Topic: Non-mandatory tx fees = "Benevolent" 51% attack cartel (Read 1346 times)

Assuming that you recognize this as a real potential issue, could you not solve this problem by forcing all miners to include X number of transactions without fees per block? Real Bitcoin supporters will always pay fees, but between newbs and micro payments there is still plenty of reason to leave no fee transactions in the system.

You point out another major problem with bitcoin: No incentive to hard fork to fix major problems unless you and others who think like you hold large amounts of bitcoins.

Just like you mention, there is much more incentive to fix problems with bitcoin by starting a new blockchain and fixing the problem while gaining new coins. When the problems in bitcoin manifest, people will naturally want to move their money to a coin that provides solutions.

Why bother fixing bitcoin when you can get rich spawning a better blockchain? Of course this only works if the problems in bitcoin are real and unaddressed.

The solution to this particular problem would have to include either never ending block rewards or mandatory transaction fees. Using a cheap hardware friendly hashing algorithm would help too.

The solution is whatever keeps transaction processing compulsorily profitable for the joe shmoe miner - forever. Joe Shmoe is the real essence of true decentralization. True decentralization is the necessary structure to keep control of the currency out of the hands of the few.

Bitcoin could change the rules and continuously inflate the currency with never ending block rewards, however, mandatory transaction fees might be more acceptable in bitcoin. Not sure about changing the hashing algorithm.

Honestly of course, I don't actually have much faith in bitcoin to implement any of these measures. I have more faith that one or more other cryptocoins will address these kinds of issues, and some of them already do. The solution to this and other problems can be realized by the proliferation of cryptocoins and their competition in a free market to establish their value and use. It is crucial for participants in these markets to be informed and realize the ramifications of problems like this.

If you agree this is a problem, then hold positions in other coins that address this issue!
 
Looking at the bigger picture, other vectors of controlling a decentralized blockchain probably exist. People never stop trying to exploit weaknesses. The ultimate solution to preventing any of them ultimately lies in the education and vigilance of the users.

It illustrates that just because any problem seems solved now, doesn't ever mean that it can't ever be subverted. For example, the storage of gold and the issuance of receipts on gold which were used as money was at one time very decentralized. Loss of vigilance allowed this decentralization to be eroded away.

I am pointing out this flaw not necessarily to get bitcoin to change, but rather to make people simply aware of this specific issue and also that, in general, ways exist to subvert the principles of decentralized currency.

I'm definitely not the only one pointing this out. I've seen it in the link i posted in the OP and it is related to the thread called "The deflationary problem" started by Sweft.

Many of the users today are informed about the importance of why the currency is decentralized, but after cryptocoins gain more mainstream adoption, the masses aren't going to know or care about how it works, they will just use a currency because everybody else does and there are goods and services to be exchanged.

Therefore it is important that problems like this get pointed out and discussed and addressed early.

So what about changing the incentives around to prevent what you predict?

What changes do you suggest?

Nice argument. Let's just go with that and forget about it.

But wait, what if proof of work based cryptocoin networks aren't just an irrelevant fad ??!!??!!?

By the time this ever becomes and issue bitcoin will likely be irrelevant.

Contrary to what you said about this not happening in a free market, it is indeed the ability of people to choose freely whether or not to pay a tx fee which drives the tx fee charging miners out of business. Likewise any miner is totally free to choose whether to charge fee or not.

I will try to explain better my earlier response to this question you quoted. Keep in mind this is after the block rewards dry up. The compensation for mining is only the tx fees.

Say half the miners (or even more) refuse to include in blocks they mine the transactions without a fee. The other miners will process all tx regardless. People are therefore incented to not include a tx fee, because statistically their tx will eventually be processed by miners who don't require a fee.

The people who don't mind waiting a few blocks for their tx to show up won't pay the fee. This loss of revenue will make it unaffordable for some miners on slimmer margins to mine, and they will drop out, which causes the relative network hashing share of the fee waiving miners to grow. This causes the wait time for blocks including transactions without fees to be shorter. This further incents more people to not include a fee. This makes profit margins for fee charging miners even smaller, and drives out of business more miners who need that fee. This causes the relative network hash rate of miners who don't care about fees to grow again, which statistically means blocks containing tx without fees will be found even sooner. This makes it so even more people don't include a fee. This causes..... yada yada yada yada yada

This is spot on. The speculation of such an occurrence has very little foundation within a free market. 

I don't mean attack by literally attacking the currency to harm it, but to project their power into the economy. The last thing they would want to do is harm the currency. That's what I mean by "benevolent". They could do stuff like charge tx fees to their competitors, freeze the assets of whatever politically convenient boogeyman the media tells us we happen to be scared of, arbitrarily tax everybody, you know, all the shit a decentralized currency supposedly prevents.

Think about what you are saying... Other cryptocoin types use hashing algorithms which somewhat level the playing field hardware wise. Maybe that's what you're trying to say. Anyway, this has nothing to do with the problem.

How do you know that a majority of hashing power accepting no-fee transactions is going to be working with one plan to attack bitcoin, rather than preserving the value of their existing bitcoins (which would be worth less after such an attack) or preserving their bitcoin-based business or helping out because they like using bitcoin and would be inconvenienced if it lost credibility or something else? Or the same sorts of things with people paying fees.

Also, what if bitcoin clients included some code to use the processor and graphics card in such a way that they didn't use any more power (by avoiding stepping up the frequency or whatever) in order to hash? You could get a lot of hashing power that way, and some lucky people would randomly get some fees in their accounts.

It would incent the people using the currency to not include tx fees because they know their tx will eventually get processed anyway. The more they do this, the less the fee charging miners income, and more will quit out of necessity.

Why would the fee-charging miners go out of business? Wouldn't the fee-charging and non-fee-charging miners just coexist? If one large miner decides to confirm no-fee transactions instead of fee transactions, this will not economically incentivize the rest of the miners in any way, as far as I know.

As soon as block rewards dry up beyond a certain threshold, a one way slippery slope is exposed for miners to go out of business on. Since transaction fees aren't mandatory, the network hashing share can effectively be purchased by miners subsidizing their own mining operations, by way of gaining the share of network hash rate given up by fee charging miner going out of business.

By waiving transaction fees, the fee waiving miners will less incent people to include transaction fees, because statistically, blocks with these transactions in them will eventually be found by the fee waiving miners, even if the miners who charge fees reject these transactions.

It is not necessary for the fee waiving miners to collude or to have a majority of hashing rate to start the process of driving out the fee charging miners. It will happen naturally at an ever growing rate in proportion inverse to how long people care to wait for a block to be found with their transaction in it that they didn't include a fee for. As the netwrok hash share of fee waiving miners grows, this wait time becomes shorter, more people will disinclude fees, and thus the eclipse of fee charging miners accelerates.

The hashing network will then probably be comprised by the likes of amazon, google, or other companies who can afford to mine for free. They mine for free as a way to purchase influence over the blockchain. By forming coalitions or cartels, they can project their policies onto the economy by "benevolently" executing arbitrary 51% attacks without negatively affecting the continued use of the currency.

This may be a dead horse, but maybe it shouldn't be. It's been discussed in the noob section, but once people get out of noob jail, they rarely go back.

This summarizes this article, which also includes some things i didn't summarize:
http://www.marketoracle.co.uk/Article39704.html