magical lower prices, because your salary is being "made more efficient" as well. Want to take out a home equity loan when disaster strikes? Oh, well, your house is only worth 25% of what it once was, and your loan principal will immediately start to increase in its percentage of your paycheck each year.

    Meanwhile, without loans being made, capital available for investments and business starts begins to dry up. Most of the money in the economy is not just the actual "cash" the government releases, but all of the various "money" "created" by loans and investments using other people's money. That's what drives the economy to innovate and try out new things.

    Innovation decreases, because investors don't want to take a chance unless it's a "sure thing." When the 1% stops spending, disaster really begins. Businesses are even more prone to downsize than they are today -- no one ever wants to risk having to borrow money. Eventually, if unchecked, it can lead to a deflationary spiral, which is just as bad an economic disaster as an i

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