Topic: GHash.IO and double-spending against BetCoin Dice - page 8. (Read 112009 times)

The possibility of this happening was known since the very beginning so why are you all freaking out now when it's too late? No central bank you say? The entity with the most computing power is the central bank. Will be interesting what happens now.

The cex.io price per GH/s is consistently too high to earn a bitcoin profit, yet people still pay it.

* what would be the implications of reaching 51%?

1. BTCGuild and GHash.IO
GHash.IO overtook BTCGuild this week - they now have a quarter of a percent more of the network than BTCGuild.

Last week I wrote:
"GHash.IO keep increasing their share of the network, most likely due to CEX.IO trading. I'm not sure how I feel about this - it's an increase in the proportion controlled by a single entity, but in effect any pool has the same control of hashes. It should make no difference that (as far as I'm aware) CEX.IO maintains the hash sources locally rather than the sources being distributed. Is there a downside I'm not understanding?"
I received a couple of good responses on bitcointalk.org:

From eleuthria, BTCGuild pool op:
"Only extra worry from cex.io/ghash.io that is different from past concerns is accountability.  If a public pool *attempted* to do something nefarious that pool just committed suicide whether they succeed or fail at the gamble.  When a pool that has ~1 PH/s (based on estimates looking at their speed fluctuations during known pool issues for public vs private) privately owned, there is no accountability left.  Pair that with using a 0% fee for what was already the 2nd largest mining entity before the public was allowed in.  If they attempt something, there is basically no downside.  If the public hashrate leaves due to an attempt, they aren't actually losing anything (no fee) other than the mining time on their private farm."

From gmaxwell, bitcoin developer:
"The excuse giving for years of why consolidations of ten percent, twenty percent, or even more, in the hands of pool operators didn't effectively disprove the Bitcoin security model was that pool operators were more obligated than a typical miner to behave with the public interest at heart because the hashrate controlling miners could vote with their feet.

I've never been too fond of the argument: evidence (e.g. miners voting with their feet very slowly even when a pool is clearly robbing them) suggests otherwise... But that argument doesn't even exist for GHash.io/CEX.io: the miners are captive and cannot leave. Worse, there is a moral hazard because an unknown portion of the hardware is paid for by other people (at top dollar rates too) and so if some stunt they perform debases its value... so what? Heck, perhaps it drops the market value down to nothing an cex can buy their obligations back for a song. This means that CEX.io can probably profit from an attack even if that attack ultimately fails."

Thanks for explaining that, guys. I feel a little foolish for not having taken market forces into account.

* what would be the implications of reaching 51%?

42%, up from 38% 4 days ago. Would be good to have a graph over time.

* what would be the implications of reaching 51%?

* what was the most recorded % of any pool? I thought BTC guild had 49% for quite a while.

* Why are people adding and not running away?

The analogy is false. Firstly, there is no cultural component that favours membership in any one pool over any other (as there is with the political party system). Secondly, as opposed to the political party system, when it comes to Bitcoin there is a much more limited number of variables at play. Thirdly, switching pools is trivial, and since it is the miners themselves who stand to lose the most by destroying the network, they have the greatest incentive to switch, as opposed to the political party system where, in principle at least, achieving 100% power is desirable.

If only two pools are left, then definitely one of them will cross the 51% mark and the other one will be decimated.

This is a flaw of a decentralized currency powered by democracy. The following is a nice video on explaining the implications of this effect:

http://www.youtube.com/watch?v=s7tWHJfhiyo

In essence, those who are worrying about a single pool getting to 51% (i.e. "first past the post") will go to the second largest pool, instead to the smaller ones. Essentially only two pools will be left.

Same with the two-party system in America.

I remember mining at P2pool as well, but the problem at the time was dust, I would pay crazy fees for transactions, although I was looking at P2pool and the Litecoin Devs with the Bitcoin devs were giving funds to make a better software that solves many of the problems, I don't know how is it today with P2Pool since I stopped mining a long time ago but I think this problem is solved.

Hint: you can still use P2pool even if the dust issue still exist,  the key to reduce this problem is to use coin control, you simply take all inputs to one transaction and pay the fee only once, this is what I was doing...

and P2Pool is the only solution for decentralized mining so I don't know if miners understand that and at least give it a try !