Topic: A startling thought crossed my mind - page 2. (Read 2969 times)

Yes I understand. They check the blockchain.. But how can they tell which blocks in the chain are legitimate? If the small minority of miners changes to new rules unanimously, there wont be a fork and everyone will be forced to use the same longest blockchain now being generated under new rules. So how then does a client reject a transaction that is in the blockchain it uses I ask?

I've never really gotten how that addressed the concerns. Someone with resources could just buy several thousand high-powered CPUs and do the same thing as folks spending a lot of money on GPUs.

Really, if there's something that can be bought and that is good to own, there's no way to prevent the rich from owning more of it, whether it be gold, U.S. Senators, or hashing power.

Obviously your own non-mining client can tell what is and isn't an actual Bitcoin transaction, that's how you know you've been paid even before a tx gets in a block. The tx has to have a history that leads back to a valid generation, has to be signed correctly etc.

The concern advanced by the OP is the same concern I believe that resulted in "Litecoin", a currency based on an algorithm that favors regular CPUs and that is more difficult to specialize on hardware that would favor those with capital (as compared to SHA256 which favors GPUs, and soon FPGA and ASIC).

I have never been concerned.  The way I see it, if the 99% decides that mining is too centralized with special hardware only available to the 1% and that the 1% is abusing their stewardship, they can pick a block number and a new algorithm and say, "we're switching, see ya", rendering the 1%'s pricey ASIC farms quickly obsolete.

I thought the merchants only sent and received transactions and had nothing to do with the blockchain unless they were miners themselves?

EDIT: Also my initial argument was that due to how the system is designed it will eventually lead to a really small minority control 100% of miners and when the switch happens it would be 100% of miners not 95%, what then?

They just keep running the code they've been running.   It will reject the 'bad' blockchain being produced by 95% of the miners, and accept the 'good' chain being produced by the other 5%.

Please explain to me how they can do that?

Depending on what rule changes you are talking about it doesn't matter if 95% of miners choose to switch to say 50BTC reward forever. The power is with the merchants to reject the false coins.

It is interesting (perhaps worrying) to consider how cheaply one could pick up a lot of mining power. If miners are somewhat narrow-mindedly interested in short-term gain they may sell their power for a small % over the coins they get. How many would mine empty blocks only if the pool gave a 10% bonus? If the pool got 50%+ it could decrease difficulty by ignoring others blocks and building only on it's own. I strongly believe enough miners would bail after all they want to actually send their coins right? But with soft totalitarian rules it could conceivably be a problem. For example, very high fees with fees returned to registered members somehow.

I don't think any of this is likely, just thinking aloud.

Yes, probably, and folks with the more efficient miners & lower electricity rates would probably not even be taking losses while others are forced out due to lack of profitability.

- But, I'm not mining with particularly efficient equipment and I also don't have particularly low electricity rates, but I don't recall there ever being a time when I was losing money mining. So, for now, I don't think we need to worry about mining becoming worryingly consolidated. When FPGA advances a fair bit further than it is, though... it could become a serious problem because most FPGA miner owners won't have any other purpose for it than mining, and because they're so energy-efficient, it doesn't matter much how difficult mining is at a low BTC price, or that there's not much resale value in those circumstances.... They'll just keep mining, and GPU miners will be pushed out.

Yes, over time, only those with a lot of capital will be able to mine efficiently. But it's not like only businesses in a narrow industry, or only the top three global corporations will be the ones involved.

Even if it costs $10M to do significant mining, since bitcoin will have become mainstream by that time, there will be plenty of big businesses that could get involved if they chose to, possibly thousands. It's been suggested that many might jump in just so they have a way to get their own transactions processed without any fees, since by then fees for quick processing will likely be non-negligible. And of course, there will continue to be new businesses springing up whose only function is mining, distributing profits to the shareholders.

tl;dr - It's not a real concern. Only the scale will shift, not the level of centralization.

Wouldn't you say that when the price falls at a certain difficulty it forces the weaker miners out first since the miners with better equipment who are more invested are willing to take and usually can afford some small losses before they'd have to quit?


What I'm asking for is please show me how the number of individual miners is net growing and why and how the number of individual miners isn't net shrinking as I outlined it is. Cause when I look at the Bitcoin history there was a time when there were a lot more individual miners than there are today, so I don't see how you could possibly be right.

Mining difficulty tends to be based on the price of Bitcoins (though it lags). This makes it profitable for most people to mine. Only in an event where the price/difficulty correlation dramatically breaks will people with unusually cheap electricity be the only remaining miners. Currently, this is not the situation -- my electricity is not unusually cheap, and I'm making a bit over 2x electricity costs using 5850s, which aren't noted for being particularly energy-efficient. It could be a problem, but I don't see it - right now - being a problem we should worry about.

I believe this to be false with the rising difficulty without a rising price of Bitcoins.

+ many people mine because they already have the pc + gpu for it. thats a lot of small miners who can compete because they dont have to pay for hardware and they usually dont account their time into the price either.

All the users client apps still have to accept and allow the blocks of the miner. If the user clients start ignoring blocks from dishonest miners, they wont be included.

EDIT: My thinking in this OP is flawed by my lack of understanding of how the Bitcoin system works.

So I did some more thinking about my post here and specifically the lesson about if there's centralized power to be auctioned off, the auctioned will always follow and a really alarming thought crossed my mind:

I fear I may have discovered a fatal flaw in Bitcoin's design.

(I know what you're thinking: "oh no, not one of those again.." but please hear me out. I'd much rather you prove me wrong than me being right, I just fear that I'm not wrong.)


The fatal flaw is in how network gets secured through CPU power and more specifically the way the reward is tied to the hashing difficulty. Think about it, if you examine the current situation of who the miners are, not the mining pools which are irrelevant to this problem, but the specific individual miners.. who are they? I'll tell you! They are those individuals among us  that have the right equipment and can get electricity at the right price in order for mining to be a profitable venture for them.

Do you see the problem yet?

Miners, in other words those who safeguard the Bitcoin system against any attacks on the system as it is but also safeguarding against a new client with a change of the pre agreed upon rules, are getting whittled down to a small minority that has the capital to compete! Don't you see? It's a clear example of concentration of power! As the difficulty rises less and less miners are able to stay afloat and compete and smaller and smaller is the number of safeguarding individual miners!

It doesn't take a crystal ball to figure out where this is leading.. Eventually you are going to have a few powerful corporations running all the mining power and we're all going to be at their mercy when it comes to the rules of the system. And believe me, it's a given that such concentrated power will inevitably get auctioned off!

Btw this is how Satoshi envisioned the system staying secure in his Bitcoin paper:

Can we really count on a small minority of nodes to remain honest? The entire human history says: NO!


I'm a bit shaken just by thinking about this so please, someone, please put my mind at ease and show me how I am wrong, how the scenario I just laid out isn't going to come true?