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Largest Bitcoin Mining Pool Pledges Not To Execute '51% Attack'
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?"
Add more compute power to a different pool.
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
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.
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."
I am officially gone from
Libertarian currency in "falls into monopoly" shock.
No kidding!!! What do you say at this point?
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.
[Sir Garlon] is the marvellest knight that is now living, for he destroyeth many good knights, for he goeth invisible.
So many Bitcoin stories. This one asks questions like,
"Can we trust them?!?"
"Are these assurances enough!?!"
Same answer to both: "Who cares anymore?!?"
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?
"[E]conomies always depend on you dealing with other people, some of whom will benefit from screwing you"
Knowledge is how to play a game, intelligence is how to win, wisdom is knowing what game to play.
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.
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.
Come as you are, do what you must, be who you will.
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.
Bitcoin Magazine has a good article on this subject: Mining Pool Centralization At Crisis Levels. 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.
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?
Koans and fables for the software engineer
If they were serious about this, Why not fork into two separate pools?
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.
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.
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 Bitcoin will come crashing down when the next round of attacks happen due to this.
Ghash.io's press release indicates that they have some ideas on where they want Bitcoin to go. They now have enoug power to force changes in the system.
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 to bank mismangement. The federal reserve was not sufficient. And of course we all know about the depression.
Bit coin lacks this sort of regulation. A bit coin "bank" does not have a federal reserve rate to assure that the money supply doesn't mulitply. And it has no regulation on too big to fail for these mining consortia.
Some drink at the fountain of knowledge. Others just gargle.