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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 @11:20AM (#45916591)

    Add more compute power to a different pool.

    • by Bill, Shooter of Bul (629286) on Friday January 10, 2014 @11:22AM (#45916627) Journal

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

      • by Anonymous Coward on Friday January 10, 2014 @11:42AM (#45916899)
        Bitcoin is decentralized. It is not controlled by a central government. It is secure against manipulation, unlike cash. It's like cash, so if it's in my wallet, there's no way anyone can steal it. Bitcoin is surely going to replace all the fiat paper currency. I can already spend it at overstock.com, purchase a Tesla car, or buy illegal drugs online with it. And it has no impact on the environment, because mining operations are forced to go where electricity is cheapest to be profitable. Who could ask for more?
        • by omnichad (1198475) on Friday January 10, 2014 @11:53AM (#45917053) Homepage

          It is secure against manipulation

          Did you even read the headline or summary?

        • Re: (Score:2, Insightful)

          by Immerman (2627577)

          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.

        • Looks like it's not that much decentralized.

          • 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

        • Re: (Score:2, Insightful)

          by Anonymous Coward

          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

        • Can I use bitcoin to buy tulip futures or pets.com stock options?
      • by 0p7imu5_P2im3 (973979) on Friday January 10, 2014 @12:01PM (#45917165) Journal
        Ironically, the 51% attack is very similar to a phenomenon with the US Dollar that is commonly referred to with the politically correct monicker "Quanitative Easing" and the derogatory, though very applicable, term "bailouts."
        • Re: (Score:3, Insightful)

          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.
          • by jythie (914043) on Friday January 10, 2014 @12:33PM (#45917643)
            Some people are philosophically against inflation in general, there are also those that believe any planning or manipulation by regulators is inherently bad regardless of the outcome. There are all sorts of pop-economic arguments against quantitative easing, but their root tends to be mostly philosophical in nature.
            • Some people are philosophically against Science, that doesn't mean we should take their viewpoint into consideration when planing scientific things.

          • by dkleinsc (563838) on Friday January 10, 2014 @01:16PM (#45918153) Homepage

            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.

      • by neokushan (932374)

        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?

        • by Qzukk (229616)

          What % of control do you think regular banking systems have and how much is required to manipulate that?

          What percentage of banks had to work together to manipulate LIBOR?

        • 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.

    • by SirGarlon (845873)
      That's easy to say but decreasingly effective to do. Why should one have to be a miner in order to ensure the stability of the market? That's an externality most people didn't sign up for.
      • 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.

        • by TheCarp (96830)

          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.

    • by samkass (174571)

      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.

      • by TheCarp (96830) <`ten.tenaprac' `ta' `cjs'> on Friday January 10, 2014 @11:54AM (#45917063) Homepage

        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.

    • 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

  • Ideally, miners should be responsible and move to another pool to avoid the 51% attack possibility. Being part of a possible exploit when shit hits the fan will hurt their bottom line more than being part of the biggest pool will gain them
    • by dkleinsc (563838) on Friday January 10, 2014 @11:25AM (#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."

      • They can't completely control its value, all they can do is leave it alone or destroy its value completely. The price is controlled by the individuals buying and selling bitcoins.
    • by TheCarp (96830)

      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.

    • Re: (Score:3, Informative)

      by Nukenbar (215420)

      If they were serious about this, Why not fork into two separate pools?

  • They can't act much worse than the traditional large financial institutions. Not sure how this makes bitcoin that much less reliable than stocks, the US dollar or the EURO
  • ...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.

  • At least that is the theory. But we all know that there is no control for the control... thus we are back to trust. But since its about money and there is no guarantee that a third party can get involved which may force the farm into exploiding the 51% attack it will only solve this issue by not having 51% of the overall computational power. This means, either giving up on at least 1% atm or helping other farms reaching a higher computational share.
  • by Sockatume (732728) on Friday January 10, 2014 @11:26AM (#45916677)

    Libertarian currency in "falls into monopoly" shock.

  • double and triple spending the same coins

  • by SirGarlon (845873) on Friday January 10, 2014 @11:26AM (#45916689)

    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.

    • Alternative phrasing, modern post-industrial economies always depend on you dealing with other people, some of whom will benefit from screwing you.

    • by Sockatume (732728) on Friday January 10, 2014 @11:33AM (#45916785)

      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.

      • 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)

        • by tftp (111690)

          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...

      • by MrChips (29877)

        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)

      by King_TJ (85913) on Friday January 10, 2014 @11:44AM (#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.

    • Perfect analysis. I prefer random people to organized crime .... er ... government. Thank you.

    • At least the random group of people on the internet don't threaten me with guns for not obeying their silly rules like the government does.

      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.
  • by Notabadguy (961343) on Friday January 10, 2014 @11:32AM (#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: (Score:2, Informative)

      by Anonymous Coward

      Editorial agenda.

  • govt takedown (Score:4, Interesting)

    by Cardoor (3488091) on Friday January 10, 2014 @11:35AM (#45916801)
    what's to stop a central bank or government with unlimited funds (and that sees cryptocurrency as a threat) from deliberately buying up mining capacity and doing it themselves?
  • Bitcoins weakness (Score:5, Insightful)

    by RalphSleigh (899929) on Friday January 10, 2014 @11:49AM (#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.

    • 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.

    • If ASICs were available to anyone, the price of bitcoins would be capped by the price of electricity (+ some investment costs for the hardware). Of course, it would be capped by the lowest price of electricity anywhere, so mining would become unprofitable for most current miners. It would be interesting to see what happens then.

      How long until someone starts using bitcoin mining instead of storage for temporary overproduction of solar power?
  • by De Lemming (227104) on Friday January 10, 2014 @11:53AM (#45917057) Homepage

    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.

  • by QilessQi (2044624) on Friday January 10, 2014 @11:55AM (#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?

    • by JcMorin (930466)
      Yep but people *CAN* join another pool if they want. And that WILL happened, I expect their percentage to drop to 30% in the next month. A centralized authority like the government or the central bank you CAN'T bypass it. The voluntary aspect makes a big difference. People just warn that 40% is too much because once you have majority you can do nasty thing.
  • 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.

  • by multimediavt (965608) on Friday January 10, 2014 @12:28PM (#45917551)

    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.

  • by Infiniti2000 (1720222) on Friday January 10, 2014 @12:32PM (#45917621)

    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.

  • by Anonymous Coward

    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

  • The summary of this press release seems to have a bit of an agenda. The release more importantly states:

    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.

  • But can a network relying on such assurances survive in the long run?

    Why would it be worse, than the traditional fiat-money systems? Where the government prints — and spends — melting out people's savings...

  • by Animats (122034) on Friday January 10, 2014 @03:05PM (#45919447) Homepage

    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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