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Bitcoin Security Endangered By Powerful Mining Pool

timothy posted about 2 months ago | from the cornering-the-market dept.

Bitcoin 281

An anonymous reader writes Ars Technica reports that for the first time in Bitcoin's five-year history, a single entity has repeatedly provided more than half of the total computational power required to mine new digital coins, in some cases for sustained periods of time. It's an event that, if it persists, signals the end of crypto currency's decentralized structure."

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This is what we've warned you about (3, Funny)

Anonymous Coward | about 2 months ago | (#47243695)

But all the early-adopters / ponzi-schemers kept insisting that it was impossible.

Told. You. So.

Re:This is what we've warned you about (5, Interesting)

billstewart (78916) | about 2 months ago | (#47243731)

Mining pools and custom hardware do make it possible for a large enough group to get over 50%, especially as the need for mining hardware crowds CPU and GPU miners out of the game. We'll see whether they decide it's more useful to stay over 50% and cheat, stay over 50% and not cheat, or split the pool into two or more pieces to keep the value of their Bitcoins higher than they would be if the market abandons Bitcoin because of perceptions of cheating.

What happens if (4, Interesting)

goombah99 (560566) | about 2 months ago | (#47243817)

I wonder what happens if someone with more than enough CPU power to get 99% of the mining jumps in one night. What kind of Damage could they do in a short interval before people notice? What if their goals were not to steal bitcoins but rather to snatch all the coins from, say, Kim Jong Un, or Al Queda. E.g. for example the NSA or Samsung or Saudi arabia. They would not care about the loss of value in their stolen coins, the point is to deprive an adversaries use of them.

Does the Amazon or Azure networks have enough rentable time to pull this off?

Re:What happens if (3, Interesting)

goombah99 (560566) | about 2 months ago | (#47243827)

Also if the bit coin miners get concentrated into just a few, what happens if these 3 were to get DDOSed? if the big miners are off line then would the next largest miner have a window of time where they controlled more than 50% of the mine? Would they be able to pull off some shenanigans in that time?

Re:What happens if (4, Informative)

sFurbo (1361249) | about 2 months ago | (#47244023)

The difficulty is updated every 2016 blocks, or roughly every two weeks [bitcoin.it] . If the amount resources spent on mining was suddenly reduced extensively, the mining would just go much slower until the next update, so no one would be able to take advantage of that (although it could be problematic for bitcoin, if e.g. the update went from 10 minutes to 100 minutes). After the next difficulty update, the difficulty would be low, but if the mining pools were back up, you would not be able to control bitcoin. Even if the update rate goes to 1 minute, this will only persist for 201,6 minutes, or a few hours.

All of this is assuming that no other response was done in the two weeks after the DDOS.

Re:What happens if (3)

lgw (121541) | about 2 months ago | (#47244079)

If someone rents 1,000,000 Amazon severs to mine bitcoins, would you pick a DDOS fight with that. Even with special purpose HW, it's unlikely to be a small pipe.

Re:What happens if (3)

fuzzyfuzzyfungus (1223518) | about 2 months ago | (#47244357)

If someone rents 1,000,000 Amazon severs to mine bitcoins, would you pick a DDOS fight with that. Even with special purpose HW, it's unlikely to be a small pipe.

One potential complication is that 'mining' isn't particularly bandwidth intensive (not quite zero, and more miners require more bandwidth, to cover updating all of them when it a block is found and you need to get new work units immediately since you now know that all the other candidates are incorrect; but overall quite minimal); but it is computationally demanding and very much rewards specialized hardware.

Most of the hardware you can easily rent in places with ample bandwidth will be aimed at customers who want to do web services. Comparatively anemic CPUs; plenty of storage and RAM, nice fat connection; maybe some offerings with faster CPUs or GPU compute units if the vendor has been dabbling with those sorts of customers.

I definitely wouldn't pick a bandwidth fight with such a thing, unless I had some delightfully clever amplification attack up my sleeve; but even at Amazon prices you would be burning insane amounts of money to get a hashrate that would even make you worth paying attention to.

If anything, I'd consider the reverse strategy: much of the world's crazy-ASIC capacity is probably on relatively narrow pipes because that's all they need. Don't bother trying to rent enough to out-compute them, use the rentals in high-bandwidth areas to knock as many ASIC clusters that aren't your collaborators as possible offline.

Re:What happens if (2)

gweihir (88907) | about 2 months ago | (#47243849)

Amazon and Azure are far too expensive, unless a state-actor is willing to invest a few billions.

Re:What happens if (1)

dbIII (701233) | about 2 months ago | (#47244065)

unless a state-actor

Wouldn't they just use distributed malware?

Re:What happens if (2)

fuzzyfuzzyfungus (1223518) | about 2 months ago | (#47244415)

Malware is handy because it makes Ghashes/watt much less relevant (though, with the portion of today's computing power that is in battery powered or thermally constrained devices, you have to be careful that your compute malware doesn't cause even the most idiotic of users to notice that their laptop now scalds their flesh and lasts 45 minutes on a full charge and bring it in for repair, an uptick that vendors would probably notice relatively quickly and get actually-competent security consultants involved in); but what it doesn't do is change the fact that CPU mining is basically a toy at this point.

Sporadic amounts of time on a few hundred thousand to few million CPUs is still hardly valueless, especially if you pay none of the costs other than a command-and-control server; but you'll be a relatively small player. Not a bad gig if you can get it; but you won't be a kingmaker.

Re:What happens if (1)

fuzzyfuzzyfungus (1223518) | about 2 months ago | (#47244401)

Amazon and Azure are far too expensive, unless a state-actor is willing to invest a few billions.

Unless either is somehow hiding unbelievable losses from overbuying capacity they can't sell, they'd likely get even more expensive if anyone actually had a serious try: power isn't free, so there is presumably a price for EC2 spot instances so low that they won't even fire up the server; but depreciation isn't free, so both Amazon and Microsoft presumably work rather hard to keep their supply close to the available demand and have most of the churn at a given time be give-and-take between cost-sensitive; but failure tolerant, spot customers, and less cost sensitive, less failure tolerant, reserved and on-demand customers, with very little going idle if they can help it.

If you had vast financial resources; but wanted the capacity Now, you could buy out all the spot instances in no time, and with no special fuss; but you'd have to have a special talk with Amazon about suspending normal on-damand pricing and booting all those customers, and a still touchier talk about the possibility of telling all the 'reserved instance' customers that a more important client has come up, so sorry, and booting them. Displacing the resources allocated to Amazon's own e-commerce operations would also be a touchy business.

Both Amazon and MS do a pretty good job of, at amazingly low cost, making sure that there appears to be as much capacity as you want at any given time; but they'd go bankrupt in short notice if that were actually true for radically atypical requests. Even if you paid for buildout, and were willing to wait while the contractors scrambled and shoved stuff in containers and trailers and things, the semiconductor industry is 'just-in-time' all the way down, more or less.

If a state actor (especially American) wanted to roll Bitcoin, they'd probably be better off designing a mining ASIC, or contracting Intel/IBM/some much quieter fabless contractor that usually does custom bits for NRO satellites/whoever to do it, and then using some combination of large amounts of money and insinuations of special consideration on future contracting to get it fabbed by one of the classy outfits that the plucky little ASIC startups(the ones that aren't just scams) just don't have access to.

I definitely wouldn't want to argue with the Ghashes/watt of a well designed ASIC produced by someone who has the clout and the cash to get it produced on Intel's fancy process of the moment...

Re:What happens if (1)

Anonymous Coward | about 2 months ago | (#47244281)

I wonder what happens if someone with more than enough CPU power to get 99% of the mining jumps in one night. What kind of Damage could they do in a short interval before people notice? What if their goals were not to steal bitcoins but rather to snatch all the coins from, say, Kim Jong Un, or Al Queda. E.g. for example the NSA or Samsung or Saudi arabia. They would not care about the loss of value in their stolen coins, the point is to deprive an adversaries use of them.

Does the Amazon or Azure networks have enough rentable time to pull this off?

Thanks to ASIC mining, they're not even close. You need specialized hardware and lots of it to make to get a noticeable market share these days. For mining, a GPU is about 100-200x faster than a CPU, and the newest ASIC mining boxes are 1000 - 5000x faster than a GPU.

Re:What happens if (2)

fuzzyfuzzyfungus (1223518) | about 2 months ago | (#47244425)

Given the fairly low bandwidth demands of bitcoin mining (only slightly higher than just keeping a client up to date with the blockchain, and increasing with size only by a fairly low constant factor as you need to grab more work units), I wonder what sort of connections most of the world's bitcoin hashing power is on?

Unless there is some sort of "yeah, it's just DSL speeds, but we do something really clever upstream to make it as hard to DDOS as a connection a million times as fast" service, that might actually be how Amazon, Azure, or any other web-services-oriented rental service could manipulate the bitcoin scene:

Not by computing; because CPU miners are toys; but by DDOSing all concentrations of mining power not aligned with they hypothetical attacker into smoking craters long enough to substantially magnify the effective representation of the attacker's compute assets...

Perhaps Russian Business Network wishes to consider, yes?

Re:What happens if (5, Informative)

N3x)( (1722680) | about 2 months ago | (#47244329)

Well the thing is, getting 51% doesn't mean you can steal any coins. It means you get to control who can and cannot spend their coins. Also you would be able to do "double spends" of coins in certain situations. Getting 51% means you control the transfer service not the coins themselves. Also it would be really really expensive and once you stop the network will start working as normal again.

Re:What happens if (1)

pantaril (1624521) | about 2 months ago | (#47244381)

I wonder what happens if someone with more than enough CPU power to get 99% of the mining jumps in one night. What kind of Damage could they do in a short interval before people notice? What if their goals were not to steal bitcoins but rather to snatch all the coins from, say, Kim Jong Un, or Al Queda. E.g. for example the NSA or Samsung or Saudi arabia. They would not care about the loss of value in their stolen coins, the point is to deprive an adversaries use of them.

First it is highly improbable that someone with 99% of current hashing power would suddenly emerge out of the blue. He would need pretty big and completely secret hardware factory for making ASIC mining chips.
Second you can't steal third-party bitcoins even with 51% attack because you don't have control of the private keys necessary to sign the transaction. Only thing you can do is try to double-spend your own bitcoins - craft one fake transactions which sends your coins to merchant than overwrite it with another transaction which sends the money back to your own address.

Re:What happens if (1)

wbr1 (2538558) | about 2 months ago | (#47244413)

You could not use your ownership of the pool to steal coins. The work done validates transactions. You could double spend, or deny transactions, but to my knowledge not forge them. But I am a crypto currency newb so I may be wrong.

However the cost to even attempt it would be exceedingly prohibitive.

Re: What happens if (0)

Anonymous Coward | about 2 months ago | (#47244417)

Nope. The processing power of the bitcoin network is substantial;it is, however, single purpose custom ASICs.

In terms of general purpose CPU equivalence, you would need about 10 billion of the latest Xeon CPUs, to get 50% (or about 200 million of the latest GPUs).

I'm not even sure if that much general purpose computing power exists in the world.

The other issue is that dozens of manufacturers are pumping out bitcoin ASICs at an incredible rate - the bitcoin network hash rate is currently increasing exponentially at 1-2% per day!

Re:This is what we've warned you about (1)

westlake (615356) | about 2 months ago | (#47243877)

Mining pools and custom hardware do make it possible for a large enough group to get over 50%
We'll see whether they decide it's more useful to stay over 50% and cheat, stay over 50% and not cheat, or split the pool into two or more pieces to keep the value of their Bitcoins higher than they would be if the market abandons Bitcoin because of perceptions of cheating.

do you need a large group or simply raw computational horsepower?

and if they --- whoever "they" are ---- don't give a damn about the value of their holdings and are simply out to topple the inverted pyramid the geek has created, what then?

Re:This is what we've warned you about (1)

gl4ss (559668) | about 2 months ago | (#47243935)

raw computational horsepower would mean that you would have a large group.

but at this point, it would be in the interests of some of the bigger contributors to this pool to put their machines on some other pool.

Re:This is what we've warned you about (0)

Anonymous Coward | about 2 months ago | (#47243897)

could be the work of a government player with the intent of destabilizing and discrediting the currency completely. that would actually be an effective strategy to that at least.

Re:This is what we've warned you about (0)

Anonymous Coward | about 2 months ago | (#47244373)

Mining pools and custom hardware do make it possible for a large enough group to get over 50%, especially as the need for mining hardware crowds CPU and GPU miners out of the game. We'll see whether they decide it's more useful to stay over 50% and cheat, stay over 50% and not cheat, or split the pool into two or more pieces to keep the value of their Bitcoins higher than they would be if the market abandons Bitcoin because of perceptions of cheating.

Oh, yeah, I'm sure that'll work. After all, the current ratio of 99:1 for the USD has practically kept the 1% in the poorhouse.

Yup, no way in hell the world would make a currency that corrupt the global standard, right?

Now I know how ignorance insisted this could never happen to bitcoin.

Re:This is what we've warned you about (2)

gweihir (88907) | about 2 months ago | (#47243845)

Indeed. However, they are killing their own revenue-stream this way, unless people stay stupid. Well, judging from earlier ponzi-schemes, people will stay stupid until all their money is gone...

Re:This is what we've warned you about (0)

Anonymous Coward | about 2 months ago | (#47243947)

I made rigs and made lots of money. when it peaked at 1200 per coin i sold everything plus all my rig components. anyone hanging on to this is an idiot. peace.

Re:This is what we've warned you about (4, Insightful)

ArsonSmith (13997) | about 2 months ago | (#47243949)

This is it? I kept away from Bitcoin and the literally millions of dollars I could have made and this is the big fizzle that I was warned about. Fuck you! Fuck you and your fear mongering.

Re:This is what we've warned you about (1)

Travis Mansbridge (830557) | about 2 months ago | (#47244129)

Unless you got in before the fear mongering (or any widespread awareness), or you invested millions (which would be stupid at any point), you didn't miss out on "literally millions of dollars."

Re:This is what we've warned you about (2)

TapeCutter (624760) | about 2 months ago | (#47244133)

millions of dollars I could have made

Hindsight is always 20/20, you made a decision based on a risk judgement because nobody can predict the future, we all have to wait for it to happen. Also what did you do with the money you didn't put into mining, I doubt you hide it under the mattress?

Re:This is what we've warned you about (1)

pantaril (1624521) | about 2 months ago | (#47244361)

But all the early-adopters / ponzi-schemers kept insisting that it was impossible.

No one except trolls like you claims that 51% attack is impossible, on the contrary, the danger of it is explicitly mentioned even in the original bitcoin white paper. Maybe you should read it before spreading misinformations:

Proof-of-work is essentially one-CPU-one-vote. The majority
decision is represented by the longest chain, which has the greatest proof-of-work effort invested
in it. If a majority of CPU power is controlled by honest nodes, the honest chain will grow the
fastest and outpace any competing chains. To modify a past block, an attacker would have to
redo the proof-of-work of the block and all blocks after it and then catch up with and surpass the
work of the honest nodes. We will show later that the probability of a slower attacker catching up
diminishes exponentially as subsequent blocks are added.

https://bitcoin.org/bitcoin.pd... [bitcoin.org]

I now have 50% of the Slashdot comments here! (0, Troll)

billstewart (78916) | about 2 months ago | (#47243711)

Bwahahah!

Re:I now have 50% of the Slashdot comments here! (2)

NoNonAlphaCharsHere (2201864) | about 2 months ago | (#47243717)

Heh. I just stole 17% of your total.

Now I have over 50% of the comments! (1, Troll)

billstewart (78916) | about 2 months ago | (#47243715)

Better than First Post!

And if this were Bitcoin, instead of Slashdot, I'd get to block the rest of you! Bwahahah! But it's not, so you'll probably crowd me out here soon enough.

Re:Now I have over 50% of the comments! (1)

NoNonAlphaCharsHere (2201864) | about 2 months ago | (#47243729)

I'll sell this post back to you -- for a price.

Ha ha. (-1)

Anonymous Coward | about 2 months ago | (#47243733)

Take that, libertarian bitches.

MINUS 1, TR,OLLo) (-1)

Anonymous Coward | about 2 months ago | (#47243739)

posts. Therefo8e raise Or lower the

Fear mongering much? (0)

Anonymous Coward | about 2 months ago | (#47243745)

It's an event that, if it persists, signals the end of crypto currency's decentralized structure.

The Bitcoin network doesn't control all the crypto currencies networks. It only controls the Bitcoin network. Even if a pool takes over, the other cryptos are safe from this particular takeover.

What's going to be interesting is watching the trade value for Bitcoin. As of this writing, the value is around 598$USD, it was around 530$USD earlier today.

Re: Fear mongering much? (2)

sandertje (1748324) | about 2 months ago | (#47243873)

It does have severe ramifications for other crypto currencies. The other crypto currencies are modeled on Bitcoin, with just some parameters different. If Bitcoin can be compromised, this nearly immediately means the other currencies can be compromised as well. The end of Bitcoin would thus also signify the end of most, if not all, other crypto currencies.

Re: Fear mongering much? (2)

viperidaenz (2515578) | about 2 months ago | (#47243989)

That, and once bitcoin went bye bye, there would be an entity with massive computing power available to take over any other crypto currency.

Re: Fear mongering much? (1)

Issarlk (1429361) | about 2 months ago | (#47244189)

It will be interesting to watch, since some other currencies use a different challenge, making the computer need memory in addition to the computing power to twart specialised asic miners.

Not reusable (1)

DrYak (748999) | about 2 months ago | (#47244547)

there would be an entity with massive computing power available to take over any other crypto currency.

Except that massive computing power is in the form ASICs which are extremely optimized for computing SHA256^2 and nothing else.
So the largest part of the current computing power would be pretty much useless.

Re: Fear mongering much? (0)

Anonymous Coward | about 2 months ago | (#47244091)

It does have severe ramifications for other crypto currencies. The other crypto currencies are modeled on Bitcoin, with just some parameters different. If Bitcoin can be compromised, this nearly immediately means the other currencies can be compromised as well. The end of Bitcoin would thus also signify the end of most, if not all, other crypto currencies.

All except one, Timekoin is not a copy/paste/rename of Bitcoin code. The model it uses is immune to those with the most CPU power and for the last 4 years with thousands of dollars offered as a reward, no one has been able to break its implementation of open digital currency. Bitcoin might have been a good beta test for the idea, by others have already solved the obvious issues long ago.

Re: Fear mongering much? (0)

Anonymous Coward | about 2 months ago | (#47244283)

Go with Pandacoin then, specifically the current variant with the market symbol "PND". Being Proof-of-Stake now (formerly Proof-of-Work, for about three months, to get a large quantity of coins distributed as fairly as possible) makes it resistant to this kind of attack, but at the same time there is the Pandacoin multipool [pandapool.info] which you can mine at as well, either via Scrypt of X11 algorithms. That way you can still make some coin without having to "buy in" or trade something else. Seems a pretty safe bet in my opinion.

Re: Fear mongering much? (1)

pantaril (1624521) | about 2 months ago | (#47244387)

It does have severe ramifications for other crypto currencies. The other crypto currencies are modeled on Bitcoin, with just some parameters different. If Bitcoin can be compromised, this nearly immediately means the other currencies can be compromised as well. The end of Bitcoin would thus also signify the end of most, if not all, other crypto currencies.

Not all cryptocurrencies use proof of work like bitcoin, some of them use proof of stake, combination of proof of work and proof of stake or maybe some completely different mechanism.

Yes, other currencies which use proof-of-stake are also vulnerable to 51% attack but this is nothing new, this is a fact known from the beginning, it is explained in the original whitepaper by Satoshi Nakamoto.

Where's the guns to their heads? (1)

waddgodd (34934) | about 2 months ago | (#47243751)

One would assume that the thousands of other miners, if it was really that important to them, could easily step up their collective games and provide more hashing power than ghash can, even if ghash is actually claiming their entire rented-out customer base as their own (a rough equivalence of this would be if, say, Hertz was claimed to control more than half the roads because the cars on it are Hertz rent-a-cars).

Re:Where's the guns to their heads? (3, Insightful)

mpthompson (457482) | about 2 months ago | (#47243819)

I believe the issue isn't so much whether one group can counteract another. Rather, it is something happening that the promoters of Bitcoin claim should not happen. It doesn't instill confidence in a crypto currency when what you say is impossible (or extremely improbable) is proven to be false and your only backup is relying on parties to "play fair".

Re:Where's the guns to their heads? (1)

Barlo_Mung_42 (411228) | about 2 months ago | (#47244115)

I guess I don't see how this was even considered improbable. The amount of coin you dig is based on the amount of power ($$$) you put into it. What was ever in place to keep a very rich person or group of less rich people from stepping in and doing this?

Re:Where's the guns to their heads? (1)

TapeCutter (624760) | about 2 months ago | (#47244137)

your only backup is relying on parties to "play fair".

Yes, I always found it odd that libertarians and the flower power people don't get along with each other.

Re:Where's the guns to their heads? (0)

Anonymous Coward | about 2 months ago | (#47244305)

Who says they don't?

Re:Where's the guns to their heads? (1)

pantaril (1624521) | about 2 months ago | (#47244405)

I believe the issue isn't so much whether one group can counteract another. Rather, it is something happening that the promoters of Bitcoin claim should not happen. It doesn't instill confidence in a crypto currency when what you say is impossible (or extremely improbable) is proven to be false and your only backup is relying on parties to "play fair".

I see that only bitcoin haters are incorrectly claiming that bitcoin promoters say that 51% attack is impossible. But that is simply untrue. The 51% attack is clearly described in the original whitepaper by Satoshi Nakamoto in the proof-of-work section and it is well understood by bitcoin enthusiasts. How are we saying that 51% is impossible when we describe it in our core specification?

Re:Where's the guns to their heads? (1)

Fr33z0r (621949) | about 2 months ago | (#47244479)

it is something happening that the promoters of Bitcoin claim should not happen

"The system is secure as long as honest nodes collectively control more CPU power than any cooperating group of attacker nodes."
- Bitcoin Whitepaper, Page 1

It's just human nature... (5, Interesting)

mpthompson (457482) | about 2 months ago | (#47243759)

But having a single entity in GHash's position, of holding 51 percent of the mining power, of being in a monopoly position, of being able to launch any of these attacks at will, completely violates the spirit and intent of Bitcoin as a currency.

Given enough of an incentive, has there ever been in history a man-made system, technical, political or otherwise, that hasn't been undermined and exploited by those with the capability and power to do so?

Probably best this happens to Bitcoin sooner rather than later. As fine as Bitcoin is, believing that technology alone can defeat human nature is a fools errand. We are betting off investing in creating more moral men and woman and a society that sustains them than technology that is supposed to be infallible against basic human nature.

Re:It's just human nature... (4, Interesting)

Beck_Neard (3612467) | about 2 months ago | (#47243811)

Not to mention that every time a bug or vulnerability has been found in some part of the bitcoin ecosystem (like in Mt.Gox's non-standard trading software), the vulnerability HAS been exploited. Every single time. If you really think that someone isn't going to use this power (or hasn't already), you're dead wrong. Even worse, they can double-trade coins in a way that no one would ever find out, even if they dropped back below 51%. A few smaller cryptocurrencies got completely destroyed by 51% attacks. I think the bitcoin community will be watching this development very closely.

Re:It's just human nature... (1)

dbIII (701233) | about 2 months ago | (#47244073)

like in Mt.Gox's non-standard trading software

Since they were the main players MTGOX were the standard.

Re:It's just human nature... (0)

Anonymous Coward | about 2 months ago | (#47244297)

No, they weren't. The standard (protocol-wise) is, by definition, what at least 51% of the bitcoin network's computational power uses. MtGox's software made some dodgy assumptions about that standard. However big they were, the consensus of bitcoin nodes always trumps one trading site. And that's why having 51% controlled by one group is a bad thing.

Re:It's just human nature... (1)

N3x)( (1722680) | about 2 months ago | (#47244335)

Of course someone would find out. There can only be one blockchain and when your coins suddenly aren't a part of it anymore they are no longer valid coins and can't be spent. Which is something most would notice.

Re:It's just human nature... (1)

gnasher719 (869701) | about 2 months ago | (#47244513)

Since these exploits are illegal, a _known_ group cannot perform them. And I'd say that if you have 51% of the bit coin mining capacity, you are a big group and can be identified.

Re:It's just human nature... (2, Insightful)

Anonymous Coward | about 2 months ago | (#47243823)

Not to mention the environmental damage is huge. They use a ton of electricity to basically do nothing... they're not curing cancer or anything. They're making up numbers.

Re:It's just human nature... (4, Insightful)

TapeCutter (624760) | about 2 months ago | (#47244235)

I agree. The main problem with modern capitalism is that a particular economic activity does not have to make sense, nor does it have to contribute to the growth/maintenance of civilization, it just has to make a profit. OTOH the phrases "make sense" and "civilization" are both subjective terms.

Bitcoins are just an obvious example. Here in Australia we ship millions of tons of bauxite several thousand km's from a mine bathed in sub-tropical desert sunshine all year round to the southern end, and turn it into aluminium. We spent billions on port infrastructure to do so. Why? - Because the southern state's government build a brown coal generator specifically for the smelter and sold the electricity to the smelter for virtually zero profit. It beggars belief that it was (supposedly) more "economical" to do this than it was to build a solar smelter right next to the "fly in, fly out" mine located in the middle of the fucking desert.

To the right wing nutters that may misinterpret the above, I'm not advocating we throw away capitalism. I agree that no matter what the game is, people will adapt to the rules of the game guided by self interest, but without rules there is no game. We need to step back and rethink the rules in light of the object of the game.

Re:It's just human nature... (3, Insightful)

Rockoon (1252108) | about 2 months ago | (#47244545)

To the right wing nutters that may misinterpret the above, I'm not advocating we throw away capitalism

Clearly, since your example begins with government having a power plant built and then selling its capacity at cost.

This sort of thing is highly unlikely in real capitalism where the owner of the power plant would want to justify this particular use of the money over other particular uses. It is only through force of government, with specific government action, that your example exists at all.

But yes, the Statist might try to pass off your example as an "anti-capitalism" thing.

Re:It's just human nature... (0)

Anonymous Coward | about 2 months ago | (#47243977)

But having a single entity in GHash's position, of holding 51 percent of the mining power, of being in a monopoly position, of being able to launch any of these attacks at will, completely violates the spirit and intent of Bitcoin as a currency.

Given enough of an incentive, has there ever been in history a man-made system, technical, political or otherwise, that hasn't been undermined and exploited by those with the capability and power to do so?

Probably best this happens to Bitcoin sooner rather than later. As fine as Bitcoin is, believing that technology alone can defeat human nature is a fools errand. We are betting off investing in creating more moral men and woman and a society that sustains them than technology that is supposed to be infallible against basic human nature.

This is possibly one of the most insightful and true things ever said on slashdot.

Re:It's just human nature... (1)

SuricouRaven (1897204) | about 2 months ago | (#47243983)

" We are betting off investing in creating more moral men and woman and a society that sustains them"

Been trying that for millenia. Success is limited.

or a society that leverages selfishness for good (4, Insightful)

raymorris (2726007) | about 2 months ago | (#47244093)

> We are betting off investing in creating more moral men and woman

Attempts to do that have a not been as successful as we'd like. Religions, for example, have that as a primary goal. Unfortunately, religions are run by the same selfish, power-hungry humans who run all of our other systems.

Some of the founding fathers of the US wrote about attempting to create a system whereby the individual quest for money and power ends up benefiting the common good. Some native American tribes had such a system. In their tradition, every few years neighboring groups would gather to redistribute rankings - power and prestige. The ranking of each leader was determined by how much he gave away. A man of prestige would work a few years, carefully managing his capital to try to produce as much good stuff as he could in order to give away more than his neighbor, thereby retaining his title.

    Free and open source software is similar - one gains prestige by contributing a lot. Recruiters have computer programs thatlook for people with a lot of commits on Github and elsewhere. My own contribution to the Linux kernel gives me some cachet that helps with getting a good job, etc.

Some US founders wanted to use that idea as much as possible, and they succeeded in one way. They reasoned that the President would want to keep his power, so he'd resist any attempt by the senate to increase their relative power. Similarly, the house would want to be powerful, so they wouldn't let senate or president roll over them. That worked pretty well for 200 years, then presidential power increased vis-a-vis Congress. Each house of Congress is still pretty powerful, though, so they do keep the president in check to some extent.

Perhaps we could find more eways to make doing "right" also be the most profitable / prestigious. If someone controls a capital asset such as a large cargo ship, they'll WANT to do good thing X because the benefit to them is Y. What might X and Y be? Alternatively, people want (money/power/recognition/sex), in order to get what they want, they might need to do (something that benefits society). How can society benefit from people's attempt to get money, or power, or sex?

Don't say it can't be done. For thousands of years societies traded sex for marriage. People wanted sex, society wanted stability, and it was decided that the society would expect you to get married before having sex. Most people complied.

Ghash.IO is not consistently over 51%, yet anyways (4, Informative)

mysidia (191772) | about 2 months ago | (#47243769)

Not yet anyways.

6 months ago GHash.IO promised [ghash.io] they would (1) Take steps to prevent accumulating 51% hashing power, including: not accepting new miners, and (2) They would not attempt an attack, and (3) They would provide cex.io users an option to use another mining pool (They have apparently not implemented (3) yet).

A DDoS [cryptocoinsnews.com] against the pool was reported to occur yesterday, which adversely affected mining. At one point... their hashrate was reported to have dropped to 7%. Then BitFury pulled 1 PH/s out of their pool.

Re:Ghash.IO is not consistently over 51%, yet anyw (2)

LordLimecat (1103839) | about 2 months ago | (#47243859)

Oh they promised! Well, color me convinced.

Re:Ghash.IO is not consistently over 51%, yet anyw (5, Interesting)

houstonbofh (602064) | about 2 months ago | (#47243871)

Oh they promised! Well, color me convinced.

And if they break it (like they did) a simple DDOS attack knocks them off the top spot, (like it did) and sets a scary precedent...

Re:Ghash.IO is not consistently over 51%, yet anyw (0)

Anonymous Coward | about 2 months ago | (#47244257)

How much internet access does mining require? And how much should they care if they don't see every bitcoin (because of DoS) when they get to say which transaction is valid?

Re:Ghash.IO is not consistently over 51%, yet anyw (1)

kasperd (592156) | about 2 months ago | (#47244299)

Take steps to prevent accumulating 51% hashing power, including: not accepting new miners

Why is this even necessary? I was under the impression that a mining pool would not be able to pull off an attack without it being immediately visible to the miners in the pool. Doesn't that mean that having a pool with majority of the processing power isn't enough to pull of an attack, you also need all miners in the pool to conspire to perform the attack?

Bitcoin stopped being distributed a long time ago. (5, Interesting)

Animats (122034) | about 2 months ago | (#47243785)

Bitcoin stopped being a distributed system a long time ago. All the serious miners now have data-center sized installations of custom boards with custom ASICs. Some are liquid-cooled. The original idea was millions of end users running Bitcoin mining as a background job on their CPU. That's totally dead.

Re:Bitcoin stopped being distributed a long time a (5, Interesting)

GrandCow (229565) | about 2 months ago | (#47243867)

Bitcoin stopped being a distributed system a long time ago. All the serious miners now have data-center sized installations of custom boards with custom ASICs. Some are liquid-cooled. The original idea was millions of end users running Bitcoin mining as a background job on their CPU. That's totally dead.

This is absolutely hilarious. Not because it's a fake post (I honestly don't know if it is or not), but just the fact that someone would even think that this is a good enough idea to post that 'serious' miners are actually doing this. This is the California gold rush all over again... the only people making a profit off of the mining are the people selling the ASIC's/shovels. Mining isn't profitable and hasn't been for quite some time. While it might be if you ignore the hardware cost and only think of the electricity cost, you're still BARELY making a SLIGHT profit. That's only in places that you have very cheap electricity (or can find a way to make someone else pay for the electricity). And once again, that doesn't even count the cost of hardware in the first place. Lets not forget that there are other idiots funneling money into even faster hardware which makes your very expensive highly specialized and unable to be repurposed board basically worthless in a few months time, once the electricity cost passes what you'll make back from mining.

HINT: this is before you get your initial cost of hardware back out of the system. You will never make a net profit. Ever.

The only money in bitcoin right now is in speculating, and even then it's a suckers game. Your profits are based entirely on someone else guessing wrong and losing money into the system that you might be lucky enough to cash out at the right time. You can do that easier and without a datacenters worth of hardware with penny stocks. Also penny stocks are LEGAL! You don't have to worry about some new law negating all of your money like you have to do every day with bitcoin.

I'll just stop here because anyone that legit cares about bitcoin already had their opinion made before they even read a word of this comment.

Re:Bitcoin stopped being distributed a long time a (3, Interesting)

Anonymous Coward | about 2 months ago | (#47243973)

Ignorant, misinformed, and outspokenly opinionated? What an unusual combination!

Some asshole on slashdot.org claims that you can't make money mining bitcoin so it must be true.

That's why the network difficulty continues to get exponentially more difficult right? Cause there's just THAT MANY suckers burning up electricity at no profit?

Here's what ACTUALLY happened: you tried to compete in an industry with high barriers to entry, while GROSSLY under-capitalized, with limited-zero competitive advantage. You failed to turn a profit therefore all the people investing in 20nm fab & data-centers are just fools with too much money.

Learn something about how the world works before spewing nonsense on the interblags please. I come here for serious business.

Re:Bitcoin stopped being distributed a long time a (1)

gl4ss (559668) | about 2 months ago | (#47243985)

That's why the network difficulty continues to get exponentially more difficult right? Cause there's just THAT MANY suckers burning up electricity at no profit?

in a word: Yes.

or do you think the shovel makers are just stupid enough to not to plug the usb cable into their own computer?

Re: Bitcoin stopped being distributed a long time (2, Interesting)

Anonymous Coward | about 2 months ago | (#47244109)

No. That's actually not what happened.

What happened is exactly what people who understand cryptography said would happen. Bitcoin's cryptographic cost has gone up, number of miners has gone down, specialized pools have reached critical mass, and the TRUST IN THE CURRENCY (which is the only asset it ever had) is gone.

So you can call everyone else losers for not investing enough capital. (Gotta spend money to make money, right? But with Bitcoin that's only true if you're an idiot.)

Bitcoin is dead. The only people still "investing" in it are speculators and miners who are either playing with someone else's money or worriedly working it hoping to recoup their "investment" and the majority are not going to make it.

Time for the sociopaths to shut up while the cryptographers work around them.

Re:Bitcoin stopped being distributed a long time a (2)

Animats (122034) | about 2 months ago | (#47244167)

'serious' miners are actually doing this.

They are. Here's the biggest Bitcoin mining operation in North America as of Dec. 2013. [komonews.com] (Annoying commercials, then skip ahead to 03:15). Generated $8 million/month at the time. Probably about $800K/month now; the difficulty has gone up 5x since then, and the price has dropped by half. It's in upstate Washington, where power is cheap and cooling is easy.

Re:Bitcoin stopped being distributed a long time a (1)

Kaenneth (82978) | about 2 months ago | (#47244231)

I've lived in Washington 40 years, and I'm never heard of a town/county named 'upstate'.

Re:Bitcoin stopped being distributed a long time a (0)

Anonymous Coward | about 2 months ago | (#47244411)

Bitcoin stopped being a distributed system a long time ago. All the serious miners now have data-center sized installations of custom boards with custom ASICs. Some are liquid-cooled. The original idea was millions of end users running Bitcoin mining as a background job on their CPU. That's totally dead.

This is absolutely hilarious. Not because it's a fake post (I honestly don't know if it is or not), but just the fact that someone would even think that this is a good enough idea to post that 'serious' miners are actually doing this. This is the California gold rush all over again... the only people making a profit off of the mining are the people selling the ASIC's/shovels. Mining isn't profitable and hasn't been for quite some time. While it might be if you ignore the hardware cost and only think of the electricity cost, you're still BARELY making a SLIGHT profit. That's only in places that you have very cheap electricity (or can find a way to make someone else pay for the electricity). And once again, that doesn't even count the cost of hardware in the first place. Lets not forget that there are other idiots funneling money into even faster hardware which makes your very expensive highly specialized and unable to be repurposed board basically worthless in a few months time, once the electricity cost passes what you'll make back from mining.

HINT: this is before you get your initial cost of hardware back out of the system. You will never make a net profit. Ever.

The only money in bitcoin right now is in speculating, and even then it's a suckers game. Your profits are based entirely on someone else guessing wrong and losing money into the system that you might be lucky enough to cash out at the right time. You can do that easier and without a datacenters worth of hardware with penny stocks. Also penny stocks are LEGAL! You don't have to worry about some new law negating all of your money like you have to do every day with bitcoin.

I'll just stop here because anyone that legit cares about bitcoin already had their opinion made before they even read a word of this comment.

Then perhaps you could explain why someone IS invested millions of dollars to attempt to mine bitcoins, because it certainly seems that the only intent to invest that kind of money into this only to find little or no profit is only doing it to destroy bitcoin completely.

And please don't sit here and point fingers towards penny stocks or any other investment vehicle sitting behind the most corrupt currency on the entire planet. We're worried about BTC miners capturing 50% of the market while ONE percent controls the overwhelming majority of the USD that you somehow think will remain stable. Corruption is the only thing keeping the USD a currency.

Sorry if you didn't catch that last part. I'll TRY AND SPEAK LOUDER SO YOU CAN HEAR ME OVER THE PRINTING PRESSES WORKING OVERTIME IN WASHINGTON.

Re:Bitcoin stopped being distributed a long time a (2)

houstonbofh (602064) | about 2 months ago | (#47243881)

However, the large mining groups also make large targets. A simple DDOS makes them small potatoes again. http://www.cryptocoinsnews.com... [cryptocoinsnews.com] A few of these and the big mining groups will start breaking up.

Re: Bitcoin stopped being distributed a long time (0)

Anonymous Coward | about 2 months ago | (#47244101)

So the cabal of moneyed elites with their mining super rigs who currently dominate the network, will be pushed out by black hats. I'm sure the future of bitcoin is in good hands.

Re:Bitcoin stopped being distributed a long time a (1)

N3x)( (1722680) | about 2 months ago | (#47244341)

It's still distributed it's just not massively distributed anymore.

Re:Bitcoin stopped being distributed a long time a (5, Informative)

pantaril (1624521) | about 2 months ago | (#47244435)

The original idea was millions of end users running Bitcoin mining as a background job on their CPU. That's totally dead.

The author of the original idea bets to disagree:

Long before the network gets anywhere near as large as that, it would be safe
for users to use Simplified Payment Verification (section 8) to check for
double spending, which only requires having the chain of block headers, or
about 12KB per day. Only people trying to create new coins would need to run
network nodes. At first, most users would run network nodes, but as the
network grows beyond a certain point, it would be left more and more to
specialists with server farms of specialized hardware. A server farm would
only need to have one node on the network and the rest of the LAN connects with
that one node.

That is from Satoshi Nakamoto's post from 2008: http://www.mail-archive.com/cr... [mail-archive.com]

Some newer coins intend to stay ASIC resistant (2)

Powercntrl (458442) | about 2 months ago | (#47243841)

While the threat of a 51% attack may be blown out of proportion (a pool sells their cut of the coins that are mined and it is in their best interest that the coin remain as valuable as possible - attacking a coin would be counterproductive), some altcoin developers have stated that they will change their coin's proof-of-work algorithm if ASICs are developed for it. Vertcoin and Execoin's developers have both stated they'll do whatever it takes to keep ASICs out.

Most of the speculation that fuels the pump-and-dump world of altcoins is based on the belief that Bitcoin may not end up being the cryptocoin that average people use to buy pizza, pay their bills, etc.

Re:Some newer coins intend to stay ASIC resistant (1)

gweihir (88907) | about 2 months ago | (#47243863)

At the very least, the scrypt-based coins offer a nice security-test of scrypt. And scrypt is ASIC resistant. The Password Hashing Competition may also yield a few more where ASICs do not offer any advantage. With those, the idea of a lot of individuals mining on their own systems may become reality again.

Re:Some newer coins intend to stay ASIC resistant (2)

SuricouRaven (1897204) | about 2 months ago | (#47243993)

You can get ASICs for scrypt now. They don't perform very fast (My five-ASIC Gridseed miner is almost exactly as fast as my GPU), but they are very power-efficient.

Re:Some newer coins intend to stay ASIC resistant (1)

viperidaenz (2515578) | about 2 months ago | (#47244047)

http://www.cryptocoinsnews.com... [cryptocoinsnews.com]
96MH/s hardware litecoin/scrypt miner, $3600.

Scrypt has been taken over by ASICs (4, Interesting)

perpenso (1613749) | about 2 months ago | (#47244049)

And scrypt is ASIC resistant.

It was erroneously thought to be so. ASICs have taken over scrypt mining. Two $90 ASIC scrypt miners (720 kh/s) using 7-8 watts each can beat a Radeon R9 290 (850 kh/s). Their combined hash rate is slightly less but when you factor in power costs they win. Note the ASIC miners are usually controlled by a Raspberry Pi to reduce power costs.

Re: Some newer coins intend to stay ASIC resistant (1)

sandertje (1748324) | about 2 months ago | (#47243895)

Again, this means having to trust some developers to actually do what they're promising. That's the complete opposite of crypto currencies' core tenet: that trusting any humans is not necessary since the technology means no one can feasibly gain any real control. That assumption has now been proven false. If so, then what is the remaining use of cryptcurrencies in favor of general fiat currencies?

Re:Some newer coins intend to stay ASIC resistant (1)

Time_Ngler (564671) | about 2 months ago | (#47243909)

While the threat of a 51% attack may be blown out of proportion (a pool sells their cut of the coins that are mined and it is in their best interest that the coin remain as valuable as possible - attacking a coin would be counterproductive)

Why don't we just let ghash.io own the "official" copy of the ledger, and do away with mining entirely, then? After all, according to you, it would be against ghash.io's best interest to do anything to harm the value of bitcoin...

Isn't the block chain what makes it decentralised? (1)

ceview (2857765) | about 2 months ago | (#47243851)

Isn't the point of bitcoin is that the block chain is decentralised? i.e. everyone has a copy of it? does it matter who mines the coins as long as the coins end up distributed around? also can't the bitcoin protocol just be tweaked by the developers or something?

Re:Isn't the block chain what makes it decentralis (0)

Anonymous Coward | about 2 months ago | (#47243893)

If I say I have it, and you say you have it - who has it ? whoever more than 51% of nodes say has it.

Re: Isn't the block chain what makes it decentrali (5, Informative)

sandertje (1748324) | about 2 months ago | (#47243899)

If you control 51% of the hashing power in the network, you can modify the block chain while simultaneously self-verifying your version as the one-and-true block chain.

Re:Isn't the block chain what makes it decentralis (1)

Barlo_Mung_42 (411228) | about 2 months ago | (#47244125)

" also can't the bitcoin protocol just be tweaked by the developers or something?"

Not if they want to be taken seriously as a real currency. You might be tempted to think "The Federal Reserve does that with the $". Sure, but the developers behind bitcoin (if they can even do this, I don't know) are not the Federal Reserve.

maintain? (-1)

Anonymous Coward | about 2 months ago | (#47243875)

the only way to maintain the value of this imaginary currency is to void all outstanding bitcoins and keep them that way. at zero. which is what it is actually worth. The amount of electricity that this botnet is using to mine the coins is probably greater than or equal to the value of the coins.

it's like saying i should just leave a dozen hair dryers on 24 hours a day and expect money to show up in my email.

the only reason this works financially is that the owner of the zombie mining operation isn't paying to power it. But the demand for the coins keep going up and up because uneducated investors see it as the future. (hint: it is not)

Hence, bitcoin might be the stupidest thing to go investing in at such a high price point. the people who got in early, made their money and got out, they're the only real winners

we live in an america where a ton of people have no faith in paper money because it is not backed by the gold standard.- from their point of view, i really don't see this as a better solution. AND JUST YOU WAIT UNTIL SOMEONE COUNTERFEITS THE BITCOIN - then we'll really see the dominoes fall

Not really a problem (0)

Anonymous Coward | about 2 months ago | (#47243903)

This isn't really an issue.

If the number 1 mining pool is foolish enough to try something like the 51% attack, the perceived value of Bitcoins would plummet. Therefore, they won't do it. They would be the biggest losers from such a move.

Pool operators can't be hacked ? (1)

perpenso (1613749) | about 2 months ago | (#47244053)

This isn't really an issue.

If the number 1 mining pool is foolish enough to try something like the 51% attack, the perceived value of Bitcoins would plummet. Therefore, they won't do it. They would be the biggest losers from such a move.

Pool operators can't be hacked? Targeted malware can not launch a 51% attack?

Re:Pool operators can't be hacked ? (0)

Anonymous Coward | about 2 months ago | (#47244351)

Good point. Logically they should have amazing security procedures to make this impossible, but since most humans are lazy and greedy ....

Re:Not really a problem (2)

91degrees (207121) | about 2 months ago | (#47244147)

You can makea lot of money from a drop in value. Short selling is possile with Bitcoin as well as any other fungible commodity.

Re:Not really a problem (0)

Anonymous Coward | about 2 months ago | (#47244343)

This would be the equivalent of GM deliberately making their cars explode, and massively short selling their own stock. Sure, it's theoretically possible, but it would be pretty stupid in practice.

80/20 rule (1)

Anonymous Coward | about 2 months ago | (#47243951)

It would be ironic if the brilliant and careful design of bitcoin gets taken down by the 80/20 rule.

Perhaps more thought needs to be given to the alternatives that try to address the computation race problem that leads to this distribution.

Correction, Tardmitter (-1)

Anonymous Coward | about 2 months ago | (#47244025)

" It's an event that, if it persists, signals the end of crypto currency's decentralized structure."

ONE crypto currency. There are CC's out there you're not even fucking aware of and have been built with these flaws in mind.

Quit being an alarmist whore.

~Khyber

The Night Shift @ Fort Meade (3, Interesting)

Scot Seese (137975) | about 2 months ago | (#47244031)

.. It's just the guys on the 3rd shift at Fort Meade, retasking server farm cycles.

Re:The Night Shift @ Fort Meade (0)

Anonymous Coward | about 2 months ago | (#47244145)

.. It's just the guys on the 3rd shift at Fort Meade, retasking server farm cycles.

/makes a mental note to check and see what was declassified in 2038-2040. I'm sure someone at the puzzle palace has been tasked with researching how much computing power it would take to own the network. No, I don't think they have, and no I don't think they will, it's not their bailiwick. But answering the question of whether or not they could falls into the category of damn interesting problems, and damn interesting problems are well within their bailiwick.

Winklevoss (1)

Anonymous Coward | about 2 months ago | (#47244207)

Who are they going to sue this time ? They put all the money of the Facebook lawsuit into Bitcions. And now they're going to lose it.. I'm a little sad for these two guys.

Stupidity (2, Interesting)

Anonymous Coward | about 2 months ago | (#47244219)

It appears that people who provide half of the mining power are so stupid to choose the most popular pool among the alternatives.

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