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Largest Bitcoin Mining Pool Pledges Not To Execute '51% Attack'

Soulskill posted 1 year,20 days | from the currency-with-an-option-for-hostile-takeover dept.

Bitcoin 351

An anonymous reader writes "Bitcoin transactions are confirmed by performing complex calculations, also known as 'mining.' If a single mining pool gains 51% of the overall computational power in the network, various forms of transaction manipulation become possible. Only a few years into Bitcoin's existence, this existential threat appears to be at hand, with Bitcoin mining pool ghash.io approaching 51% of mining power. ghash.io has now assured the Bitcoin community in a press release (PDF): 'GHash.IO does not have any intentions to execute a 51% attack, as it will do serious damage to the Bitcoin community, of which we are a part.' But can a network relying on such assurances survive in the long run?"

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If you're concerned... (4, Insightful)

egcagrac0 (1410377) | 1 year,20 days | (#45916591)

Add more compute power to a different pool.

Re:If you're concerned... (4, Insightful)

Bill, Shooter of Bul (629286) | 1 year,20 days | (#45916627)

Or more cheaply .. don't use/trust bitcoin.

Re:If you're concerned... (5, Funny)

Anonymous Coward | 1 year,20 days | (#45916899)

Bitcoin is decentralized. It is not controlled by a central government. It is secure against manipulation, unlike cash. It's like cash, so if it's in my wallet, there's no way anyone can steal it. Bitcoin is surely going to replace all the fiat paper currency. I can already spend it at overstock.com, purchase a Tesla car, or buy illegal drugs online with it. And it has no impact on the environment, because mining operations are forced to go where electricity is cheapest to be profitable. Who could ask for more?

Re:If you're concerned... (5, Insightful)

omnichad (1198475) | 1 year,20 days | (#45917053)

It is secure against manipulation

Did you even read the headline or summary?

Re:If you're concerned... (1, Insightful)

Immerman (2627577) | 1 year,20 days | (#45917105)

Going where electricity is cheapest hardly equates to no environmental impact - in fact the cheapest electricity is typically generated from burning coal, which is by far the dirtiest option in terms of toxic waste, in terms of CO2 emissions, and in terms of radioactive waste released into the environment without even attempting to capture it.

Re:If you're concerned... (1)

Anonymous Coward | 1 year,20 days | (#45917675)

No, the cheapest electricity is geothermal. That's why the mining operations are going to Iceland. Not that I'm agreeing with his other points.

Because if we want to talk about truly cheap, that would be a digital currency that anyone could attain through something like a smart phone. Not one that requires thousands of machines running 24/7 consuming megawatts of energy, no matter how cheap, to produce it. It's a niche currency that is still controlled by an elite. Once we reach the super-percentage, once the difficulty becomes burdensome, it then just becomes a plain digital currency with no other benefits.

Re:If you're concerned... (0)

xorsyst (1279232) | 1 year,20 days | (#45917107)

So far it's proven to be more trustworthy than most government-issued currencies. This is the first real threat to trust.

Re:If you're concerned... (2)

marcosdumay (620877) | 1 year,20 days | (#45917133)

Looks like it's not that much decentralized.

Re:If you're concerned... (2, Insightful)

Anonymous Coward | 1 year,20 days | (#45917155)

I don't know if you noticed, but the point here is that there is a group in a position to manipulate bitcoin and the only security against that manipulation is the pledge of that group, an organization that no one outside of the bitcoin community has ever heard of.

It may or may not impact the environment (my uneducated guess is it may well be more efficient in terms of energy than the portion of traditional financial services it could replace), but that has little to do with whether people use cheap or expensive energy to do the mining.

Re:If you're concerned... (2)

larry bagina (561269) | 1 year,20 days | (#45917587)

Can I use bitcoin to buy tulip futures or pets.com stock options?

Re:If you're concerned... (4, Interesting)

0p7imu5_P2im3 (973979) | 1 year,20 days | (#45917165)

Ironically, the 51% attack is very similar to a phenomenon with the US Dollar that is commonly referred to with the politically correct monicker "Quanitative Easing" and the derogatory, though very applicable, term "bailouts."

Re:If you're concerned... (1, Funny)

operagost (62405) | 1 year,20 days | (#45917403)

But... but... the GOVERNMENT is doing it, so it's OK! You must be one of those Faux News right wing teabaggers!

Re:If you're concerned... (2, Insightful)

CensorshipDonkey (1108755) | 1 year,20 days | (#45917507)

I don't really understand what the problem with quantitative easing is. Inflation is running at record low levels, and beyond that inflation in the 2-5% regime can actually be desirable for us.

Re:If you're concerned... (3, Interesting)

jythie (914043) | 1 year,20 days | (#45917643)

Some people are philosophically against inflation in general, there are also those that believe any planning or manipulation by regulators is inherently bad regardless of the outcome. There are all sorts of pop-economic arguments against quantitative easing, but their root tends to be mostly philosophical in nature.

Re:If you're concerned... (1)

neokushan (932374) | 1 year,20 days | (#45917255)

It takes 51% of the network to manipulate bitcoin.

What % of control do you think regular banking systems have and how much is required to manipulate that?

Re:If you're concerned... (1)

SirGarlon (845873) | 1 year,20 days | (#45916639)

That's easy to say but decreasingly effective to do. Why should one have to be a miner in order to ensure the stability of the market? That's an externality most people didn't sign up for.

Re:If you're concerned... (1)

Overzeetop (214511) | 1 year,20 days | (#45916749)

So you're saying that most people are just leeches on the system. It like the average bitcoin user has no idea what kind of infrastructure it takes - or doesn't care - in keeping an independent currency afloat.

Re:If you're concerned... (2)

TheCarp (96830) | 1 year,20 days | (#45916917)

Actually most people just pay the tiny voluntary transaction fee....which the miners scoop up. It is actually a massive implementation not only of a digital economy but of a microtransaction based gift economy as transaction costs are voluntary but default so people do actually pay them.

Last bitcoin transaction I made, I actually double checked the fee.... it worked out to about 50 cents on $100. Seemed quite worth it to me given that paypal would have taken more.

Re:If you're concerned... (0)

Anonymous Coward | 1 year,20 days | (#45917433)

From my understanding, it's always the same amount, no matter how much you transfer. So for transferring $100 it is reasonable. For transferring $1, it is expensive. And for transferring $0.01, it gets ridiculously expensive.

And if the value of Bitcoin goes up, so does the value of the transaction fee. If the value goes up a factor of 10, then for everything below $5, the transaction fee will be larger than the amount transferred.

So much for using Bitcoin for microtransactions.

Re:If you're concerned... (1)

TheCarp (96830) | 1 year,20 days | (#45917519)

> From my understanding, it's always the same amount, no matter how much you transfer.

Don't get confused.... the amount defined as the default in the client doesn't change. However, it is a setting. You can, if you like, set it to 0 and pay no fee at all, or you can lower it. Depending on the client this might be a global setting or might be able to be overridden on a per transaction basis. Either way, it is always reconfigurable.

Re:If you're concerned... (1)

samkass (174571) | 1 year,20 days | (#45916789)

This attack is not an all-or-nothing thing, either. 51% is just the threshold to be able to guarantee success. Controlling 40% of the mining capacity is enough to be able to double-spend a transaction that's been confirmed 6 times with 50% confidence.

Re:If you're concerned... (0)

Anonymous Coward | 1 year,20 days | (#45916935)

Wrong, neither 51% nor any other level guarantees success. It's simply a question of the probability that you can be first to find a hash n times in a row, where the probability of being first is the percentage of the mining you control, and n the number of confirmations that are required.

Re:If you're concerned... (3, Informative)

TheCarp (96830) | 1 year,20 days | (#45917063)

Sure except for the fact that I don't believe this is actually an accurate description of the 'control' a mining pool actually has. Generally people go get their client and join the pool. This sort of control would require that everyone (or most anyway) who joins the pool uses a specialized client designed specifically to ignore the rules of bitcoin and work on a fraudulent block chain.

It can't be done by just pooling together people running the normal clients that everyone else uses. Doing it via a pool like this would either mean tricking lots of people, some of whom are technically saavy and have a vested interest in bitcoin prices not being destroyes so the pool owners can cheat...or by having everybody be in on it... either way making it unlikely they would get away with it unnoticed.

Re:If you're concerned... (1)

Charliemopps (1157495) | 1 year,20 days | (#45917045)

Right, I think we need a government body to maintain this so we don't have to worry about things like this. All mining pools should have to pay into some sort of reserve just in case there's a crash... lets call it the "Federal bitcoin reserve" Then they can control how many bitcoins are mined and... oh wait

Military (0)

Anonymous Coward | 1 year,20 days | (#45916595)

The Military should launch a premptive attack on them, to prevent it.

Re:Military (0)

Anonymous Coward | 1 year,20 days | (#45916699)

I've always thought the Military should not be sent overseas to fight pointless wars. They should be sent to the ghetto to eradicate the gangsta plague by any means necessary. Black gangstas, white gangstas, latino gangstas, anybody who thinks being a street thug is cool, get them all.

Re:Military (0)

Anonymous Coward | 1 year,20 days | (#45917521)

So, have you read the Declaration of Independence and the Constitution lately? No? I think you need to because your "idea" is a known bad one, fully rejected by our founding fathers.

A promise only goes so far (1)

TheRealMindChild (743925) | 1 year,20 days | (#45916607)

Ideally, miners should be responsible and move to another pool to avoid the 51% attack possibility. Being part of a possible exploit when shit hits the fan will hurt their bottom line more than being part of the biggest pool will gain them

Re:A promise only goes so far (5, Insightful)

dkleinsc (563838) | 1 year,20 days | (#45916667)

Also, you could just as easily read this the opposite way: "Nice cryptocurrency you have there. It would be a real shame if we got to the point where we could completely control its value in other currencies and reap huge profits while doing so. Not that we'd ever dream of doing that - we promise that we're not even really considering the possibility."

Re:A promise only goes so far (2)

Jeff Flanagan (2981883) | 1 year,20 days | (#45916991)

They can't completely control its value, all they can do is leave it alone or destroy its value completely. The price is controlled by the individuals buying and selling bitcoins.

Re:A promise only goes so far (0)

Anonymous Coward | 1 year,20 days | (#45916805)

On the contrary, it would be in your individual best interest as a miner to get into the pool with the 51% attack capability, so that you could benefit from the market manipulation. Otherwise you're just one of the suckers.

Re:A promise only goes so far (1)

SharpFang (651121) | 1 year,20 days | (#45917423)

Sorry but being a smart miner you will avoid the situation when 51% becomes possible. The moment it is, market plummets and all your hard-mined and double-spent bitcoins become worthless. In essence, 51% is not "earn a lot of money" attack, it's a "murder the network" attack. Miners don't want the network murdered.

Re:A promise only goes so far (1)

TheCarp (96830) | 1 year,20 days | (#45917129)

Except it is only a perception. How would they pull off such an attack unless the majority of the pool was running a hacked client that specifically ignored the rules? I have mined in a pool (briefly back before ASICs) and the pool doesn't actually have the kind of control over its members, who download their own software and set it up...and then join the pool.

Re:A promise only goes so far (2, Informative)

Nukenbar (215420) | 1 year,20 days | (#45917245)

If they were serious about this, Why not fork into two separate pools?

so much for decentralization (0)

Anonymous Coward | 1 year,20 days | (#45916611)


Cant be worse (2)

butchersong (1222796) | 1 year,20 days | (#45916625)

They can't act much worse than the traditional large financial institutions. Not sure how this makes bitcoin that much less reliable than stocks, the US dollar or the EURO

Re:Cant be worse (-1)

drinkypoo (153816) | 1 year,20 days | (#45916665)

Yep, that's my reaction as well. The US Dollar works so long as the US Government promises not to manipulate it. Err....

Re:Cant be worse (4, Insightful)

i kan reed (749298) | 1 year,20 days | (#45916721)

The US government makes no such promise, and investors know it. Slow, long-term inflation is part of the instability prevention plans of most currency issuing nations.

Re:Cant be worse (1)

CensorshipDonkey (1108755) | 1 year,20 days | (#45917535)

I don't know why this is considered controversial. Small amounts of inflation can actually be desirable. What other "manipulations" are people ACTUALLY worried about the US government doing?

Re:Cant be worse (1)

FooAtWFU (699187) | 1 year,20 days | (#45916755)

Yes, well, insofar as the US Government promises not to substantially manipulate the dollar, the dollar is stable. Insofar as they don't, the value of the dollar falls relative to other, more trustworthy currencies (and commodities) and people demand higher interest for government bonds, loans, and similar instruments, to compensate for the decaying value of the dollar.

(Of course, some "manipulation" is necessary to match fluctuations in the overall state of the economy and achieve a stable dollar. But even in ancient economies with commodity money, persistent deflation and monetary shocks were reasonably common.)

Re:Cant be worse (0)

Archangel Michael (180766) | 1 year,20 days | (#45916945)

My understanding, is that Deflation benefits those that acquire assets, in so much as "a penny saved, is a penny earned". Right now, saving money is a fool's game, as a "Dollar saved is .98 in a year". Inflation is a hidden tax on savings, pure and simple. Inflation is what allows a country to deficit spend indefinitely, because inflation helps remove the value of today and replace it with the value of tomorrow. It is also the danger of deficit spending, and centralized currency (like the USD), as the temptation to hyper inflate currency rises with the debt increases.

And I personally don't put it past the current (D) and (R) parties to collude long enough to screw the people by turning on the faucet with something like "Quantitative Easing" ... oh wait ...

Re:Cant be worse (5, Insightful)

Anonymous Coward | 1 year,20 days | (#45917103)

I wish people who didn't understand basic economics wouldn't post like they did.

Deflation makes an item worth $1000, worth $990 later. It hurts people with assets. However, if you have cash, that same amount of cash will buy more as deflation continues. Deflation is bad because SMART people stop buying things that will be cheaper tomorrow and inventory in shops is a bad thing because you pay interest on holding it while it reduces in value.

Inflation does not allow a country to deficit spend forever. Inflation allows paying off debt at a future time cheaper only if you ignore the interest on the debt. Usually interest on debt is higher than inflation, so that doesn't work.
What you were attempting to say is a fiat currency can never go bankrupt. If they country cannot pay debt they can print money until they can pay debt, that is the cause of hyper-inflation.

Please stop posting explanations of things that you don't understand.

Re:Cant be worse (1)

FooAtWFU (699187) | 1 year,20 days | (#45917203)

Inflation is like a tax on accounts denominated in dollar amounts, it's true. However, you'll also note that inflation in the US is relatively steady since the 1980s when Volcker took over. That's why the US dollar is relatively steady right now - unlike in 1981, when inflation was 13.5% . The dollar is trusted as far as it proves trustworthy.

But you can still get monetary shocks even if you don't depend on fiat currency: read up on the inflationary consequences of the gold rush of 1849 [eh.net] on the (gold-backed) money supply: "Soaring gold output from the California and Australia gold rushes is linked with a thirty percent increase in wholesale prices between 1850 and 1855."

Re:Cant be worse (4, Insightful)

unimacs (597299) | 1 year,20 days | (#45916883)

Theoretically at least, the US Government has to answer to its citizens and there are a couple hundred million of us. Further, even though the US is a "super power", there are still serious consequences for mucking with the dollar too much.

Who does GHash.IO answer to?

Re:Cant be worse (1)

M. Baranczak (726671) | 1 year,20 days | (#45917067)

More importantly, the government has to answer to the people who hold the money. Fiat currency (or, as normal people call it, "money") has two things going for it: 1. The issuing government has tight control over it; 2. The government has strong incentives to keep the currency stable. Yeah, it's a sketchy system, but it has a much better track record than Bitcoin.

Re:Cant be worse (0)

Anonymous Coward | 1 year,20 days | (#45917407)

Serious consequences? LOL. The Federal Reserve manipulates the dollar. They loaned out TRILLIONS from "thin air" not so long ago - and they even initially refused to say who they lent them to. Google for federal reserve trillions if you don't believe me. Sure they are trillions in loans that were supposedly paid back, but when you loan others trillions from "thin air" interest free you are creating billions. Even a financial fool like me can make money from large interest free loans.

And on a related note, the petrodollar (google that) is a great advantage to the USA. The USA has a big advantage as long as everyone else keeps using the US dollar. When US dollars are created, everyone who owns positive amounts of the US dollar becomes POORER. And almost everyone uses it to buy oil, CPUs, wheat, software, etc. So basically the USA can tax the rest of the world at will. The USA owes Japan, China etc trillions in US dollars that the USA can create. Only idiots believe the USA is screwed because it owes China trillions in US dollars. Who is screwed if Uncle Sam owes his neighbor 2 trillion Uncle Sam tokens that he can create by entering digits on his computer?

It's like Zimbabwe - where Mugabe creates Zimbabwe dollars and transfers wealth from the rest of Zimbabwe to himself and his cronies. Everyone else laughed at Zimbabwe.

In the past a fair bit of that created US dollars flowed down to the US people- directly or indirectly via large projects (e.g. highways). The US people were the "cronies" of the US Gov. And the rest of the world were stuck in the USA's Zimbabwe, needing US dollars to by oil from OPEC and weren't laughing at the exported inflation.

The 300 or so million US people should wake up and pay better attention to what is going on and what is actually happening. Then ask themselves whether they are still cronies of the US Gov, or they have been supplanted by others. How much of the created US dollars are going to them? How much are going to others?

If too many move to euros, gold or even Bitcoin the USA will lose its advantage over the rest of the world.

Re:Cant be worse (5, Insightful)

Sarten-X (1102295) | 1 year,20 days | (#45916893)

That's utterly backwards.

The US dollar works because the Federal Reserve promises to manipulate it.

Yes, I Pinky Swear (1)

Stickerboy (61554) | 1 year,20 days | (#45916649)

...I will Do No Evil(tm).

Laws and pledges will inevitably be broken inversely proportional to the enforcement and proportional to the benefits of breaking your word and how many people are involved. So Bitcoin is good, no one involved is trying to make money for nothing.

Re:Yes, I Pinky Swear (1)

Anonymous Coward | 1 year,20 days | (#45917415)

Yes, but as we all know, we can trust Bitcoin because... um... look at the pretty hashes! So many hex digits... oooo... hex digits have never let us down before! Hex digits are our only true friends...

"But can a network relying on such assurances surv (0)

Anonymous Coward | 1 year,20 days | (#45916655)

"But can a network relying on such assurances survive in the long run?"

No, but it can rely on the fact that the damage any such attack would do to Bitcoin would definitely not be in any mining pools interest. It's not even a prisoner's dillema, it's just bad all round.

Re:"But can a network relying on such assurances s (1)

neilo_1701D (2765337) | 1 year,20 days | (#45916967)

No, but it can rely on the fact that the damage any such attack would do to Bitcoin would definitely not be in any mining pools interest. It's not even a prisoner's dillema, it's just bad all round.

True - if that miner wanted a long-term relationship. If they wanted to manipulate the price then cash out and fly on their pre-booked tickets to Majorca then maybe not so much. Because that's never happened before.

Re:"But can a network relying on such assurances s (1)

QilessQi (2044624) | 1 year,20 days | (#45917335)

Or possibly this:

1. Find (or create through other agents) an index fund tied to the value of BTC.
2. Short BTC.
3. Use your mining pool's 51% position to compromise the BTC network, driving participant confidence (and hence value down).
4. Profit.

Illegal? Oh, probably. That doesn't seem to dissuade people.

Re:"But can a network relying on such assurances s (1)

bobbied (2522392) | 1 year,20 days | (#45917639)

How on earth do you short BTC?

It's not like BTC is currently traded by brokers and I don't know anybody who is selling BTC future contracts.

If you know a way to do this, let me know.. There is serious $$ to be made here.

Re:"But can a network relying on such assurances s (0)

Anonymous Coward | 1 year,20 days | (#45917285)

You are assuming that the miners are in for making money from Bitcoin. However, what if the group that gets 51% actually has a different goal? For example, imagine a government wanted to destroy Bitcoin, for whatever reason. Then they could, with government money, put up a giant mining pool (and with government resources they might even be able to hide the fact that it is a pool instead of many independent miners, and certainly that the government is involved), get 51% and then do random attacks.

Assurance is good, control ist better. (2)

ExXter (1361251) | 1 year,20 days | (#45916661)

At least that is the theory. But we all know that there is no control for the control... thus we are back to trust. But since its about money and there is no guarantee that a third party can get involved which may force the farm into exploiding the 51% attack it will only solve this issue by not having 51% of the overall computational power. This means, either giving up on at least 1% atm or helping other farms reaching a higher computational share.

I'm probably going to regret this post (5, Funny)

Sockatume (732728) | 1 year,20 days | (#45916677)

Libertarian currency in "falls into monopoly" shock.

Re:I'm probably going to regret this post (0)

Archangel Michael (180766) | 1 year,20 days | (#45917183)

I am not afraid of the Monopoly, as much as I am over reaching governments. Monopolies will eventually fail, over reaching governments just keep over reaching.

Microsoft was a Monopoly. It has failed. It was replaced by something Microsoft couldn't buy, sell, or legislate against (Linux). Now we have a vibrant ecosystem of computers that Microsoft never even imagined until it was too late. All without government intervention.

The problem with Monopolies is that it often takes longer to fail than people are willing to wait for. It is part of the "Something must be done, this is something (even if it is the wrong thing to do), therefore it must be done" mentality that is short sighted.

Monopolies are natural, so is their demise. Laws that deal with Monopolies last forever, and have terrible unintended consequences.

Re:I'm probably going to regret this post (4, Insightful)

Anonymous Coward | 1 year,20 days | (#45917299)

I am not afraid of the Monopoly, as much as I am over reaching governments. Monopolies will eventually fail, over reaching governments just keep over reaching.

Yet somehow the East India companies managed to impoverish the larger part of humanity for over three centuries and have a run of over a century each. Monopoly and government are the same thing. Only American Libertarians think they live in a world where economic and political power have nothing in common and can't reenforce each other until the fundamentals of the economy turn against them.

Re:I'm probably going to regret this post (1)

operagost (62405) | 1 year,20 days | (#45917475)

Great insight. There are no shortage of power-hungry politicians who will look at a monopoly or similar situation as an "emergency" and convince the people to give the government permanent power to "solve" a temporary problem.

Re:I'm probably going to regret this post (1)

CensorshipDonkey (1108755) | 1 year,20 days | (#45917585)

What the hell do you expect the US government to do with the currency that's "evil"? Small amounts of inflation are desirable from a citizen standpoint and from an economic growth standpoint, not just from a deficit spending standpoint.

imagine the NSA doing it (1)

alen (225700) | 1 year,20 days | (#45916687)

double and triple spending the same coins

So let me get this straight (5, Interesting)

SirGarlon (845873) | 1 year,20 days | (#45916689)

Let me get this straight. In order to use Bitcoins, I don't have to trust any government ... but I *do* have to trust a group of random people on the Internet who have a massive stake in the market and say they would never manipulate that market.

Choose your poison, I guess.

Re:So let me get this straight (1)

i kan reed (749298) | 1 year,20 days | (#45916735)

Alternative phrasing, modern post-industrial economies always depend on you dealing with other people, some of whom will benefit from screwing you.

Re:So let me get this straight (1)

SirGarlon (845873) | 1 year,20 days | (#45916807)

Well put!

Re:So let me get this straight (1)

CanHasDIY (1672858) | 1 year,20 days | (#45916815)

Hence the phrase, "Choose your poison."

Alternate phrasing - Damned if you do, damned if you don't.

Re:So let me get this straight (1)

Anonymous Coward | 1 year,20 days | (#45916819)

Alternative phrasing, modern post-industrial economies always depend on you dealing with other people, some of whom will benefit from screwing you.

Or just get to the raw truth:
Economics involves dealing with people, many of whom are jerks.

Shorter version (2)

davidwr (791652) | 1 year,20 days | (#45916907)

"[E]conomies always depend on you dealing with other people, some of whom will benefit from screwing you"

Re:Shorter version (0)

i kan reed (749298) | 1 year,20 days | (#45916999)

Nah, you can have survival economies before population levels reach concentrations that require modern agriculture. I'm not advocating that as a superior alternative(it sucks), but it is an alternative that doesn't require trusting interactions with others to continue.

Re:So let me get this straight (1)

Anonymous Coward | 1 year,20 days | (#45916913)

Modern post-industrial economies also have a plethora of regulations and many public figures who can be held accountable. Even private parties can only be so private when they are working at large banks and such.

Moral of the story: of course there are always people who would benefit from screwing you, but you cannot argue that trusting a random group of people who you basically could never even know who they are much less hold accountable is better than trusting a government/worldwide economy.

The current world economy also benefits from arbitrage and so many market making parties that it creates a fairly efficient environment. These people who can suddenly manipulate bitcoins are basically a pure monopoly that make it so it cannot become efficient just from many active parties.

Re:So let me get this straight (1)

i kan reed (749298) | 1 year,20 days | (#45917033)

Indeed, I've found that to be the logical conclusion of my premise as well, but it doesn't sit well with the neoclassicalists, so I thought I'd let the premise stand on its own.

Re:So let me get this straight (4, Informative)

Sockatume (732728) | 1 year,20 days | (#45916785)

This has nothing to do with the market in bitcoin speculation. It's about the fact that a majority of the cryptographic network (which is what bitcoin miners are) has to concur for a transaction (sending money to someone else) to be considered valid. When you control 51% of the computing power, you can start faking transactions.

Re:So let me get this straight (1)

Anonymous Coward | 1 year,20 days | (#45916859)

You can also block specific people from making valid transactions, so the whole "censorship-free currency" thing turns out to be, in the end, a pile of horseshit.

Re:So let me get this straight (1)

Archangel Michael (180766) | 1 year,20 days | (#45917277)

One can counter this by increasing the requirement from 50% confidence (or whatever) to 75% (or whatever). Further, this is solvable by replacing Mining operations with plain old processing for a fee operations. From what I understand, one does not have to "mine" coins to process transactions, one can simply process for a part of the transaction, as a fee. Higher Fees mean faster transaction processing. (and if it isn't part of the protocol, it should be)

re: trust (3, Insightful)

King_TJ (85913) | 1 year,20 days | (#45916925)

In order to use any of the current breed of crypto-coins, I think you have to trust quite a few "random people on the Internet" anyway?

For starters, you have to put some trust in whoever developed the coin you're using -- because let's face it. The entire thing is just a piece of software that someone wrote. Did the developer pre-mine a bunch of coins that he/she is hoarding up secretly, waiting for everyone else to "establish" the coin as a viable currency, only to dump all of it in the future and crash the market -- walking away with the loot? Is there some sort of "back door" designed into a particular crypto-coin so the developer has a way to "cheat" and obtain coins more quickly than everyone else, bypassing the usual rules for mining one?

You have to put a lot of trust in the people running the currency exchanges. These places typically want you to transfer (sometimes relatively large) sums of crypto into wallets maintained on their servers, just so you can conduct a trade with that money. THEN, you have to further trust that they'll properly handle any withdrawal requests you make.

To a lesser extent, anyone in ANY mining pool has to put trust in the pool operator. While sure, most competent pools provide all sorts of statistics so you can see how your returns are being calculated and what they estimate your "hash rate" is? It's not out of the realm of possibility that one of these places could "skim off the top" by shorting you just a tiny little bit of hash rate that you wouldn't even notice. Multiplied by all of the miners using the pool, though, it amounts to a lot of CPU time the owner could be redirecting towards coins mined into his own personal wallet someplace?

If you want to talk about trusting government instead? Now you're talking about a very small group of elite, powerful individuals who call all the shots for a given currency. There's no "moving mining to another pool" if you don't trust the first one here.

So yeah, it really is a "choose your poison" situation -- but IMO, my own government has proven itself shady, not at all trustworthy, and relatively inept at accomplishing stated goals in a timely manner and under budget. By contrast, the people running the mining pools and exchanges I've used are still more of an "unknown" - but ones who so far, appear to have treated me fairly. So I know which one I'd rather place trust in right now.

Re:So let me get this straight (1)

Archangel Michael (180766) | 1 year,20 days | (#45917205)

Perfect analysis. I prefer random people to organized crime .... er ... government. Thank you.

Another Bitcoin story (3, Insightful)

Notabadguy (961343) | 1 year,20 days | (#45916761)

So many Bitcoin stories. This one asks questions like,
"Can we trust them?!?"
"Are these assurances enough!?!"

Same answer to both: "Who cares anymore?!?"

Re:Another Bitcoin story (2, Informative)

Anonymous Coward | 1 year,20 days | (#45916877)

Editorial agenda.

It i possible but ..... (0)

Anonymous Coward | 1 year,20 days | (#45916795)

All this is possible if we look at the fact that the US dollar for many years has been the 'de facto' international currency. The assurance that the US government provides is not even given to the wider community but to its populace, and that is, it will not do random crap with the value of the dollar. In a similar but very limited way economic stability can be maintained with the Bitcoin currency if the dominant player honors their assurance. However, and this is a big however, business is business and if executing the 51% attack is in the best interest (long term) of the GHash.IO, you had better believe that all type of funky will happen to Bitcoin. What's that interest? Who knows, an exit strategy, portfolio diversification, personal or political views, survival in the face of an existential blackmail threat and so on and so forth.

govt takedown (4, Interesting)

Cardoor (3488091) | 1 year,20 days | (#45916801)

what's to stop a central bank or government with unlimited funds (and that sees cryptocurrency as a threat) from deliberately buying up mining capacity and doing it themselves?

Re:govt takedown (0)

Anonymous Coward | 1 year,20 days | (#45916915)

Absolutely nothing. In fact is recent revelations are any indication I'd say its almost a certainty that the NSA has the ability to easily kill bitcoin if they wanted to.

Re:govt takedown (1)

Cardoor (3488091) | 1 year,20 days | (#45916995)

agreed. in fact, i have been suspecting for a while now that the volatility in btc pricing (which keeps people away, as who wants a currency that can swing +-20% in a day?) might be due to the government using their seized SilkRoad wallet (and whatever other seized bitcoins they have) to overwhelm the market. people have rallied around the fact that you can't 'short' bitcoins to artificially manipulate it lower - but if you own hundreds of millions of dollars of seized bitcoins (never mind mining for new one), and don't care about preserving the value of your holdings, you could crater the market whenever you feel like it. maybe im off about the ability to push btc prices down dramatically by say, indiscriminantly selling say, $1-2 million worth? i don't know how deep the market is.. maybe someone here does.

Re:govt takedown (1)

biodata (1981610) | 1 year,20 days | (#45917629)

>who wants a currency that can swing +-20% in a day? Daytraders? > i don't know how deep the market is BTC Market cap currently around $11billion

Because it's expensive (1)

davidwr (791652) | 1 year,20 days | (#45917097)

Doing this would mean diverting funds from their other evil plans^H^H^H^H^H^H^H^H^H^Hinvestment opportunities.

Re:govt takedown (0)

Anonymous Coward | 1 year,20 days | (#45917461)

that seems like a lot of work and a big budget item when you could instead just compromise the security of a whole lot of mining capacity that other people have already paid for

"Unit Cost: $0".

Probably US government (0)

Anonymous Coward | 1 year,20 days | (#45916829)

NSA.io, sorry, Ghash.io, now owns Bitcoin.

Game over.

The NSA is pretty much dead (0)

Anonymous Coward | 1 year,20 days | (#45917247)

All the new super-secret stuff is now being done by the*ack**gack*NO CARRIER

This could be a good lesson for libertarians (1)

Anonymous Coward | 1 year,20 days | (#45916975)

They love bitcoin and insist that unregulated free markets produce the best possible outcome. In reality, we know that eventually in free markets through collusions, mergers, and cartels a small number of players will eventually emerge that can control the entire market. So now the value of their bitcoin investment is in the hands of what GHash.io decides to do, even if they promise to not be evil. This is the exact opposite of the anarcho libertarian paradise of what bitcoin was portrayed to be.

Bitcoins weakness (4, Insightful)

RalphSleigh (899929) | 1 year,20 days | (#45916985)

The problem here is that mining these days requires custom ASICs made to compute the double SHA-256 used by Bitcoin as the proof of work, CPUs and GPUs just don't cut it. ghash.io is the pool attached to the larger manufacturer of them, and as its always more profitable to mine using your ASICs than sell them, you can't just buy a bunch for anywhere near the cost price and mine yourself.

Solving this will require someone to make and sell the mining hardware at near the cost price instead of using it themselves. They may lose a bit of profit but in the long run the network will be better off.

Re:Bitcoins weakness (1)

FriendlyLurker (50431) | 1 year,20 days | (#45917383)

Solving this will require someone to make and sell the mining hardware at near the cost price instead of using it themselves.

Or moving to a Proof Of Stake system and ASIC/GPU resistant algorithm (eg memory-bound):

However current GPU/ASIC/miners are dead-set against this as it will make their hardware much more uncompetitive vs normal computers.

Re:Bitcoins weakness (0)

Anonymous Coward | 1 year,20 days | (#45917555)

They may lose a bit of profit but in the long run the network will be better off.

OK. You first.

Good article with several solutions (2)

De Lemming (227104) | 1 year,20 days | (#45917057)

Bitcoin Magazine has a good article on this subject: Mining Pool Centralization At Crisis Levels [bitcoinmagazine.com] . It also suggests a number of solutions.

The primary solution is for miners to switch to a peer-to-peer mining pool. In these the control is decentralized, just like the Bitcoin network itself. Even if such a pool hits 51% market share, it will not be able to actually block or reverse transactions, since the mining pool is decentralized and so its power is vested in the network as a whole.

Exchanging one set of masters for another? (4, Insightful)

QilessQi (2044624) | 1 year,20 days | (#45917075)

I don't have strong feelings about Bitcoin either way, but as I understand it some folks support Bitcoin because it isn't controlled by a central bank or government.

Except it seems that one large mining pool -- or a consortium of smaller ones seeming independent but in truth acting together -- can game the system in certain ways. In short, controlling it. And given that large sums of money are on the line already, is Bitcoin really that different from any other currency?

Re:Exchanging one set of masters for another? (0)

Anonymous Coward | 1 year,20 days | (#45917395)

is Bitcoin really that different from any other currency?

Yes. It's a much worse store of value.

Re:Exchanging one set of masters for another? (1)

JcMorin (930466) | 1 year,20 days | (#45917547)

Yep but people *CAN* join another pool if they want. And that WILL happened, I expect their percentage to drop to 30% in the next month. A centralized authority like the government or the central bank you CAN'T bypass it. The voluntary aspect makes a big difference. People just warn that 40% is too much because once you have majority you can do nasty thing.

Why not? (1)

jbmartin6 (1232050) | 1 year,20 days | (#45917207)

But can a network relying on such assurances survive in the long run?

Are there other networks we use that rely on such assurances? ICANN comes to mind.

Screw Bitcoin (0)

Anonymous Coward | 1 year,20 days | (#45917209)

Coinye is the crypto currency of our generation!

lol (0)

Anonymous Coward | 1 year,20 days | (#45917287)

Ha-ha-ha... That was quick

Not without regulation (2)

multimediavt (965608) | 1 year,20 days | (#45917551)

But can a network relying on such assurances survive in the long run?

Answer: NO!

And, here comes the bear trap that any sane person knew was coming for this unregulated currency. Regulations will have to be put in place, which means govts will have to get involved in order for it to survive, and that has been the central reason why I and many others have remained skeptical and completely wary of this cryptocurrency from the beginning. Markets don't self regulate. It's a lie, a myth and history has already demonstrated numerous times that when there's money involved there's corruption involved. Take away any sane regulations and you have a major ripoff in the making. I am never going to deal in BitCoins, ever. Won't have any, won't take any. Give me money backed by a central reserve bank, thank you very much. Take your unregulated, make believe currency somewhere else.

P.S. It is make believe because it only has value to those who use and accept it. That it shares with real currency, except BitCoin is backed by dubious sources, at best. Again, no thanks. My $0.02/£0.02/€0.02.

We promise we'll be good (2)

Infiniti2000 (1720222) | 1 year,20 days | (#45917621)

GHash.IO does not have any intentions to execute a 51% attack

Yeah, and that Level 18 stronghold on Game of War: Fire Age promised not to attack me either. I don't need to tell you how that worked out.

Mining Pools Are Stupid. (0)

Anonymous Coward | 1 year,20 days | (#45917671)

I still have no idea why they are even a thing.
There should be one and only one. And it should be decentralized so NOBODY can control it.

The whole idea of mining pools annoys me.
It is such a retarded system.

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