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The paper outlines two attacks that a hash rate majority can undertake: (1) double-spending; and (2) sabotage (force a decline in exchange rate). But there is

by apo 8y ago

The paper outlines two attacks that a hash rate majority can undertake: (1) double-spending; and (2) sabotage (force a decline in exchange rate). But there is a far more benign and profitable attack: collect all of the block reward. No need to tell anybody, and no need to upset users by double-spending. Business as usual. In other words, establish a benevolent mining monopoly: https://bitzuma.com/posts/bitcoins-end-game-the-benevolent-mining-monopoly/ https://bitzuma.com/posts/bitcoins-end-game-the-benevolent-m... The hash rate majority becomes an effective monopoly by censoring blocks from outside the cartel. The incentive is equal to half the block reward. If done properly and gradually, few users would notice. Nor would many care. Those who did would simply leave. I suspect there's even a version of this attack in which a cartel makes public threats to censor blocks it disapproves of. This is, after all, what BIP-9 does: https://github.com/bitcoin/bips/blob/master/bip-0009.mediawiki https://github.com/bitcoin/bips/blob/master/bip-0009.mediawi... Using this approach, a cartel may be able to leverage a hash rate below 50% to 100%. There's some precedent for this with UASF. The hash rate of the group threatening to censor blocks there was quite small (certainly below 50%). Depending on who you talk to, the threat of block censorship by this group was enough to shut down segwit2x.

erikpukinskis 8y ago
Would lower the carbon footprint of the mines.
- wmf 8y ago
  The "losing" miners would continue mining on a separate chain (e.g. Monero Classic) as long as it was marginally profitable. They wouldn't just throw away their hardware.
  - Kadin 8y ago
    Only until someone does the same thing to the other chain. The logical next step is for the miners leaving the biggest chain to concentrate on a chain where they can successfully pull off the same attack that just drove them away, and on down the line until all chains have been taken over by one large participant each. The steady-state is a reduction in mining activity across all public blockchains by ~50% or so, although that's probably an upper bound that wouldn't actually be reached.
- QML 8y ago
  In theory, if all members of the cartel were to follow the rules, then yes. However, Bitcoin mining suffers from the same problem that Californian farmers face when there's a drought -- the tragedy of the commons [1]. In both scenarios, there is an individual incentive to deviate from the rules set: with Bitcoin, it would be with people secretly mining; with farmers, it would be with people secretly taking more water than their allotment. [1] https://en.wikipedia.org/wiki/Tragedy_of_the_commons https://en.wikipedia.org/wiki/Tragedy_of_the_commons
gbhn 8y ago
Looking at hash rate shares historically, it is incomprehensible that market share would remain so stable through several generations of mining tech. So the existing system is precisely a cooperative benevolent monopoly, albeit an informal one. My guess as to why the miners don't just turn off their equipment and threaten to overturn any non-monopoly block mining is that they just don't know how much of the speculative bubble is based on their behavior, and acting that way might pop it.
- kylebenzle 8y ago
  You dumb, "benevolent monopoly", not even close, miners are selfish and greedy, far from benevolent. If it was more profitable to attack the network with their hash power they would, but they would be essentially scrapping the $millions they put into the hardware.
QML 8y ago
Is this even viable? Due to the non-linearity of block rewards -- reward as a function of time spent working on a block is not constant -- an individual miner is always incentivized to pool hop after a certain point [1]. [1] http://www.cs.huji.ac.il/~yoadlew/bitcoin.pdf http://www.cs.huji.ac.il/~yoadlew/bitcoin.pdf
- kylebenzle 8y ago
  You are right, the argument (against bitcoin) holds no water and comes from a place of ignorance (and probably fear).

by apo 8y ago

erikpukinskis 8y ago

Would lower the carbon footprint of the mines.

wmf 8y ago
The "losing" miners would continue mining on a separate chain (e.g. Monero Classic) as long as it was marginally profitable. They wouldn't just throw away their hardware.
- Kadin 8y ago
  Only until someone does the same thing to the other chain. The logical next step is for the miners leaving the biggest chain to concentrate on a chain where they can successfully pull off the same attack that just drove them away, and on down the line until all chains have been taken over by one large participant each. The steady-state is a reduction in mining activity across all public blockchains by ~50% or so, although that's probably an upper bound that wouldn't actually be reached.
QML 8y ago
In theory, if all members of the cartel were to follow the rules, then yes. However, Bitcoin mining suffers from the same problem that Californian farmers face when there's a drought -- the tragedy of the commons [1]. In both scenarios, there is an individual incentive to deviate from the rules set: with Bitcoin, it would be with people secretly mining; with farmers, it would be with people secretly taking more water than their allotment. [1] https://en.wikipedia.org/wiki/Tragedy_of_the_commons https://en.wikipedia.org/wiki/Tragedy_of_the_commons

gbhn 8y ago

Looking at hash rate shares historically, it is incomprehensible that market share would remain so stable through several generations of mining tech. So the existing system is precisely a cooperative benevolent monopoly, albeit an informal one. My guess as to why the miners don't just turn off their equipment and threaten to overturn any non-monopoly block mining is that they just don't know how much of the speculative bubble is based on their behavior, and acting that way might pop it.

kylebenzle 8y ago
You dumb, "benevolent monopoly", not even close, miners are selfish and greedy, far from benevolent. If it was more profitable to attack the network with their hash power they would, but they would be essentially scrapping the $millions they put into the hardware.

QML 8y ago

Is this even viable? Due to the non-linearity of block rewards -- reward as a function of time spent working on a block is not constant -- an individual miner is always incentivized to pool hop after a certain point [1]. [1] http://www.cs.huji.ac.il/~yoadlew/bitcoin.pdf http://www.cs.huji.ac.il/~yoadlew/bitcoin.pdf

kylebenzle 8y ago
You are right, the argument (against bitcoin) holds no water and comes from a place of ignorance (and probably fear).