EDIT - I misunderstood the attack. While a person can punish a pool by withholding a block, they can not then submit that hash elsehwere for the block. Toast was right. Good to know you Bitshares guys are on top of things. I should have reread a relevant thread again. I just got all excited.
If any mod wants to delete this, feel free as it serves no purpose but clutter IMO. My apologies.
Let me explain the exploit. I wish I had the original thread from bitcointalk, but it was a conversation I just had that led me to these conclusions.
Basically any miner of a pool can withhold blocks from the pool and submit them via a regular solomining setup. This doubles your expectation if no one else is doing it with no real downside except it is basic thievery.
BTCGuild is supposedly running quite under expectation. Hmmm..
This exploit will introduce some form of private pools that rely on a reputation system. Even that would be a hard sell. So outside of private pools, it forces people to go back to solo mining or to lose a lot of expectation due to being cheated.
Solo mining doesn't work so well and will discourage a LOT of small time miners when they run bad for months or longer.
The end result is the guys who don't have enough hashing power to solo mine without really high variance will be forced to use pools which are likely exploited or they give up in frustration.
So will this lead to centralization or decentralization? After playing out the scenarios to me, I think it will lead to decentralization as pools just simply can not be as large as they once were. They'll fragment as people form pools around some form of trust systems. By necessity the pools will be smaller. So we will have smaller pools and less people mining. These trust systems could utilize historic data from a pool's accounts and their blocking vs hashing rates. (You still would not have enough data IMO for most users with BTC)
Whether this is more or less decentralized is not 100% clear, but I tend to go with being more decentralized as pools themselves really are a security issue.
I suspect whatever the outcome is, POW is going to come out not looking so great.
Thoughts ? Is gamey confused again ? If someone knows some threads with better explanations please post them.
I did not read a reasonable way to work around this either. Multipools around scrypt/gpus are a different thing and not near as exploitable. However I really think BTC is stuck with this exploit and all the repercussions.
Frankly I fear I am confused or I simply don't understand why this hasn't already become a huge problem. Nice guy miners?