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Ghash.io very close to 51% of bitcoin pool

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Re: Ghash.io very close to 51% of bitcoin pool

#91

Post by msandford »

jobeirne wrote: post #82
jre wrote: post #76

Earlier quoted context omitted.

Here is a thought experiment : Say the pool operator is also the owner of Bank A (which has nothing to do with BTC). Now, a competitor of Bank A, Bank B, just announced that they will support BTC. The pool operator can now decide to "destroy" bitcoin and therefore cause severe financial loss for Bank B, leading to bankruptcy. If putting Bank B out of business results in gains (in USD), for the pool operator, that are…

Thanks for the concrete counterexample. I still find it dubious that the owner of Bank A would be willing to destroy a stream of income as considerable as a 51% stake in BTC just to preempt a competitor in another market. That seems too self-sacrificial to be practical. Also, you're missing the point that Bank B's successful adoption of BTC would also benefit Bank A's owner, since that adoption would be a boon for BT…

It's all a matter of the right price. Bank A doesn't own 51% of bitcoin, it has control over 51% of the mining pool. As a rational agent in the bitcoin-only world that's worth SOMETHING but not billions. As a rational agent in the total world it might be worth sacrificing $100mm on the pool if it can cost your competitor $10b.

Re: Ghash.io very close to 51% of bitcoin pool

#92

Post by masklinn »

waterlesscloud wrote: post #90
masklinn wrote: post #64

Earlier quoted context omitted.

No, it's in the hand of the pool operator not in the hand of the pool's miners.

Watch how fast the miners leave the operator if they disagree with his actions. It's the hands of the miners.

> Watch how fast the miners leave the operator if they disagree with his actions.

1. They'd have to be aware of the actions of an anonymous pool owner

2. The amount of damage the pool owner can do before people even have the time to start leaving is staggering

> It's the hands of the miners.

You're in denial.

Re: Ghash.io very close to 51% of bitcoin pool

#93

Post by jre »

jobeirne wrote: post #82
jre wrote: post #76

Earlier quoted context omitted.

Here is a thought experiment : Say the pool operator is also the owner of Bank A (which has nothing to do with BTC). Now, a competitor of Bank A, Bank B, just announced that they will support BTC. The pool operator can now decide to "destroy" bitcoin and therefore cause severe financial loss for Bank B, leading to bankruptcy. If putting Bank B out of business results in gains (in USD), for the pool operator, that are…

Thanks for the concrete counterexample. I still find it dubious that the owner of Bank A would be willing to destroy a stream of income as considerable as a 51% stake in BTC just to preempt a competitor in another market. That seems too self-sacrificial to be practical. Also, you're missing the point that Bank B's successful adoption of BTC would also benefit Bank A's owner, since that adoption would be a boon for BT…

Good points. What I wanted to point out is that the typical arguments about an agent's incentives to not destroy BTC usually fail to take into account gains outside of the BTC world.

Re: Ghash.io very close to 51% of bitcoin pool

#94

Post by cwp »

simbyotic wrote: post #73
pron wrote: post #41

I don't know much about the particulars of BitCoin mechanics, but the general spirit of this story seems like a natural evolvement of any unregulated organization. People who favor unregulated markets/societies dislike the concentration of power in the hands of a central authority, but the reality is that in any social system there will always be concentration of power in the hands of the few. I've read a hypothesis[…

"In that period of unprecedented (and largely unregulated) growth, much of the US population became quickly enslaved by a few members of an elite group, later called the robber barons (Rockefeller, Frick, JP Morgan, Vanderbilt, Carnegie, Mellon et al.)" You ought to rethink what you define as "enslavement". As far as I am aware, neither Rockefeller, nor JP Morgan, nor Carnegie "enslaved" the US population when they h…

Did the robber barons kidnap people from Africa, ship them across the sea in chains and force them to work by whipping them if they didn't? No.

Still, have you ever heard the song "Sixteen Tons?"[1] You might recognize the lines "another day older and deeper in debt" and "I owe my soul to the company store." It's about the life of a coal miner in Kentucky. Those lines refer to a system where the company paid its workers in vouchers that they could use to buy food and clothing from the company store. Prices at the company store were higher than the workers could afford on the wages they received, but since they didn't get cash they didn't have the option to buy elsewhere. So they'd buy on credit and gradually build up a debt to the company that they had no way to pay off.

Is that slavery? Perhaps not technically, since the workers weren't owned by the company and couldn't be sold. But they didn't have many choices, either. They were basically stuck doing a fixed amount of work each day in exchange for food and lodging. Sounds an awful lot like slavery in practice.

[1] Obligator wikipedia link - https://en.wikipedia.org/wiki/Sixteen_Tons

Re: Ghash.io very close to 51% of bitcoin pool

#95

Post by mrfusion »

nwh wrote: post #89
mrfusion wrote: post #88

With all the concern over double spending, I'm wondering doesn't double spending happen frequently? It seems like all you'd have to do is make two transactions within a short time period like < 1 second. Doesn't this happen from time to time?

That's why nobody should be accepting transactions with no confirmations.

Right, but surely it happens, no?

Re: Ghash.io very close to 51% of bitcoin pool

#96

Post by celticninja »

pron wrote: post #81
notdrunkatall wrote: post #77

Earlier quoted context omitted.

...except you're wrong. Bitcoin participants have developed a solution to the 51% problem, without any regulation, without any government stepping in and telling anyone to do anything. https://en.bitcoin.it/wiki/Getblocktemplate Your post is a poorly argued attempt to inject politics into a technical discussion. It reads like the top comment at /r/politics, not HN.

The invention of a new currency is a highly political act; claiming it isn't is a political statement in itself. The discussion of any disruptive technology should quickly focus on politics and ethics, or risk being abused. You can't both claim to invent technology that seriously affects society, and at the same time dismiss talk of politics as irrelevant. A technology can either be irrelevant or be political (if you…

Bitcoin is more of a technology than a currency, as such it does not have to have been a political act to create it.

Re: Ghash.io very close to 51% of bitcoin pool

#97

Post by true_religion »

pron wrote: post #41

I don't know much about the particulars of BitCoin mechanics, but the general spirit of this story seems like a natural evolvement of any unregulated organization. People who favor unregulated markets/societies dislike the concentration of power in the hands of a central authority, but the reality is that in any social system there will always be concentration of power in the hands of the few. I've read a hypothesis[…

Wait....

It has been a while since I studied this era, but my understanding is that Rockefeller, Frick, JP Morgan, Vanderbilt, Carnegie, Mellon et al. were the "good guys" like in the instance of Carnegie steel which gave back tremendously to the community.

The named figures of this period, who still have visible fortunes today, were generally better than the grand morass that were known as the robber barons.

Re: Ghash.io very close to 51% of bitcoin pool

#98

Post by waterlesscloud »

masklinn wrote: post #92
waterlesscloud wrote: post #90

Earlier quoted context omitted.

Watch how fast the miners leave the operator if they disagree with his actions. It's the hands of the miners.

> Watch how fast the miners leave the operator if they disagree with his actions. 1. They'd have to be aware of the actions of an anonymous pool owner 2. The amount of damage the pool owner can do before people even have the time to start leaving is staggering > It's the hands of the miners. You're in denial.

The fact remains that the "power" of the pool operator depends on the miners, who can change pools in a matter of minutes.

The instant it's known they're abusing their power, it starts to vanish. It's not a long, drawn-out process.

It literally starts within minutes.

Re: Ghash.io very close to 51% of bitcoin pool

#99

Post by nhaehnle »

josu wrote: post #87
nhaehnle wrote: post #61

Earlier quoted context omitted.

Despite the good responses, there are two points that I believe are important that haven't been pointed out yet. 1. While a 51% pool operator could double spend, none of the participants can do that. The social incentives against a pool operator exploiting this power are very strong, however, because double spends are basically impossible to hide and would destroy the value Bitcoin - which is pretty much against the…

I hadn't heard of the second possible attack that you mention until now. Could you please point me to an article or somewhere that develops the idea. I'm intrigued about what people predict that the miners of such pool would do in that scenario.

The interesting point about the second possible attack is that a weaker form is possible even with less than 50% of the hashing power. The term to search for in a search engine is "selfish mining", e.g. here: http://bitcoinmagazine.com/7953/selfish-mining-a-25-attack-a...

Re: Ghash.io very close to 51% of bitcoin pool

#100

Post by monochr »

waterlesscloud wrote: post #98
masklinn wrote: post #92

Earlier quoted context omitted.

> Watch how fast the miners leave the operator if they disagree with his actions. 1. They'd have to be aware of the actions of an anonymous pool owner 2. The amount of damage the pool owner can do before people even have the time to start leaving is staggering > It's the hands of the miners. You're in denial.

The fact remains that the "power" of the pool operator depends on the miners, who can change pools in a matter of minutes. The instant it's known they're abusing their power, it starts to vanish. It's not a long, drawn-out process. It literally starts within minutes.

And control of the block chain can be taken over in minutes too. As far as I am aware the network updates itself every 10 minutes. So unless the operator never has a period of more than 10 minutes of 51% control or more the network is vulnerable.
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