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I read a bit through the forum discussion and the part I find fascinating is that new cryptocurrencies, with low hash rates, are seen as targets ... and that th

• sigil 13y ago
  Shouldn't the takeover risk be priced into a new cryptocurrency? If coin price > mining cost / 2, it becomes worth it to acquire 51% of mining capability so you can vote the other 49% to yourself, no? But then again, once you have 51% control and everyone knows it, the value of those coins quickly goes to zero. As is probably happening with Auroracoin as we speak.
  • wmf 13y ago
    In other words, the price of any new cryptocurrency (that uses an existing algorithm) should be zero, since a 51% attack is nearly certain.
    • sigil 13y ago
      Well not zero, just below half the mining costs, right? As long as it's below that, you still lose more taking over the new cryptocurrency than you gain. And that's also not taking the price drop post-takeover into account, which affects how much the attacker could actually cash out. But yeah, it would seem that miners of new cryptocurrencies should expect to lose money initially.
      • rblatz 13y ago
        That is ignoring people who do it for the lulz or to prevent competing coins from popping up.
    • skj 13y ago
      Well, not quite - the 51% attack is not free. There is some value that makes the 51% attack too expensive, and game theory, yadayada.
  • deleted 13y ago
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  • sirsar 13y ago
    > If coin price > mining cost / 2, it becomes worth it to acquire 51% of mining capability so you can vote the other 49% to yourself, no? No. The most powerful thing a 51% miner can do is roll-back transactions. The currency goes back to the spender, not to the miner.
    • sigil 13y ago
      But you can doublespend whatever coins you've got, and reject all other transactions, so the effect is the same. (You're right though, I phrased that incorrectly with "vote.")
• cwp 13y ago
  And if that's the case, what's the difference between the high-hash-capable defender and a central bank? (Not sarcasm, honest question.)
  • lukeschlather 13y ago
    The central bank can shut its systems off for a day without worrying about all its assets disappearing when they come back online.
  • icebraining 13y ago
    Unlike central banks, a miner with >50% hash-rate can't "print money" as it wishes, that's still regulated by the algorithm. http://bitcoin.stackexchange.com/questions/658/what-can-an-attacker-with-51-of-hash-power-do http://bitcoin.stackexchange.com/questions/658/what-can-an-a...
    • krrrh 13y ago
      The bond market is a pretty strong check on government-backed currencies. It's a stretch to say that a central bank can just print money as it wishes.
    • mpyne 13y ago
      Wait, why can't that miner simply unilaterally switch to a better algorithm? Especially if the switchover isn't drastic, the ledger could be effectively destroyed before the minority notices in time to do a clean fork.
      • maxerickson 13y ago
        For the fork to mean anything other clients have to also switch algorithms (or they won't even accept any of the fork blocks as valid).
  • kordless 13y ago
    Better, what's the difference in someone holding a massive amount of compute at their beckoning and using it in a similar way? The answer is, there is no difference. Power is power.
• mcintyre1994 13y ago
  I thought the same. I'm wondering whether it's possible to secure a coin with hashpower without artificially drastically increasing its difficulty - as I understand the mining does that securing, but can it be secured without affecting mining? My guess is probably not, but I'm not completely sure. It seems like it'd be hard for a coin to catch on if it skips the CPU and maybe even GPU mining phases completely - but maybe that's necessary to secure a new coin.
• tlrobinson 13y ago
  Sounds about right, at least for PoW-based blockchains. IMHO this is a good thing. Most of these coins offer marginal advantages over Bitcoin itself. It's in everyone's interest to consolidate on the most valuable, and thus typically most secure blockchain and least volatile cryptocurrency.
  • a8000 13y ago
    It is in the interest of the early adopters. For those not involved yet that have never mined before it might be more fun / interesting to adopt a new coin, for which there are no ASIC implementations.
    • tlrobinson 13y ago
      If what you care about is your cryptocurrency being "fun" and "interesting" rather than "secure" and "stable", then sure.
      • ben0x539 13y ago
        Wouldn't people who prefer "secure" and "stable" go with actual, non-crypto currencies?
        • deleted 13y ago
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      • a8000 13y ago
        Everything I would want to buy I can pay for with a free international credit card my bank issues. The only real incentive to use a cryptocurrency for me would be for things like giving and receiving online tips, like a site independent karma system, but as soon as you need to actually buy the coins from somewhere it is just as convenient or inconvenient as tipping fiat money.
• wmf 13y ago
  Any new cryptocurrency that uses an existing algorithm (SHA256 or scrypt) needs to be merge-mined to prevent it from being immediately attacked. An alternative is for new cryptocurrencies to use new algorithms that existing pools don't support.
  • rsync 13y ago
    Can you explain what you mean by "merge-mined" ? Further, just using a new algorithm only protects you briefly, right ? Can't the pools implement new algorithms as they see fit ?
    • wmf 13y ago
      http://bitcoin.stackexchange.com/questions/273/how-does-merged-mining-work http://bitcoin.stackexchange.com/questions/273/how-does-merg... The actual mining is done by clients using software like cgminer; the pools just coordinate. If the software doesn't support a particular POW algorithm then it would have to be updated and tens of thousands of people would have to install the update. Also, there are pools that auto-switch between different scrypt currencies to mine the most profitable one, but mining software doesn't (currently) auto-switch algorithms.
    • Zarathust 13y ago
      While this is true for desktop mining and to some extend, gpu mining, largest and most powerful pools use ASIC boxes which are not re-programmable. Some hash algos perform better than others on gpu depending on the parallelization potential.
      • rsync 13y ago
        Ok, so you could theoretically "defend" your new cryptocurrency by basing it on an algorithm that nobody has ASICs for yet, and by the time there are ASICs, its probably defended well enough by mass adoption at that point (otherwise nobody would bother to make an ASIC for it).
  • comboy 13y ago
• mrb 13y ago
  This is exactly right. Having been in Bitcoin for 3.5 years, I have personally witnessed quite a few other altcoins being killed because of majority attacks. I have been explaining this to people as a reason why Bitcoin has a huge first-mover advantage as it has a very strong hashrate already backing up the network.
  • rwallace 13y ago
    Which coins have been killed thus far? The reason I ask is because I'm curious: technological artifacts don't usually have the sharp line between life and death that most biological lifeforms do, particularly in the case of software which can potentially lie dormant indefinitely as a static bitstream. However it seems to me crypto currencies should have a sharp line, because as I understand it, the process of block mining serves as a heartbeat; the cessation of the heartbeat should serve as such a line. I'm wondering whether that is actually the case; what really happens when the heartbeat of a crypto currency stops?
• this_user 13y ago
  > "Which leads me to conclude that any new cryptocurrency would need to be launched by an organization that had the computing power to defend the currency (assuming it follows resource-intensive mining paradigms like bitcoin et. al)" So, you're saying that there should be some kind of powerful institution that is capable of defending the currency against manipulation attempts if necessary and thus ensures a reasonable level of stability in said currency? This concept seems somewhat familiar, you might even consider it a crypto currency's Central Bank. What I find funny w.r.t. to BTC et al. is that people are slowly starting to find out that living in the currency equivalent of the Wild West is not as much fun as it sounds at first. First, there were calls for more government regulation and a higher level of accountability on the side of infrastructure operators and now even the idea of some entity defending the currency against attacks seems like an attractive prospect. My prediction is that at the end there will be an epiphany that our real world currency system is constructed the way it is for a reason. It may not be perfect, it certainly has some major flaws but at the end of the day it's still better than the alternatives.
  • zanny 13y ago
    I've been in BTC trading for two years. Never has anything been wrong with btc proper, it is always with centralized businesses around it, with the exception of the double spend fork of the blockchain during that one version upgrade early on, which was a valuable lesson for future upgrades like the recent 0.9 transition, which went smoothly. And no, central banks are awful. That is one of the myriad reasons distributed compute power is what makes bitcoin strong. And ironically, central banks are autocratic and blockchains are democratic, while the systems that consistently produce the former are purported republics, and blockchains just come from no ideology or power structure, I guess anarchy. > My prediction is that at the end there will be an epiphany that our real world currency system is constructed the way it is for a reason. It may not be perfect, it certainly has some major flaws but at the end of the day it's still better than the alternatives. The current system is giving a monopoly on printing money without any backing store of value besides the confidence in the printer to a select few easily exploitable and corruptible appointed heads of central banks with no mechanism for the fair distribution of new funds. These banks then operate through violence to guarantee peoples assets to falsely make the currency look more secure than it is, by threatening you if you don't pay the taxes to recoup the losses of risk in storing your money with someone else. Is it an arms throw from the worst possible system, which would be the absence of any confidence at all, and it is only with systemic manipulation such a system still works at all. That, and the US dollar is the compulsory international currency for oil, which everyone craves like a cocaine addict without a fix.
• Pitarou 13y ago
  You're interpretation is quite correct, and this solves the "anybody can create a cryptocurrency" problem. Isn't Satoshi Nakamoto's design brillian!
  • woah 13y ago
    How is that a "problem"? Seems like it's only really a problem for Bitcoin hoarders.
• CamperBob2 13y ago
  Seems apparent that just as "Information wants to be free," it's also true that "Currency wants to be centralized."
• pkulak 13y ago
  You just need to secure it with something other than proof of work, which is vulnerable to these 51% attacks. Proof of stake isn't, mostly because if you own 51% of the currency, the last think you want to do is devalue it.
• kewal 13y ago
  I think a project like Ethereum, which should be in full swing by the 4th quarter of this year will solve this issue. The Ehtereum network can secure against the 51% attack, and alt-coins can be implemented on top of it for just this purpose, and the ease of implementation, since Ethereum comes with a full scripting language. Ethereum isn't an alt-coin - it is a system to create 'smart contracts'. One such smart contract could be the implementation of a coin like AuroraCoin. Any alt-coin you can think of should be able to be implemented on the Ethereum network - and the chances are they will even be more feature rich because of the EtherScript language.