Topic: How are large mining pools not a threat? - page 3. (Read 4589 times)
You answered your own question ... because destroying the network benefits nobody.
they aren't a threat because they are not nefarious.
There have been a few discussions lately about large mining pools (including GHash and others) and the possible threat of 51% (and other similar) attacks.
In some of these threads, I see people dismissing the threat by saying things along the lines of "why would a pool of significant size do something so stupid so as to destroy the value of their own profits?" Others defend the pools by saying "these are honest, legit people - we can trust them."
At first these arguments seemed to put me at ease, but as I've given it more thought, they're not really sitting right with me.
Consider this analogy:
If we all share the same planet, and any amount of harmful pollution (however insignificant) released into the environment ultimately threatens our own well-being as inhabitants of the planet, then why would any individual or organization chose to continue any operation that releases pollution?
(I'm not trying to start any political debate about the environment here, but I think most would agree that many forms of pollution have at least some kind of detrimental impact on the environment).
The fact of the matter is, it's not a simple winner-takes-all and loser-gets-nothing scenario. We can live with a degree of pollution in the environment if it means we can enjoy the benefits of large-scale manufacturing, transportation, etc.
Self interest (as a whole) is very much tuned to the short term. While the long-term effects of our actions do have a varying degree of weight on our decisions, I think it's safe to say that short-term benefits - in general - take priority over long-term considerations. In a perfect world, perhaps the negative effects of pollution would be felt and shared immediately by all, and the free market alone could adapt and find an appropriate balance. In the real world, however, we rely on regulation to help minimize poor decisions (intended to maximize short-term profits) of self-interested organizations that would negatively impact us all.
Now, going back to Bitcoin....
I've been watching the growth of Bitcoin since around 2010. I strongly believe that Bitcoin (or at least the concept of a decentralized cryptocurrency) is "an idea whose time has come." It provides a solution that (in theory) needs no regulation - except by democratic vote - in order to protect everyone's interests (unlike the example of pollution above). In my mind, Bitcoin's greatest achievement isn't so much technical, but rather social. The brilliance is not in the algorithms used or even in the decentralized network. The real achievement is in engineering incentives that keep the system in check.
The U.S. Constitution was (at least at one time) hailed as a remarkable system that ensured a balance of powers. The United States government has been called "the grand experiment", much in the same way Bitcoin is a great, borderless experiment of a similar nature. Whether it's Bitcoin or a successor to Bitcoin, I think this experiment is here to stay.
So what does this have to do with mining pools? As others have said, I really doubt that any mining pool would be foolish enough to do something completely crazy and destroy all of our trust in Bitcoin overnight - at least not intentionally. But think about it this way: if every bank vault in the world had a vulnerability that you (and only you) could exploit, possibly without detection (or at least with a degree of deniability)... what would you do? I doubt any sane person with that ability would immediately go drain every account they could get their hands on. It would cause global economic collapse - a world where even obscene amounts of money really wouldn't be worth much. You'd probably even tell yourself "I'm an honest person - I'm not touching that money"... until that nagging starts getting stronger and stronger.
Sooner or later, if given the opportunity to take unfair advantage of the system day after day, month after month, I think a lot of otherwise "trustworthy" people/organizations will end up giving in, albeit in subtle ways at first. Most people left to their own devices wouldn't flip a switch (for a reward) to immediately contaminate all of the world's fresh water at once, but if given a million switches each of which contaminates just 1 millionth of the world's fresh water for a substantial reward... I think there'd be some serious switch-flipping going on.
So what am I saying? Basically, I'm more worried now than I've ever been about the future of Bitcoin for one reason: the very real possibility for mining pools to be dishonest and carry out attacks. It's something that we really shouldn't wait to see before trying to address it. I don't care how "trustworthy" this or that pool is. I also don't care if a pool is normally incentivized (by block rewards) to stay honest and play by the rules. Bitcoin was built on the assumption of mistrust by all parties - whether or not their actions are in their own best interest. It needs to be immune to the very real possibility of mining pools abusing power for whatever reason.
No, I don't think any large pool is going to team up with another pool tomorrow and go on a "rampage" destroying all of Bitcoin's value by double-spending, reversing transactions, etc. But I don't KNOW that's not going to happen. It's certainly within the grasp of a couple of the pools at the moment. More likely, such abuse would happen slowly at first (as the pool or pools try not to draw attention). There would be speculation of wrong-doing, but no definite answers at first. The value would fluctuate as some people begin to lose trust in the system, while others would believe the system should self-correct with time. So the pools would continue to take advantage of their power, testing our trust in the system even more. At some point, a cascade of fear and mistrust would trigger panic in the markets, but this time, there would be no recovery...
Am I alone in this fear? I've heard/read that some Bitcoin alternatives are built on proof-of-work systems that are supposedly immune to this sort of thing... How practical are these solutions really, and is there any chance the core Bitcoin devs will modify Bitcoin's algorithms (assuming miners will adopt the change) to incorporate a solution like that? Is there a plan?
In some of these threads, I see people dismissing the threat by saying things along the lines of "why would a pool of significant size do something so stupid so as to destroy the value of their own profits?" Others defend the pools by saying "these are honest, legit people - we can trust them."
At first these arguments seemed to put me at ease, but as I've given it more thought, they're not really sitting right with me.
Consider this analogy:
If we all share the same planet, and any amount of harmful pollution (however insignificant) released into the environment ultimately threatens our own well-being as inhabitants of the planet, then why would any individual or organization chose to continue any operation that releases pollution?
(I'm not trying to start any political debate about the environment here, but I think most would agree that many forms of pollution have at least some kind of detrimental impact on the environment).
The fact of the matter is, it's not a simple winner-takes-all and loser-gets-nothing scenario. We can live with a degree of pollution in the environment if it means we can enjoy the benefits of large-scale manufacturing, transportation, etc.
Self interest (as a whole) is very much tuned to the short term. While the long-term effects of our actions do have a varying degree of weight on our decisions, I think it's safe to say that short-term benefits - in general - take priority over long-term considerations. In a perfect world, perhaps the negative effects of pollution would be felt and shared immediately by all, and the free market alone could adapt and find an appropriate balance. In the real world, however, we rely on regulation to help minimize poor decisions (intended to maximize short-term profits) of self-interested organizations that would negatively impact us all.
Now, going back to Bitcoin....
I've been watching the growth of Bitcoin since around 2010. I strongly believe that Bitcoin (or at least the concept of a decentralized cryptocurrency) is "an idea whose time has come." It provides a solution that (in theory) needs no regulation - except by democratic vote - in order to protect everyone's interests (unlike the example of pollution above). In my mind, Bitcoin's greatest achievement isn't so much technical, but rather social. The brilliance is not in the algorithms used or even in the decentralized network. The real achievement is in engineering incentives that keep the system in check.
The U.S. Constitution was (at least at one time) hailed as a remarkable system that ensured a balance of powers. The United States government has been called "the grand experiment", much in the same way Bitcoin is a great, borderless experiment of a similar nature. Whether it's Bitcoin or a successor to Bitcoin, I think this experiment is here to stay.
So what does this have to do with mining pools? As others have said, I really doubt that any mining pool would be foolish enough to do something completely crazy and destroy all of our trust in Bitcoin overnight - at least not intentionally. But think about it this way: if every bank vault in the world had a vulnerability that you (and only you) could exploit, possibly without detection (or at least with a degree of deniability)... what would you do? I doubt any sane person with that ability would immediately go drain every account they could get their hands on. It would cause global economic collapse - a world where even obscene amounts of money really wouldn't be worth much. You'd probably even tell yourself "I'm an honest person - I'm not touching that money"... until that nagging starts getting stronger and stronger.
Sooner or later, if given the opportunity to take unfair advantage of the system day after day, month after month, I think a lot of otherwise "trustworthy" people/organizations will end up giving in, albeit in subtle ways at first. Most people left to their own devices wouldn't flip a switch (for a reward) to immediately contaminate all of the world's fresh water at once, but if given a million switches each of which contaminates just 1 millionth of the world's fresh water for a substantial reward... I think there'd be some serious switch-flipping going on.
So what am I saying? Basically, I'm more worried now than I've ever been about the future of Bitcoin for one reason: the very real possibility for mining pools to be dishonest and carry out attacks. It's something that we really shouldn't wait to see before trying to address it. I don't care how "trustworthy" this or that pool is. I also don't care if a pool is normally incentivized (by block rewards) to stay honest and play by the rules. Bitcoin was built on the assumption of mistrust by all parties - whether or not their actions are in their own best interest. It needs to be immune to the very real possibility of mining pools abusing power for whatever reason.
No, I don't think any large pool is going to team up with another pool tomorrow and go on a "rampage" destroying all of Bitcoin's value by double-spending, reversing transactions, etc. But I don't KNOW that's not going to happen. It's certainly within the grasp of a couple of the pools at the moment. More likely, such abuse would happen slowly at first (as the pool or pools try not to draw attention). There would be speculation of wrong-doing, but no definite answers at first. The value would fluctuate as some people begin to lose trust in the system, while others would believe the system should self-correct with time. So the pools would continue to take advantage of their power, testing our trust in the system even more. At some point, a cascade of fear and mistrust would trigger panic in the markets, but this time, there would be no recovery...
Am I alone in this fear? I've heard/read that some Bitcoin alternatives are built on proof-of-work systems that are supposedly immune to this sort of thing... How practical are these solutions really, and is there any chance the core Bitcoin devs will modify Bitcoin's algorithms (assuming miners will adopt the change) to incorporate a solution like that? Is there a plan?
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