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I'm more than sure I misunderstand something. Is the purpose of mining to introduce cost to recalculating a chain? So basically if someone changes a block in th

by avenoir 10y ago

I'm more than sure I misunderstand something. Is the purpose of mining to introduce cost to recalculating a chain? So basically if someone changes a block in the chain mining makes it impractical to extend the change upstream? If so how did this impact the security of blockchains in the early days when mining complexity was very low and attainable on a single CPU. By the way, amazing find. Immensely thankful to the OP for sharing.

arglebarnacle 10y ago
So in a blockchain, it's straightforward to verify whether a block contains only valid transactions or not (in the sense of an address only being allowed to spend coins it really has for example). Any node running the reference implementation will reject any block that is invalid regardless of mining. The issue with one actor controlling over 50% of mining power is that they can spend their money, then go back in time to before the spend to create an alternative chain. Since they control the majority of hashpower, their alternative chain catches up and ultimately becomes the reference chain in the view of the nodes in the peer to peer network. The bad actor is then free to spend the coins from their original transaction again, despite presumably having already received the goods or services from the original transaction. The real innovation of the blockchain is that it solves the Byzantine Generals problem in the case where less than 50% of the hashpower in the network belongs to coordinating bad actors. In the absence of that level of centralization and collusion, you can be sure that nobody is cheating.
mthoms 10y ago
You've definitely got the right idea. It's not mentioned in the video, but mining is also how new currency is generated - Miners are rewarded for finding blocks (thus there is incentive to mine). And to answer your question - In the early days, miners were hobyists and simply operated at a loss. The value of coins grew roughly along with the "hash power" of the collective network (as you might expect). And at the same time, the reward for finding new blocks is constantly shrinking.
bshanks 10y ago
Yes, you are correct. Proof-of-work blockchains are vulnerable to an adversary who has more computing power than the sum of the computing power of all of the honest miners. This is called a "51% attack". So baby blockchains are quite vulnerable.

by avenoir 10y ago

arglebarnacle 10y ago

So in a blockchain, it's straightforward to verify whether a block contains only valid transactions or not (in the sense of an address only being allowed to spend coins it really has for example). Any node running the reference implementation will reject any block that is invalid regardless of mining. The issue with one actor controlling over 50% of mining power is that they can spend their money, then go back in time to before the spend to create an alternative chain. Since they control the majority of hashpower, their alternative chain catches up and ultimately becomes the reference chain in the view of the nodes in the peer to peer network. The bad actor is then free to spend the coins from their original transaction again, despite presumably having already received the goods or services from the original transaction. The real innovation of the blockchain is that it solves the Byzantine Generals problem in the case where less than 50% of the hashpower in the network belongs to coordinating bad actors. In the absence of that level of centralization and collusion, you can be sure that nobody is cheating.

mthoms 10y ago

You've definitely got the right idea. It's not mentioned in the video, but mining is also how new currency is generated - Miners are rewarded for finding blocks (thus there is incentive to mine). And to answer your question - In the early days, miners were hobyists and simply operated at a loss. The value of coins grew roughly along with the "hash power" of the collective network (as you might expect). And at the same time, the reward for finding new blocks is constantly shrinking.

bshanks 10y ago

Yes, you are correct. Proof-of-work blockchains are vulnerable to an adversary who has more computing power than the sum of the computing power of all of the honest miners. This is called a "51% attack". So baby blockchains are quite vulnerable.