Topic: risk of centralization of bitcoin. - page 3. (Read 538 times)
Mining pools are businesses relying in bitcoin mining rewards. Attacking the network means suicide for the business and they will do harm than good, i mean they will gain more loss than profit — we are talking of millions of dollars here, so no one on their right mind will do that.
There is nothing much that you can do to discourage centralization as long as people are willing to mine in pools. Pools have controlled more than 51% of the hashrate for many instances but nothing much has happened.
All miners, including large pools or individual miners, are mainly beneficiaries of Bitcoin's popularity which is derived from its decentralized nature. It would be stupid for a central authority to control any of the rules of the protocol or try to manipulate the network in any possible way, because this would have a catastrophic effect on the entire Bitcoin market, because users would lose confidence in the characteristics of Bitcoin, and this would lead to a decline in its use and perhaps a complete collapse of the price. Theoretically, all hypotheses are valid. In practice, the market still has a good degree of decentralization in a way that does not allow one party to monopolize.
I don't think that the centralization of mining is on the rise. There was a time when mining was concentrated in China, and since China is an authoritarian state and a single country, I could see how some were concerned. But since the bad, mining spread a bit, largely into the USA and Kazakhstan. Unfortunately, I can't find any recent reliable data that analyzes the amount of mining happening in different countries, but there's no reason to think it's more centralized than it was years ago.
Moreover, a major deterrent of the 51% attack in am immense financial resource that's going to just get burned to attempt the attack.
Moreover, a major deterrent of the 51% attack in am immense financial resource that's going to just get burned to attempt the attack.
In short, i would suggest these idea which could majorly reduce risk of ms-use of hashrate by pool,
1. Revive P2Pool which is decentralized pool.
2. Encourage miner to keep up-to-date with Bitcoin news and prepare switch to different pool anytime in case certain mining pool doing something malicious.
Miners don't really care, at least the large ones. I've had a small farm at one point in time and switching pools took a good amount of time, especially if the webui isn't very intuitive. They probably don't want to have to deal with the hassle of going into every one of the machines and changing the pools for no good reason. If anything malicious can be detected, it is already too late. P2Pool is just not really that good.1. Revive P2Pool which is decentralized pool.
2. Encourage miner to keep up-to-date with Bitcoin news and prepare switch to different pool anytime in case certain mining pool doing something malicious.
Anyways, BTCGuild and GHash.io were the closest in recent memory. BTCGuild was more proactive in this regard and had a proposal with cascading fee structures. The onus is largely on the pool owners to force pool users to move.
As for centralisation, it is also possible, but we can see that it is distributed across, from US to Asia and even to some remote region in Russia and Europe. So again, it is present, but not seeing that it will disrupt the ecosystem.
It is still not ideal as mentioned above. I believe others already said it better, but you don't want to make miners concentrated in one or two countries. I think some people are trying to discourage this by encouraging miners to move to other countries, but that is not ideal since every miner's condition is different. At the end of the day, they are doing that for profit. I guess the worst scenario would be a huge decrease in hash rate and then a period of slow confirmation if something terrible happened to miners due to regulation. 
what are the potential ethical issues and challenges arising from the increasing centralization of mining power and wealth in very few dominant mining pools in the Bitcoin network and what can the bitcoin community do? what measures can be taken to maintain decentralization of the network while addressing these concerns?
like the risk of 51% attack when big pools have more power, etc.
It's already 2023 and we are still talking about the 51% attack? Not saying that it can't be done, but it's impossible at this point to even think about it. It will take a lot of money to execute it and not sure what will be the incentives to do that.
As for centralisation, it is also possible, but we can see that it is distributed across, from US to Asia and even to some remote region in Russia and Europe. So again, it is present, but not seeing that it will disrupt the ecosystem.
like the risk of 51% attack when big pools have more power, etc.
Theoretically, a situation may arise when a number of sufficiently large miners at some stage will cooperate in order to carry out a 51% attack. But it must have a purpose, right? After all, then there will be other miners who will connect more equipment and be able to regain control over the network. That is, we are talking about some kind of short-term action, the main purpose of which can only be to damage the reputation of bitcoin. But why do miners need it?
In addition, in order for so many large miners to cooperate for something destructive, it is necessary that they all have the same interests at the same time, and at the same time no one has option to connect additional equipment so that the first group of miners again had less control over the network.
I am not saying that we shouldn't think about how to increase the level of decentralization and reduce risks. It's still necessary. But it’s also not worth worrying too much about possible risks, they are practically zero today.
2. Encourage miner to keep up-to-date with Bitcoin news and prepare switch to different pool anytime in case certain mining pool doing something malicious.
Miners will have to check news and change their mining pools if their current mining pools have too high hashrate that potentially can do malicious thing like attacking the network.They can read news to stay up to date with the network status but more professional entities like exchanges, mining pools will have and run their full nodes together with some special tools to detect malicious things and switch their ASICs and hashrate to keep the network as most decentralized as possible to prevent against network attacks.
Detection is key as after that, they can switch their ASICs very quickly and easily. Just connect their ASICs to other pools with simple configurations.
In short, i would suggest these idea which could majorly reduce risk of ms-use of hashrate by pool,
1. Revive P2Pool which is decentralized pool.
2. Encourage miner to keep up-to-date with Bitcoin news and prepare switch to different pool anytime in case certain mining pool doing something malicious.
1. Revive P2Pool which is decentralized pool.
2. Encourage miner to keep up-to-date with Bitcoin news and prepare switch to different pool anytime in case certain mining pool doing something malicious.
what are the potential ethical issues and challenges arising from the increasing centralization of mining power and wealth in very few dominant mining pools in the Bitcoin network and what can the bitcoin community do? what measures can be taken to maintain decentralization of the network while addressing these concerns?
like the risk of 51% attack when big pools have more power, etc.
like the risk of 51% attack when big pools have more power, etc.
From my point of view, laws and legislation represent a non-negligible risk when it comes to centralising the BTC hashrate.
I will quote an excellent message posted by mikeywith recently :
If you follow this topic from start you will see that situation changed a lot, and having more than 51% of hashrate was always problematic.
Before the China ban it was Bitmain with their pools (Antpool, BTC.com and Viabtc) arguably even Poolin which was founded by an ex-Bitmain employee before the 2020 lawsuit, and then, on the other side, you had F2pool, those pools combined always had well over 50% of the total hashrate, and don't be fooled by all the names, essentially, 2-4 Chinese men sitting in closed room had the final say on what to do with all that hashrate.
Fast forward, China banned mining, and U.S players started to get into the business, creating their own mining pools, and now it's no more 2-3 Chinese men, it's 1-2 Chinese and 1-2 Americas, still the same number of entities who control well over 50% of the total hashrate, and since BTC doesn't care about those folk's nationality or names, nothing has changed in terms of hashrate distribution.
I have been professionally mining BTC long before this topic took place, and I have been following hashrate distribution years before Foundry USA pool came into existence and the fact that 2-3 entities owning over 50% of the hashrate have been the case since at least 2016, it's a lot more than just looking at a pie chart and thinking you solved the puzzle, you need to understand how are all these pools are connected, then use that knowledge to compare hashrate distribution for the past decade, and you will come to the same conclusion.
Furthermore, pool distribution is pretty irrelevant compared to gear ownership and the physical location of that hash power, at least 80% of the hashrate comes from a single manufacturer, that's more to worry about than some random pool distribution which can change drastically over the course of a few hours, the physical location of the gears and the law which they operate under is also a serious matter.
I'd rather see 3 large pools each owning 33% but hashrate divided between 50 different countries where no country has over 10% of it, rather than seeing 100 pools, each with 1% hashrate but 70% of that hashrate located in the same countries with the same laws and regulation, even worse, that majority of that 70% is owned by a single entity.
I agree with him 100%, the importance of geographical situation of miners is too often underestimated, I think that a distribution in more countries would be beneficial to the general health of the Bitcoin hashrate. With too large a majority of miners concentrated in just 2 or 3 countries, the risks associated with a change in legislation are too big.
Easy, when the mining power becomes centralized then that can only mean that bitcoin will just become any other banking institution that prioritizes the well-being of their own rather than the people that bitcoin was made for. It's unlikely to happen though, I'm sure that the major players are going to be in support of decentralization which increases even more the unlikeliness that a centralization happens. but I think that's what's going to happen when bitcoin becomes centralized.
Unless, they create a fucking consortium
Unless, they create a fucking consortium
what measures can be taken to maintain decentralization of the network while addressing these concerns?
What can be done is for the network to overwhelming reject any alternate chain created by a miner with majority hashrate making it unprofitable for them.Other than this it's a capitalist game. Miners should of course abandon a pool if they try anything malicious, meaning they will drastically lose their hashrate power, further making it unattractive for anyone to even attempt to attack the network.
- Supporting more decentralized pools
- Using easily installable software that allows anyone to create a high-quality mining pool would create more competition and diversity among miners
• Creating a pool is one thing, having enough hashrate to be competitive is another.
like the risk of 51% attack when big pools have more power, etc.
even the fact that some pool/miner will reach 51% someday does not mean that it will be profitable for him to attack. If the attack were to be made by a miner, bitcoin is not mined with the help of GPUs, which can then be resold to players, but with the help of specialized devices used only for bitcoin mining. Hence, in the event of a bitcoin collapse or a sharp drop in prices related to an attack, mining units go to the trash because they have no other use, and we are talking about billions of dollars in hardware. If the pool were to attack, individual miners will automatically turn away from it to avoid the scenario described above eliminating future profits.
Here are a few ideas to maintain decentralization:
- Supporting more decentralized pools
- Using easily installable software that allows anyone to create a high-quality mining pool would create more competition and diversity among miners
- Adopting 16nm ASICs could reduce the gap between large and small miners by making mining more efficient and affordable
- Educating and incentivizing miners: Miners should be aware of the risks and benefits of joining different pools and make informed decisions based on their values and goals. Miners should also be incentivized to switch pools if they notice that mining centralization is affecting the network’s health or price.
Mining pools are composed of many miners and not an individual. If such an issue arises which I doubt miners can switch pools to save the network. I won't dismiss the risk but for more than a decade no one tried it and no one will be able to do it.
Centralization is always present in Bitcoin or any other Crypto. PoW will always encourage centralization because it encourages people to amass hashpower and mine together. The only thing keeping them from attacking Bitcoin would be game theory. At present, the rewards from attacking Bitcoin with a 51% attack is overwhelmingly low and it is not remotely profitable for them to do so. The opportunity costs of executing any attack on Bitcoin is far higher than the benefits.
There is nothing much that you can do to discourage centralization as long as people are willing to mine in pools. Pools have controlled more than 51% of the hashrate for many instances but nothing much has happened.
There is nothing much that you can do to discourage centralization as long as people are willing to mine in pools. Pools have controlled more than 51% of the hashrate for many instances but nothing much has happened.
what are the potential ethical issues and challenges arising from the increasing centralization of mining power and wealth in very few dominant mining pools in the Bitcoin network and what can the bitcoin community do? what measures can be taken to maintain decentralization of the network while addressing these concerns?
like the risk of 51% attack when big pools have more power, etc.
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