Topic: Cartel manipulating mining difficulty? (Read 1548 times)

Slower confirmation times are self-regulating, so at most it would be a problem only two weeks in duration before solving itself. Higher fees I'm not sold on as a consequence, as it should also have a self-regulating mechanism to it in that mining difficulty doesn't directly equate to higher fees, only a large queue of unconfirmed transactions competing for limited block space would push transactions fees higher. I certainly don't trust the any mining cartel, whether it be one operating on Bitcoin, BCash or one that switches back and forth, and it has nothing to do with the currency they choose and everything to do with the fact that any sufficiently large group of people become protectionist and use their collective power to their own self-interests. Unless BCash folks are actively sabotaging the Bitcoin network in some fashion, benignly mining on their own chain or attempting to make their own system better doesn't affect Bitcoin much except for potential loss of customers, and that's entirely Bitcoin's own fault

Indeed, this is what you would expect from any rational being

They are just following the scent of money, there is nothing inherently wrong in that (everybody and his dog do basically the same anyway). But, first, don't forget that it is damaging Bitcoin. That would most certainly mean even slower confirmation times and higher fees. In fact, it means just that, which has already been sort of proven (especially when the whole bunch starts mining the alternative Bitcoin). And, second, recall how and thanks to whom Bitcoin Cash came about

I certainly concur with your analysis about the purposeful targeting of mining, but I don't think it's intended to be abusive. It's just following the money. When it's more profitable to mine BCash, that's where a sizable group of miners go.  When they run the difficulty up to the point where it's more profitable to switch back to Bitcoin, they do.  I don't see anything currently that suggests it's intending to be abusive rather than intending to optimize income.

And here we go again:



I'm curious if there is still anyone who is doubting that miners are making full use of the opportunity to earn more profits by moving their hashpower to and fro. Note that the BCash hashrate has dropped almost to zero, i.e. virtually no one is mining this coin presently (obviously till the next difficulty adjustment). By the way, people are massively buying up litecoins right now, the price has risen a whopping 20% within mere 12 hours today and continues to rise. It kinda looks folks are not quite happy with the miners' abuse of power and choose just to walk away from Bitcoin. Any Bitcoin, for that matter

A strange idea has occurred to me today

As far as I understand it, if the mining difficulty is too low and there is plenty of hashrate all of a sudden, the mining of new blocks won't be limited to just 6 blocks per hour (on average), right? If so, given the emergence of the mining cartel (controlled by Jihan and Bitmain), they could specifically "invent" Bitcoin Cash to manipulate mining difficulty, and thus mine more blocks on both chains than just 2 times more (more than 2×6=12 blocks). If there is not enough hashrate, say, in Bitcoin Cash (as was the case), the mining difficulty will go down, so the cartel will switch their miners to mining this coin. Then there is not enough hashrate left for Bitcoin, the difficulty readjusts soon thereafter, and miners switch back mining more bitcoins on the original blockchain than before



Then rinse, repeat

You really aren't doing much to alter the perception I have of you that you don't understand how mining works.  At any time and for any reason, miners can change the software they are using and point their hashpower at any other proof of work chain.  That means, if they saw fit, they could hop between Bitcoin and Litecoin just as easily as they currently hop between Bitcoin and BitcoinCash. or indeed Bitcoin and any other altcoin

You really aren't doing much to alter the perception I have of you that you don't understand how mining works.  At any time and for any reason, miners can change the software they are using and point their hashpower at any other proof of work chain.  That means, if they saw fit, they could hop between Bitcoin and Litecoin just as easily as they currently hop between Bitcoin and BitcoinCash. or indeed Bitcoin and any other altcoin. 

That hopping would still result in similar swings in difficulty adjustments (although some altcoins may handle that slightly differently if their adjustments occur more or less quickly) to the ones we're witnessing here.  There's no mandatory requirement to fork a coin just to mine an alternate version of it, when you could just as easily choose any other altcoin out there.  This line of thinking also potentially negates your theory that the creation of BitcoinCash was some sort of conspiracy or cartel decision and leans more towards the likelihood that I'm suggesting, in that BitcoinCash was simply filling a gap in the market that some developers aren't willing to cater to.

To elaborate on that, consider that out of all the thousands of potential altcoins out there, if any other altcoin was profitable and provided a ruleset that the miners found amiable, they could have switched to it.  But they didn't.  They want to mine Bitcoin, but at the same time, some of them happen not to agree with the direction it's currently heading in.  So a gap in the market was filled by some developers who felt the same way.  Now there's some pretty evident volatility in which chain is more profitable at any given time, so there's some corresponding changes in hashrate to go along with that.  Volatility doesn't necessarily imply manipulation.  Obviously we can't rule out the possibility that there might be some collusion, but I personally think it's doubtful that a single individual or group has leverage over a majority of hashrate.  I'm still willing to bet on the notion that this is all just everyone following what's in their own best interests in a free and open market, which is precisely how this was designed to work.

So again, it can all be explained entirely innocuously.  There doesn't have to be a cartel for this current situation to arise.  Nothing provided in this thread so far is definitive proof of anything.

Well, somehow I expected you to be smarter than that

For that to work out with Litecoin, you would obviously have to create Litecoin Cash (or Litecoin Cheque, or something to that tune). Indeed, some miners could actually go for that, and I don't know what Charlie Lee would say to that but I strongly suspect that the other miners would quickly kill the renegades themselves after he mentions about switching to PoS. Regarding your other point (the way to influence the miners), the only real way to bring them back to their senses is to massively switch to the same Litecoin, which people are already doing, anyway. And explaining to them what miners are really up to is just one way to make them think in this direction

And what's to stop miners from suddenly jumping on Litecoin's chain and doing exactly the same thing there?  That's right, nothing.  Litecoin was supposed to be ASIC-resistant, but that lasted all of a month, heh.  If it's profitable, they'll find a way and start following that chain.  Any contrary to the way you paint the picture, that's actually a good thing.  So either stop using coins that utilise proof of work entirely, or accept that the hashers are free to come and go as they please

Note that the BCash hashrate has dropped almost to zero, i.e. virtually no one is mining this coin presently (obviously till the next difficulty adjustment). By the way, people are massively buying up litecoins right now, the price has risen a whopping 20% within mere 12 hours today and continues to rise. It kinda looks folks are not quite happy with the miners' abuse of power and choose just to walk away from Bitcoin. Any Bitcoin, for that matter

Fair enough, Mr. Prophet. What do you think the long term implications will be? Maybe there is so much money (both smart and dumb) flowing into the market that none of this matters in the short term. But in the long term, this seems detrimental to Bitcoin's network effect. Investors need to choose one or the other: cheap Bitcoin with bigger blocks, or expensive Bitcoin with smaller blocks

That could be envisaged and should have been expected

[...]

My point is that high fees and slow confirmation times didn't affect Bitcoin prices much (if at all), so the cartel could very well expect that their "manipulation" of mining difficulties won't affect prices much either (at least, in the short term). Thus they could safely deploy "new means" to meet their goals, those of earning more profits

But it doesn't seem like the market particularly cares about the dropping hash rate. In theory, that should deplete the value since security is dropping, threatening utility as congestion builds. But again, the market may not care (or maybe the markets just aren't efficient, and late buyers are working off incomplete information). In any case, all of this is unprecedented, so we have to wait and see what will happen. We might all be blind-sided by what happens next

This extreme difficulty oscillations is damaging both to Bitcoin and BCH itself. Miners gaming on this are just looking at the small picture, short-term profit. If this oscillation goes on for a considerable period of time then it would be claustrophobic, price of either BTC or BCH would drop significantly.

Regarding hashrate, dfficulty and blocks mined, it depends on how much is thrown at bcc. If it is extremely competitive, like btc has been, the lower difficulty would not help, as the competition for a block is fierce. So blocks would be 10 minutes or longer regardless of the difficulty, and the biggest would win in most cases.

A strange idea has occurred to me today

As far as I understand it, if the mining difficulty is too low and there is plenty of hashrate all of a sudden, the mining of new blocks won't be limited to just 6 blocks per hour (on average), right? If so, given the emergence of the mining cartel (controlled by Jihan and Bitmain), they could specifically "invent" Bitcoin Cash to manipulate mining difficulty, and thus mine more blocks on both chains than just 2 times more (more than 2×6=12 blocks). If there is not enough hashrate, say, in Bitcoin Cash (as was the case), the mining difficulty will go down, so the cartel will switch their miners to mining this coin. Then there is not enough hashrate left for Bitcoin, the difficulty readjusts soon thereafter, and miners switch back mining more bitcoins on the original blockchain than before



Then rinse, repeat

I think such a faster rate of coin generation is problematic as it would lead to faster halving(less than 2 years), which leads to faster rise of transaction fees. This leads to the very problem for which bitcoin cash was created to solve. Furthermore, faster generation of coins will also lead faster into unexplored lands of comparable transaction fees overcoming block reward incentive.