Topic: Bitcoin's kryptonite: The 51% attack. - page 5. (Read 27702 times)

Due to bitcoin's software architecture does deperess miners by exponential manner, by design, total number of miners are reaching the saturation point these days. At this point, only electricity pilferers & large corporations will survive.

Even now, miners should group in mining pools, because individual miner with typical hardware should wait for block generation & 50 BTC reward some months, due to probability manner of mining.

Relationship & communication protocol between pools and individual miners are not formalized and guarantied, that miner will receive his profit. Pool admins, being FEW anonymous persons, have TOTAL control on mining, even today.

Mining pools are the same large goverment corporations, bitcoin system 'fights' against, esxcepting they are completely illegal & unguarantied.

I have been thinking the same.

What happens once the mining does not pay for itself? Then people will stop mining and the network get insecure?

Unless some big companies have invested in the money and gives it power only to keep it safe?

You ignore electiricty. In most countries there is sles tax fr private people, not businesses. TIn the EU that is a 20% differeence, Plus large sclae mining  can ask for industrial power contracts, which again are a LOT cheaper. Where i live the difference makes out over 50% in power costs.

AntiVigilante, do you think that the current mining centralization potential in Bitcoin as it is currently implemented could be a serious problem if nothing is done to change this?

Proposal: http://forum.bitcoin.org/index.php?topic=11541.msg162881#msg162881
Inception: https://github.com/bitcoin/bitcoin/issues/296
Goal: Decentralization and formation of revitalization communities.
Means: Code, donations, and brutal criticism. I've got a thick skin.

So if this is correct, would it be imperative to create incentives for "democratic" mining across the population to prevent excessive concentration? For example creating and promoting the use of electric "Bitcoin stoves" in cold regions, that prevent you and your wallet of suddenly "getting a cold"? I am not kidding

Mining on existing hardware or adding hardware to an existing computer is cheaper than building a purpose built mining rig. Therefore I think the small bitcoin miner will always be competitive with the big ones. Medium size bitcoin miners may face problems.

Also small miners can more easily deal with or during the winter benefit from the waste heat of mining.

If one person or group controls too much of the mining power they can block or with enough mining power reverse transactions.

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".

EDIT:

For those interested, I have been searching previous threads where this issue was specifically covered. I will post them here for convenience:

Stopping an attacker who has >50% of the hashing power
http://forum.bitcoin.org/index.php?topic=7166.msg105218#msg105218

Bitcoin resitance to network failures
http://forum.bitcoin.org/index.php?topic=4575.0

What's the plan about the Sybil attack?
http://forum.bitcoin.org/index.php?topic=8051.0

Is it possible to detect double spending in the > 50% network takeover scenario?
http://forum.bitcoin.org/index.php?topic=1481.0

50%+ Attack Nodes
http://forum.bitcoin.org/index.php?topic=435.0

Manipulating the mining system via strategic scheduled withholding of CPU power
http://forum.bitcoin.org/index.php?topic=11133.0

If an attacker gets more than 50 % of mining power
http://forum.bitcoin.org/index.php?topic=24996.0;all

POLL: What are the most likely things that may cause bitcoin to fail ? (merged thread)
http://forum.bitcoin.org/index.php?topic=25026.0

My Response to Ben Laurie’s ‘Last Word’ on Bitcoin
http://forum.bitcoin.org/index.php?topic=25760.0

This thread (and the link inside) covers some problems by too powerful pools. Remember this dosent fix the more fundamental problem of hashing power attack, because as already discussed in this thread, you dont need to own a pool to attack the network. But is goes in the right direction of reducing the vulnerabilities.

The 50% total hashing power - pooling flaw?
http://forum.bitcoin.org/index.php?topic=11424.0

This thread discusses a different problem that could have implications to this discussion, what happens if the internet partially fails, or different parts of the world become isolated because of some temporal connection failure. Gavin gives an interesting answer.

Bitcoin resitance to network failures
http://forum.bitcoin.org/index.php?topic=4575.0