A 51% attack is hard. It’s come close to happening once with a mining pool called GHash.io. The community quickly responded, and as of right now, the largest pool has about 17% of the network hashing power, and GHash.io has about 4%. The current state of network power distribution can be viewed at https://blockchain.info/pools , as well as other blockchain watching services. It is in any particular miners interest to be in the largest pool possible, but counter to any miners purpose to be in any pool with the possibility of making a 51% attack, since a successful 51% attack would be the end of bitcoin’s market value, which makes their investment in mining equipment worthless. This has, so far, been successful.
Each wallet does not need to contain the entire blockchain. It is generally recommended that, if you are not running a full node contributing to the network, you use a thin wallet that queries the blockchain, or a trusted blockchain monitoring service, in order to asses balances and get data needed to make new transactions in a much less data-intesive manner.
Governments are not keen to give up their monopoly on the money supply, but there are limits to how much they can do to maintain it. There have been several instances historically where government control of the money supply is undermined by the economic reality of people just using other things to conduct business, regardless of the legal status of such business.
Mining is not “wasted” computing power, but rather power being put to the specific purpose of verifying and securing the integrity of the bitcoin blockchain database. It is no more a waste of resources, than the concrete, steel, and construction time of a bank vault. It’s just not doing anything else, like creating an emergency shelter, or storing non-bitcoin valuables.
If you have a non-currency based idea to get people to properly secure a publicly editable, decentralized, ledger such that malicious actors cannot alter it to suit their needs, I’m more than willing to hear it. Until I see such a proposal, I don’t see the addition of currency to a blockchain as a complication, but rather as a necessary function. There has to be something which incentivises people to engage in the process of securing the ledger, and that is the receipt of valuable entries on the ledger, those entries being useable as currency.
It looks like other blockchain technologies (altcoins) have been the victim of 51% attacks, so I’m going to read up on their repercussions. I wonder if they were carried out by bitcoiners who don’t like competition?
It occurs to me that little can probably be done to stop attacks on distributed systems by large actors with non-monetary goals. If people are willing to throw a lot of resources into destroying a fledgling technology, they will probably succeed.
I do have an idea for a distributed public ledger in which attacks are possible but always negative-sum. I have little experience with cryptography so its probably rubbish. If it looks to not be terrible I will probably post it here for comment.
I do have an idea for a distributed public ledger in which attacks are possible but always negative-sum. I have little experience with cryptography so its probably rubbish. If it looks to not be terrible I will probably post it here for comment.
Feel free to post your idea. No one expects you to revolutionize an industry in one post. Its fun to throw ideas around.
A 51% attack is hard. It’s come close to happening once with a mining pool called GHash.io. The community quickly responded, and as of right now, the largest pool has about 17% of the network hashing power, and GHash.io has about 4%. The current state of network power distribution can be viewed at https://blockchain.info/pools , as well as other blockchain watching services.
According to the site you linked, the four largest pools control over 50% of hashing power. Would it be unrealistic for them to collude? How do you know that it has not already happened? Also there is 19% of hashing power which is listed as “unknown”. Presumably this should be from miners who are not part of any pool, but how can you exclude collusion?
It is in any particular miners interest to be in the largest pool possible, but counter to any miners purpose to be in any pool with the possibility of making a 51% attack, since a successful 51% attack would be the end of bitcoin’s market value, which makes their investment in mining equipment worthless. This has, so far, been successful.
That sounds like a tragedy of commons scenario, which isn’t promising.
Also, publicly distinct pools could collude in secret. I presume that whoever pulls it might make perhaps hundred million dollars by double-spending before the attack is discovered and Bitcoin value plummets to zero. And if you are a bitcoiner who is convinced that somebody is going to do that sooner or later, then you have an incentive to be the first to do it.
More generally, one of the common criticism of Bitcoin is that the infrastructure is currently supported by “stupid money”, since mining has a lower RoI than other forms of investment. In fact, there is some speculation that the RoI may be actually negative when considering hardware costs, and current miners are just trying to partially recoup the costs of the hardware they wrongly purchased when Bitcoin was at ~$ 1,000. This doesn’t bode well for the long-term sustainability of the infrastructure.
If a single entity controlled 51%, it could double-spend, though that would be obvious. There are more subtle attacks that are not so obvious and even require less than 51%. But I’m pretty sure that they haven’t happened because mining pools are not single entities.
These attacks require tight collusion. They require everyone in the pool to use the same software. The many people in the pool are many opportunities for the secret to leak. Moreover, I believe that most pools are open entry: people can join them and learn what software they are using.
On the 51% attacks, I was specifically thinking of state actors. However, mightn’t any eventuality which leads to a lot of Bitcoiners who aren’t enthusiasts or have ulterior motives (Bond villains?) be an issue? The current state of the BC community is probably mostly BC enthusiasts, i.e. people who aren’t just in it for the money.
You’re right that “wasted” was a poor term; “inefficient” would be better.
State actors would need to aquire mining hardware in order to make a 51% attack. Several million dollars worth of it. Trying to do so would have obvious effects on the small bitcoin mining equipment market, and unless the government turned all their machines on at once, they would spend the time they ramp up to a 51% attack actually strengthening the network, and causing other miners to also buy more equipment to keep up with the new difficulty.
This is certainly a possibility, if someone in the government recognizes the potential threat bitcoin offers to the government money monopoly. However, anyone smart enough to recognize the threat is also incentiveized to not tell the government about the threat, or even downplay the threat, while investing in bitcoin themselves, as if the threat materialized they will become significantly wealthier than they would through a government job.
As for the inefficient argument, the operating costs of bitcoin (mining) should be compared to the operating costs of more traditional money transfer services of similar size. Think armored cars, vaults, double book accounting, and other such things that a 3-4 billion dollar firm engaged in money transfer would need, and compare those costs to the costs of blockchain mining.
Only if the miners are all behaving rationally. Sunk Cost fallacy is a thing in far more people that it is not.
Plus the investment in the mining equipment market will make for more efficient mining equipment, which would be needed for the new difficulty. We’d have a second mining equipment bubble.
Bitcoiner here, so bear that in mind
A 51% attack is hard. It’s come close to happening once with a mining pool called GHash.io. The community quickly responded, and as of right now, the largest pool has about 17% of the network hashing power, and GHash.io has about 4%. The current state of network power distribution can be viewed at https://blockchain.info/pools , as well as other blockchain watching services. It is in any particular miners interest to be in the largest pool possible, but counter to any miners purpose to be in any pool with the possibility of making a 51% attack, since a successful 51% attack would be the end of bitcoin’s market value, which makes their investment in mining equipment worthless. This has, so far, been successful.
Each wallet does not need to contain the entire blockchain. It is generally recommended that, if you are not running a full node contributing to the network, you use a thin wallet that queries the blockchain, or a trusted blockchain monitoring service, in order to asses balances and get data needed to make new transactions in a much less data-intesive manner.
Governments are not keen to give up their monopoly on the money supply, but there are limits to how much they can do to maintain it. There have been several instances historically where government control of the money supply is undermined by the economic reality of people just using other things to conduct business, regardless of the legal status of such business.
Mining is not “wasted” computing power, but rather power being put to the specific purpose of verifying and securing the integrity of the bitcoin blockchain database. It is no more a waste of resources, than the concrete, steel, and construction time of a bank vault. It’s just not doing anything else, like creating an emergency shelter, or storing non-bitcoin valuables.
If you have a non-currency based idea to get people to properly secure a publicly editable, decentralized, ledger such that malicious actors cannot alter it to suit their needs, I’m more than willing to hear it. Until I see such a proposal, I don’t see the addition of currency to a blockchain as a complication, but rather as a necessary function. There has to be something which incentivises people to engage in the process of securing the ledger, and that is the receipt of valuable entries on the ledger, those entries being useable as currency.
It looks like other blockchain technologies (altcoins) have been the victim of 51% attacks, so I’m going to read up on their repercussions. I wonder if they were carried out by bitcoiners who don’t like competition?
It occurs to me that little can probably be done to stop attacks on distributed systems by large actors with non-monetary goals. If people are willing to throw a lot of resources into destroying a fledgling technology, they will probably succeed.
I do have an idea for a distributed public ledger in which attacks are possible but always negative-sum. I have little experience with cryptography so its probably rubbish. If it looks to not be terrible I will probably post it here for comment.
Feel free to post your idea. No one expects you to revolutionize an industry in one post. Its fun to throw ideas around.
According to the site you linked, the four largest pools control over 50% of hashing power. Would it be unrealistic for them to collude? How do you know that it has not already happened?
Also there is 19% of hashing power which is listed as “unknown”. Presumably this should be from miners who are not part of any pool, but how can you exclude collusion?
That sounds like a tragedy of commons scenario, which isn’t promising.
Also, publicly distinct pools could collude in secret. I presume that whoever pulls it might make perhaps hundred million dollars by double-spending before the attack is discovered and Bitcoin value plummets to zero. And if you are a bitcoiner who is convinced that somebody is going to do that sooner or later, then you have an incentive to be the first to do it.
More generally, one of the common criticism of Bitcoin is that the infrastructure is currently supported by “stupid money”, since mining has a lower RoI than other forms of investment. In fact, there is some speculation that the RoI may be actually negative when considering hardware costs, and current miners are just trying to partially recoup the costs of the hardware they wrongly purchased when Bitcoin was at ~$ 1,000.
This doesn’t bode well for the long-term sustainability of the infrastructure.
If a single entity controlled 51%, it could double-spend, though that would be obvious. There are more subtle attacks that are not so obvious and even require less than 51%. But I’m pretty sure that they haven’t happened because mining pools are not single entities.
These attacks require tight collusion. They require everyone in the pool to use the same software. The many people in the pool are many opportunities for the secret to leak. Moreover, I believe that most pools are open entry: people can join them and learn what software they are using.
Thanks, I did not know about https://blockchain.info/pools.
On the 51% attacks, I was specifically thinking of state actors. However, mightn’t any eventuality which leads to a lot of Bitcoiners who aren’t enthusiasts or have ulterior motives (Bond villains?) be an issue? The current state of the BC community is probably mostly BC enthusiasts, i.e. people who aren’t just in it for the money.
You’re right that “wasted” was a poor term; “inefficient” would be better.
State actors would need to aquire mining hardware in order to make a 51% attack. Several million dollars worth of it. Trying to do so would have obvious effects on the small bitcoin mining equipment market, and unless the government turned all their machines on at once, they would spend the time they ramp up to a 51% attack actually strengthening the network, and causing other miners to also buy more equipment to keep up with the new difficulty.
This is certainly a possibility, if someone in the government recognizes the potential threat bitcoin offers to the government money monopoly. However, anyone smart enough to recognize the threat is also incentiveized to not tell the government about the threat, or even downplay the threat, while investing in bitcoin themselves, as if the threat materialized they will become significantly wealthier than they would through a government job.
As for the inefficient argument, the operating costs of bitcoin (mining) should be compared to the operating costs of more traditional money transfer services of similar size. Think armored cars, vaults, double book accounting, and other such things that a 3-4 billion dollar firm engaged in money transfer would need, and compare those costs to the costs of blockchain mining.
No, that’s backwards.
Only if the miners are all behaving rationally. Sunk Cost fallacy is a thing in far more people that it is not.
Plus the investment in the mining equipment market will make for more efficient mining equipment, which would be needed for the new difficulty. We’d have a second mining equipment bubble.