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Whatever happened to that crisis where a single party got control of 51% of total network mining power giving them essentially 100% control over the blockchain?

• sp332 12y ago
  They've voluntarily decided to limit themselves to 40%. https://arstechnica.com/business/2014/07/bitcoin-pool-ghash-io-commits-to-40-hashrate-limit-after-its-51-breach/ https://arstechnica.com/business/2014/07/bitcoin-pool-ghash-...
  • jdong 12y ago
    And that 40% is still enough for lots of attacks.
    • michaeltoth 12y ago
      Not really. For an attack to be possible, the attacker needs to generate an alternate blockchain faster than the honest blockchain. This problem can be thought of as a binomial distribution where the "success" is the honest blockchain mining a block and extending its lead by a block and the "failure" is the attacking chain being extended by one, reducing the gap by 1 block. p = probability of honest blockchain extension by 1 block q = 1 - p = probability the attacker extends by 1 block If p <= q, the probability of the attacker catching up at some point in time is 1. This is what makes a 51% attack possible. If p > q, the probability of the attacker catching up is (q/p)^z where z is the number of blocks behind at the beginning of the attack. There is a reasonable possibility for small values of z (small number of blocks behind), that 40% control would allow for the creation of an alternate blockchain longer than the honest chain, but this is mitigated by the fact that transactions require confirmations, which extends the number of blocks and makes the likelihood of an attack very unlikely.
      • sp332 12y ago
        51% attack is not the only kind of attack. A "selfish mining" attack can break the system too. http://hackingdistributed.com/2013/11/04/bitcoin-is-broken/ http://hackingdistributed.com/2013/11/04/bitcoin-is-broken/ Here's the paper http://arxiv.org/abs/1311.0243 http://arxiv.org/abs/1311.0243
        • michaeltoth 12y ago
          Thanks for the articles. I recall reading about this last year when the paper was published, but I had since forgotten about this form of attack. This is definitely interesting.
      • nullc 12y ago
        While the factual you said we're true, they aren't anywhere near as useful as just linking to a calculator— http://people.xiph.org/~greg/attack_success.html http://people.xiph.org/~greg/attack_success.html I don't agree with your conclusions though— at 40% a determined attacker reorgs 6 confirmations with a 50% success rate. Many users don't wait even six. Consider, even with 20%— thats analogous to having five parties 'signing' blocks— a result which is less decentralized than a fair amount of traditional financial systems. (The comparison is better than it would be with other pools because ghash primarily physically controls their own infrastructure). Even though this is all quite concerning, Bitcoin is very dynamic— the current state isn't something that will last, one way or another.
    • deleted 12y ago
      [deleted]
    • keyme 12y ago
      Yep, obviously the incentive system of bitcoin is deeply flawed. It's interesting to see that the market price is completely decoupled from such problems coming into public attention... I'm holding on to my stash for now, but unless the network is hard-forked to solve this issue (and other major ones on the way), I don't see a real future for bitcoin anymore. The price could still hit $20k, but the coin would be tightly controlled by then if mining remains centralized.
      • petertodd 12y ago
        > It's interesting to see that the market price is completely decoupled from such problems coming into public attention... It's seems "decoupled" because investors know that there is a fairly high chance that the problems will be fixed when it becomes apparent that it's posing a serious threat. Ultimately what Bitcoin is is a social consensus, and that social consensus has rapidly changed before in the face of exploits and will probably do so again. Secondly, at a technical level solving the flawed incentives can be done in a backwards compatible soft-fork upgrade - a hard-fork where everyone upgrades at once is not required, which makes agreeing to and deploying such a change significantly easier.
      • baddox 12y ago
        > Yep, obviously the incentive system of bitcoin is deeply flawed. Then how do you explain that apparent lack (or at least, very low rate) of such attacks? It seems to me that what we observe is evidence against your description of the incentives.
        • keyme 12y ago
          They did occur, but yes, at a very low rate. The rate will increase once the people with guns realize the benefit of such attacks. This is not the case now, but it will be the case if the price continues to rise. Imagine that 2 court orders (one to GHash, one to the next largest pool) are enough to reverse a transaction, or to "freeze funds" by not allowing TXs from a certain key. If the incentive system encouraged independent mining, this would not be possible.
  • cottonseed 12y ago
    I'm still a little surprised this was necessary. Miner income depends on the price of Bitcoin. Therefore, miners have a self-interest to protect the integrity of the network. It isn't like there are no alternatives to Ghash.io. It looks they collectively voted that this wouldn't be a big deal, or it would get sorted out by other mechanics (like this), and they were right. It hasn't seemed to significantly effect the price of Bitcoin.
    • sp332 12y ago
      Ghash.io makes money from hosted mining, and takes no mining fees from the pool. So some miners in the pool might go elsewhere (and pay mining fees) for those reasons, but it looks like lots of people are just hoping that someone else will leave.
      • sliverstorm 12y ago
        it looks like lots of people are just hoping that someone else will leave. Yup. Hello, tragedy of the commons. Albeit in a slightly different form from normal.
        • zheshishei 12y ago
          In this case, it's more like the Bystander Effect[1], which is related to the tragedy of the commons. Both can be the result of what's called the "Diffusion of Responsibility" [2]. Specifically, the game model this is following is the Volunteer's Dilemma [3]. [1] http://en.wikipedia.org/wiki/Bystander_effect http://en.wikipedia.org/wiki/Bystander_effect [2] http://en.wikipedia.org/wiki/Diffusion_of_responsibility http://en.wikipedia.org/wiki/Diffusion_of_responsibility [3] http://en.wikipedia.org/wiki/Volunteer's_dilemma http://en.wikipedia.org/wiki/Volunteer's_dilemma
      • cottonseed 12y ago
        I didn't realize that about Ghash. Are there other zero-fee pools? Why wouldn't Ghash raise their rates? Their pool shrinks and they make more money. What's the advantage of the current setup?
  • haberman 12y ago
    So now you just have to trust that they don't have 11% more unused CPU power sitting around waiting to suddenly take over the network at any moment.
    • deweller 12y ago
      They don't own the computer power. It comes from the miners who join the pool. The 51% attack problem is something that needs to be solved for bitcoin. But it isn't as bad as you think it is. I used to think that someone who took over the network could spend my bitcoins even without my private keys. But that is not true. The actual attacks possible with 51% are significantly more minor than stealing bitcoins.
      • sanswork 12y ago
        With 51% a miner could orphan everyone elses mined blocks could they not? Essentially giving them 100% of the rewards. Thats pretty huge.
        • servowire 12y ago
          All the miners would leave that pool if they did that. I would.
          • sp332 12y ago
            Really? If the pool only has 51% of the mining power but gets 100% of the block rewards, pool members would get coins at double the normal rate. I don't see a lot of people leaving in that event.
            • leni536 12y ago
              And what would happen to the value of bitcoin?
    • baddox 12y ago
      That was and is always the case. Each individual Bitcoin miner can only be certain that they themselves are not colluding with other miners, but for all they know, every single other Bitcoin miner in the world could be colluding against them. Luckily, there is very little incentive to take over the network.