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Offline gamey

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ghash.io at 50%+ ?
« on: June 13, 2014, 11:42:36 AM »


http://www.coindesk.com/cex-io-response-fears-of-51-attack-spread/

People have been talking about this in various places.  I am curious what others think ?  51% attack is always thrown around in 'what-if' scenarios but here we are.  Why is that pool so popular?  0% fees are always sketchy to me and point to ulterior motives. Is mining full of people who are so risk averse that they can't deal with the variance of being on a pool with 10% of the hashing power ?  (So they go with 50% of the hashing power to have a nice smooth payout?)

To me it sounds like we need to ship DPOS and fork BTC like yesterday.  I personally don't see any other solution.  Has anyone else in the space been working on the toolset to enable this ?  ;)
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Offline BldSwtTrs

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Re: ghash.io at 50%+ ?
« Reply #1 on: June 13, 2014, 12:15:55 PM »

Offline CLains

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Re: ghash.io at 50%+ ?
« Reply #2 on: June 13, 2014, 01:19:47 PM »
Spooky.
Vote for BTS-2 witness: spectral (1.6.30)

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Offline liondani

Re: ghash.io at 50%+ ?
« Reply #3 on: June 13, 2014, 02:05:03 PM »
just to remember what bytemaster told before months....

At the Inside Bitcoin conference in Las Vegas the CEO of Butterfly Labs did a presentation on “The Future of Mining”.   In his presentation he pointed out that about 5 people collectively control 75% of the hashing power behind Bitcoin and 2 people control over 51%.   He then made the case that this centralization was good for Bitcoin because it means they could coordinate to rapidly resolve unexpected forks such as the one that occurred in March 2013.     According to Sonny Vleisides, without this centralization in mining Bitcoin would have died 9 months ago as decentralized clients would have been unable to reach a consensus on which fork to follow in a timely manner.

Whether or not you agree that Bitcoin would have died,  Sonny Vleisides has effectively admitted that Bitcoin has become centralized, that a small handful of powerful pool operators can unilaterally decide which block chain fork is the “official” fork, that they all know each other and that they effectively vote on which chain to support.   The session ran out of time before I had an opportunity to publicly ask the following question:  “If a small handful of self-appointed people have taken it upon themselves to decide which chain to officially support, then why should the Bitcoin ecosystem spend $1 billion dollars per year in electric costs to provide the same effective security as having 2 or 3 signatures on every block that costs next to nothing while providing infinitely more security?” 

Whether signatures or hashing power, the regular Bitcoin user has no more control over the official block chain policy than the regular Federal Reserve Note user has over official monetary policy.   Their only way to ‘vote’ is to switch to another currency which will have a smaller network with fewer exchanges, products, and services available to it. 

The fact that mining results in centralization should not have been a surprise to those who understand economies of scale.  Mining profitability is a function of efficiency and large centralized mining farms powered by the latest capital-intensive ASICs packaged and cooled in an industrial setting will eventually push all profitable mining into the hands of a single player.  Effectively, mining means that consensus is defined by an organization that can derive profits from alternative revenue streams such as taxation, tainted coins, or limiting transactions to privileged players.   It means that in the name of ‘progress’, these large miners will support other changes to the protocol that also benefit from economies of scale such as reducing block intervals, increasing block sizes, and offering instant transaction validation services.   
We have come to the conclusion that there is no traditional proof-of-work system that can provide security and decentralization at the same time.  A new approach is needed.

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Offline Agent86

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Re: ghash.io at 50%+ ?
« Reply #4 on: June 13, 2014, 02:43:42 PM »
To me it sounds like we need to ship DPOS and fork BTC like yesterday.  I personally don't see any other solution.

Better to release BTS XT.  The smart people will switch/sell their BTC in favor of a better solution which will eventually catch on.  For instance:

Peter Todd sold half of his bitcoins because of this: http://www.reddit.com/r/Bitcoin/comments/281ftd/why_i_just_sold_50_of_my_bitcoins_ghashio/
Our priority should be offering the better solution.

from the linked discussion: "Crazy when you think about it. A multi billion dollar project and a core developer is worried about paying his rent."

BTC has the problem that the people who figure out there is a problem will just sell their BTC for another store of value (a much smarter move and more expedient than trying to undertake the task of saving all the other BTC holders who can't see the problem).  The people with the means and knowledge to save BTC holders will be the first to divest and will have little incentive to take on the undertaking.  BTC holders will end up representing a less informed population and there's really nothing so special and inherently fair about the BTC distribution that it's value must be preserved at all costs.  BTC has no mechanism of leveraging their huge market cap to pay for work on solutions that benefit all BTC holders.  They can barely pay a handful of developers.

BTC needs "DAC employees"
https://bitsharestalk.org/index.php?topic=4660.msg59152#msg59152

Hopefully Bitshares owners will have such a power to promote and protect their interests unlike BTC holders.  BTC holders are powerless and hoping for a charitable savior.  Some are under the misconception that because the BTC market cap is so huge that it acts like a huge company with big resources and they think "someone is taking care of this and looking out for them" - not the case.

Offline Empirical1

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Re: ghash.io at 50%+ ?
« Reply #5 on: June 13, 2014, 03:06:41 PM »
just to remember what bytemaster told before months....

At the Inside Bitcoin conference in Las Vegas the CEO of Butterfly Labs did a presentation on “The Future of Mining”.   In his presentation he pointed out that about 5 people collectively control 75% of the hashing power behind Bitcoin and 2 people control over 51%.   He then made the case that this centralization was good for Bitcoin because it means they could coordinate to rapidly resolve unexpected forks such as the one that occurred in March 2013.     According to Sonny Vleisides, without this centralization in mining Bitcoin would have died 9 months ago as decentralized clients would have been unable to reach a consensus on which fork to follow in a timely manner.

Whether or not you agree that Bitcoin would have died,  Sonny Vleisides has effectively admitted that Bitcoin has become centralized, that a small handful of powerful pool operators can unilaterally decide which block chain fork is the “official” fork, that they all know each other and that they effectively vote on which chain to support.   The session ran out of time before I had an opportunity to publicly ask the following question:  “If a small handful of self-appointed people have taken it upon themselves to decide which chain to officially support, then why should the Bitcoin ecosystem spend $1 billion dollars per year in electric costs to provide the same effective security as having 2 or 3 signatures on every block that costs next to nothing while providing infinitely more security?” 

Whether signatures or hashing power, the regular Bitcoin user has no more control over the official block chain policy than the regular Federal Reserve Note user has over official monetary policy.   Their only way to ‘vote’ is to switch to another currency which will have a smaller network with fewer exchanges, products, and services available to it. 

The fact that mining results in centralization should not have been a surprise to those who understand economies of scale.  Mining profitability is a function of efficiency and large centralized mining farms powered by the latest capital-intensive ASICs packaged and cooled in an industrial setting will eventually push all profitable mining into the hands of a single player.  Effectively, mining means that consensus is defined by an organization that can derive profits from alternative revenue streams such as taxation, tainted coins, or limiting transactions to privileged players.   It means that in the name of ‘progress’, these large miners will support other changes to the protocol that also benefit from economies of scale such as reducing block intervals, increasing block sizes, and offering instant transaction validation services.   
We have come to the conclusion that there is no traditional proof-of-work system that can provide security and decentralization at the same time.  A new approach is needed.

 +5% Pity DPOS isn't up and running yet.

If there is any kind of major 51% attack, that is the time, the one major opportunity a successor waiting in the wings will have to shoot up overnight.

Personally I've added more NXT to my portfolio because of this and think I'm going to switch some BTC to fiat too.

This is big news. I would probably put this back on the main general discussion section. This is the problem DPOS will hopefully solve.

Offline santaclause102

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Re: ghash.io at 50%+ ?
« Reply #6 on: June 13, 2014, 04:18:00 PM »
To me it sounds like we need to ship DPOS and fork BTC like yesterday.  I personally don't see any other solution.

Better to release BTS XT.  The smart people will switch/sell their BTC in favor of a better solution which will eventually catch on.  For instance:

Peter Todd sold half of his bitcoins because of this: http://www.reddit.com/r/Bitcoin/comments/281ftd/why_i_just_sold_50_of_my_bitcoins_ghashio/
Our priority should be offering the better solution.

from the linked discussion: "Crazy when you think about it. A multi billion dollar project and a core developer is worried about paying his rent."

BTC has the problem that the people who figure out there is a problem will just sell their BTC for another store of value (a much smarter move and more expedient than trying to undertake the task of saving all the other BTC holders who can't see the problem).  The people with the means and knowledge to save BTC holders will be the first to divest and will have little incentive to take on the undertaking.  BTC holders will end up representing a less informed population and there's really nothing so special and inherently fair about the BTC distribution that it's value must be preserved at all costs.  BTC has no mechanism of leveraging their huge market cap to pay for work on solutions that benefit all BTC holders.  They can barely pay a handful of developers.

BTC needs "DAC employees"
https://bitsharestalk.org/index.php?topic=4660.msg59152#msg59152

Hopefully Bitshares owners will have such a power to promote and protect their interests unlike BTC holders.  BTC holders are powerless and hoping for a charitable savior.  Some are under the misconception that because the BTC market cap is so huge that it acts like a huge company with big resources and they think "someone is taking care of this and looking out for them" - not the case.
+5%

Offline gamey

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Re: ghash.io at 50%+ ?
« Reply #7 on: June 13, 2014, 05:01:43 PM »

Wow, interesting stuff.  Thanks for the quote from Dan.  I might use that as bait to get people on the beyondbitcoin show.  (Come challenge Dan on the following statements...)

Peter Todd probably has a lot of DarkCoin now, so he might have sold half just to support DarkCoin.

One thing is for certain is that things like this make BTC an unlikely store of wealth for amounts about 10 billion.  Until this crap is resolved, there will always be enough justified FUD to keep the marketcap down.  An opinion of course, but it seems logical to me.
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