Topic: Decentralized Mining & Preventing Centralization in Pools - page 2. (Read 4774 times)

I am sure such a derivatives market would form.  And it does not defeat the intent.   A coin today is more valuable than a coin in 6 months, so the cost of mining in the pool with immediate payout would still be higher than mining solo.   The coins mined would still be delivered to those taking a LONG TERM approach AND the pool operator would have to be trusted or individual selling the future contract would only provide payment upon a block being found with their private key and thus shift the trust from the pool to the long-term investor.  

There is clearly money to be made by facilitating pools, but those mining on the pools would face a much higher cost of doing business and if you push the time horizon out to a two or more years initially then the risks would be much higher and finding people willing to finance over that period of time would be much harder.  

Damn you Soros. Why didn't I see that!

If implemented, this intent could be easily defeated by an external BTC derivatives market which would undoubtedly form.

hmmm... but variance is an issue. If the selfish-miner has a very low valued hash, it is still probably worth holding it back.

Nevertheless your idea reduces orphan rate.

The tradeoff is it doesn't converge if the rate of competing block generation is less than the propagation delay?

More slightly off-topic discussion... So if a miner has already started working and a new solution comes later with a much lower hash, does the miner throw away the current work? I guess not. So miners only consider re-starting work up to the maximum propagation delay you expect? Hardcoded?

Then that still defeats selfish-mining because of the increasing probability that the hash found later will be lower than the held back hash solution discovered earlier. Effectively you've increased the gamma in the selfish-mining research paper.

I believe my network will converge much faster because it will never diverge in the first place because network latency is practically removed from the equation.   In the instances where there is an orphan block today it occurs because two people broadcast at about the same time.  Miners accept the first block found therefore half of the miners use one block and another half use the other.   This process is not resolved until one side of the network finds the next block.   

Under my system, two miners broadcast at the same time and everyone will immediately converge on the best chain without ambiguity.  The only potential for 'orphans' resulting in divergence is if two back-to-back blocks are found in a space less than the propagation delay AND the first block had a higher hash.   

Interesting idea for a solution to selfish-mining. We are getting off-topic a bit from your OP. You mean miners choose the chain with the hashes with the lowest value below the threshold for "difficulty". But the problem is that the longer we wait, the lower hashes can be. So you resolve that by choosing the chain with the lowest total of all hashes I presume. I suppose you've worked out the probabilities and game theory and convinced yourself this converges.

I assume you are aware of the equation for orphan rate:

https://bitcointalksearch.org/topic/reasons-to-keep-10-min-target-blocktime-260180

You've got to make sure you have convergence. This will impact on the minimum block period.

P.S. You got this conceptual idea from the mini-blockchain Clever application.

To clarify, miners do not switch chains to a fork that is split based upon an easier hash unless it has more than 2 block advantage.

I am aware of the selfish miner attack and that is solved by allowing new blocks to replace the current head block provided it is 'more difficult'.  Someone attempting to be a 'selfish miner' who starts working on a 2nd block without taking credit for the first block has a significant chance that when the rest of the network finds the first block, his second block will have been built on an invalid chain.    He would then have to find 3 blocks before the primary network found 2 blocks because miners do not switch 'chains' until their chain is more than 2 blocks behind the other chain.

Interesting proposal.

Cost of carrying extra capital means you will get lower network hashrate for the same aggregate amount spent on securing the network.

Also it means I can't reliably mine virgin coins (for removing taint issue) when I need to spend them near-term. It is a forced savings program.

I am generally against any arbitrary limit that is not helping the party who is investing. I guess you can argue it helps the overall health of the system thus coin value, but individually miners might not calculate it that way.

Perhaps you are aware of the new selfish-mining attack which is a vulnerability when any entity has control over 25% of the network hashrate. Perhaps your proposal fixes it.

Anyone who has been following crypto-currencies for long has realized that any popular (and thus hard to mine) crypto-currency ends up resorting to mining pools.  These pools become new points of centralization.    In the case of ProtoShares, a CPU coin, profiteers flooded the market with hash power and forced out the little guy who wants to mine on his home computer.  These profiteers didn't care about the coin, they just saw the price difference between the coin and the cost of mining and took advantage of the profit opportunity.   

Then we have pools that came out and captured more than 80% of the hash power due to a slight optimization advantage.  These pools had a single bug in their miner that prevented more than one transaction from being included in a block and thus caused delays for the entire network like a legitimate 51% attack.

In Bitcoin land, large ASIC firms and mining pools are a potential threat.   Even having a couple large pools is a problem and represents a kind of 'special node' in the network that if taken out or compromised could enforce white lists, black lists, or transaction delays.   A new solution is required that make the use of large pools, whether ASIC, GPU, or CPU less profitable than solo-mining for individual users.   

I have a new proposal that aims to eliminate botnets and profiteers from being a threat to GPU or CPU based coins and could be useful toward encouraging solo-mining with bitcoin by increasing the costs associated with large centralized ASIC miners. 

The basic idea is this:  blocks have a random vesting time between 1 day and 1 year with an average of 6 months.   Any pool operator would have to maintain 6 months of inventory and operating expenses on their books while exposed to price fluctuations in the underlying currency.   Mining pools would have to charge much higher fees to cover the cost of capital and a 51% attack on Bitcoin would not be able to finance itself from the immediate sale of the BTC mined.   Meanwhile, solo-miners with ASICs are back to a lottery system.   New crypto-currencies wouldn't have to worry about fly-by-night pools or profiteers that mine and dump.   The average rate of currency introduction would be the same, just delayed 6 months on average and this would also prevent a lot of short-run PUMP and DUMP scams.   

http://bitsharestalk.org/index.php?topic=905.0