Topic: Bitcoin's kryptonite: The 51% attack. (Read 27720 times)

Andes, to have control of 50% of the network you need to deploy 101% processing power (you´ll end up having 50,5%)

But, why thinking there will only be 1 dishonest entity?  If there is one, there could be more, each one of them would have their own self-interest on controlling the network.   If a lot of "dishonest" entities with great processing power try to control the network, they would make the 51% attack less probable themselves.

I think the only people we have to worry about are angry governments. They could set up an undercover pool and offer some incentive to miners who join it, whether it is lower fees or whatever. This would divert hashing power away from honest pools and create a starting point so it wouldn't be as costly. I'd imagine that with good marketing, one could get at least 25-30% hashing power like this. After that, they could buy the rest of the hardware for a few million and cause the market to crash. The Wall Street types would say "I told you so" and most people would lose interest in this type of currency. The reason I don't think greedy individuals would be interested in this is because Bitcoins would be worth next to nothing after the attack (assuming it would be detectable).

If it is ever revealed that militant groups are holding large amounts of Bitcoins, Mossad and the CIA would easily justify whatever costs are necessary to diminish it's value. Because it is inevitable that some powerful person's enemy will use Bitcoin, I think this is something to be concerned about.

So, you want them to assume that neither the transaction fees nor the exchange rates increase in the future?  Huge coincidence that both of those assumptions favor your side in the debate?

Tens of millions of dollars for hardware, and millions more for manpower is expensive for most groups in the world.

You couldn't even start on something like this with less than $2,000,000.

Several orders of magnitude more computing power than the rest of the world combined to manipulate the chain? Hmmm. One thing is clear, you only need 50% or less of the total mining capacity (supposedly currently worth 50 million dollar or less) [...]

If a lot of "dishonest" entities with great processing power try to control the network, they would make the 51% attack less probable themselves.

As a Newbie, I have also had the same thought like you had. And on june 24th, started this thread in the newbie section : Google $ CO. Mining ? http://forum.bitcoin.org/index.php?topic=21905.0

At the end of the story, no conclusions at all. Now the thread is buried....Have you managed to get to any conclusion in your thread ? This will save me a lot of reading...Thanks.

As a Newbie, I have also had the same thought like you had. And on june 24th, started this thread in the newbie section : Google $ CO. Mining ? http://forum.bitcoin.org/index.php?topic=21905.0

At the end of the story, no conclusions at all. Now the thread is buried....Have you managed to get to any conclusion in your thread ? This will save me a lot of reading...Thanks.

Hi, as a newbie I want to move a question I put recently in the middle of another thread, because I think it deserves its own discussion. Sorry if this thing has been answered before, I have been reading the forum for several hours so far but did not find the answer yet. If it was answered elsewhere, please post the link.

Is decentralized mining power important for the security and long term independence of bitcoin?

I have read a lot about transactions being decentralized as a built-in feature of bitcoin, but what about decentralized block creation? The bitcoin architecture does not guarantee decentralized mining at all. In fact, the network could in theory work "as well" with nothing more than one powerful miner, or pool of miners. Am I right?

If concentration of mining-power increases (because of bitcoin difficulty increasing faster than moore's law, leading to bigger hardware investments needed to be in the game, profitability decreasing, and economies of scale kicking in) ^(Note1), can a few miners produce all the blocks in the network without compromising the security and independece of the project? Is it possible to avoid excesive concentration of mining power? I dont see how in the current configuration of the system.

I read somewhere that Bitcoin assumes never a 50%+ of the mining power will be concentrated in one hand or in one cartel. That's the principle behind the honesty validation of the longest chain by "proof of work". Correct me if my newbie understanding is wrong on this. To assume that this concentration of computing power will never happen is ludicrous to my current level of understanding of bitcoin and human behavior.

This raises some further questions. As difficulty changes every 2 weeks, what happens if a Google-like company with bad intentions gets into the game suddenlly with 10x the total combined power of current miners? Could this sudden change of rules endanger bitcoin? Destroy it? I mean lets consider this wild posibilities. For big corporations this move would be peanuts. Powerful states overthrow smaller goverments all the time, big corporations eat small corporations all the time.

Hope to hear some thoughts from the experts out there.


(Note1): Thinking about the issue of increasing bitcoin difficulty, let's remember that  by design difficuly increases when mining power increases, in order to keep the creation rate at 10 minutes per block. So, any powerful organization that wanted to gain control of Bitcoin, could do it easily by injecting enormous amounts of mining power to the network, and by doing so, effectively reducing the rest of the miners relative power, and at the same time putting them out of business, because the difficulty would be so high, that mining would be generated below cost (subsidy). Knowing the enormous level of concentration of economic resources in the current world, this hypothesis seems in fact the most likely outcome. Predatory competition is a reality in todays market. I predict honest miners will be subjected to predatory competition if powerful economic powers decide to take control of Bitcoin.

Following this line of thought, I see Bitcoin could never become what it promises: a descentralized and free currency, if it is left alone in the wild "free market". I hope someone can find flaws in my arguments, or present ideas to correct this flaw. By the way, I have a decent amount of money put in this project, so I feel sad to become aware of this potential vulnerability. If people agree this is a serious vulnerability, lets get into "troubleshooting mode".

But for the situation to be realistic we have to assume that the honest miners would already be using the same technology. Otherwise your scenario is only valid in the concrete moment when the technology is evolving.

The last time I did the "back of the envelope" calculations (about two weeks ago), it would cost about $12,000,000 to reach 50%. That's the cost to design, contract, receive, and hookup fully-custom ASICs to build a hashmonster.  I believe it was 200 blades, each with 24 ASICs. Each ASIC would have 32 2xSHA256 cores running at 350Mhz, each with the hashes fully-implemented as custom gates, pipelined. (So while we're doing round 3 of the 3rd nonce, we're doing round 2 of the 2nd, and so on.) Each core, once its pipeline was full, could churn out one doublehash every 8 clock cycles. The total hashing power: 6.7THash/s. (That's from memory.)

However, this would only give you half if it was already half. Which it might be, for all we know.

My noob self has to agree...the central "what happens if a pool/operator gets 51% and double spends" hasn't been touched in many of these replies.

Seems like a good test to see if you actually understand btc.

Couldn't the 51% be raised, to say 95% instead?

There is no way that any single entity/organization could ever have 95% of the computing power of the network...