Decentralizing Mining - The future of BitShares Mining

[bytemaster]

We live in this reality, not in your dreamland. The reality is that without btc38 pts is worth basically nothing. There're no security of any kind there. What would happen is they would delist pts immediately and that would be the end of pts.

If you think the value of PTS is contingent on btc38 then you don't get it.   The value of PTS is based upon the future value of the DAC ideas that Invictus is developing.  BTC38 makes PTS liquid, but does not give them their value.

[iruu]

10K PTS is $80,000 and any exchange worth it's salt would have KYC in place for that kind of volume.  As a result your attack would fail because you would get caught. 

I wasn't there, but didn't someone dump like 200k pts in the first few days on btc38? I definitely read it on irc. If you don't care about the only serious PTS exchange, well.

10k PTS is perhaps $80k if you sell it one time

If I were running an exchange I would calculate the cost of a 51% attack and factor that into my withdraw limits.    I would limit the withdraw rate to half the cost of a 51% attack.  With this simple precaution combined with KYC and vesting it would make it very difficult to pull of such an attack.

We live in this reality, not in your dreamland. The reality is that without btc38 pts is worth basically nothing. There're no security of any kind there. What would happen is they would delist pts immediately and that would be the end of pts.

Another minor problem is that it's impossible to know the cost of a 51% attack. For a botnet operator it can be zero if he has no idea how to use his zombies differently at the moment. For a coin to be secure it should be very hard to amass a botnet with enough power.

[bytemaster]

most you could achieve through your attempted attack is to double spend your own PTS

The "most"? Two-three double spends with 10k pts is going to net upwards of $100k, if someone at the exchange doesn't stop depositing manually... it's enough to destroy the coin by destroying confidence. I think btc38 standing bids can support such volume. They would definitely delist pts after such incident.

Right now a 51% attack on the network would cost about $30,000 per day.

So even by your calculation, it's only $1250 per hour, long enough for anything.

The vesting period does not reduce the number of miners

Because you say so... all restrictions are going to reduce the number of miners.

10K PTS is $80,000 and any exchange worth it's salt would have KYC in place for that kind of volume.  As a result your attack would fail because you would get caught. 

If I were running an exchange I would calculate the cost of a 51% attack and factor that into my withdraw limits.    I would limit the withdraw rate to half the cost of a 51% attack.  With this simple precaution combined with KYC and vesting it would make it very difficult to pull of such an attack.   This leaves you with attempting to scam people on the forums. 

[iruu]

most you could achieve through your attempted attack is to double spend your own PTS

The "most"? Two-three double spends with 10k pts are going to net upwards of $100k, if someone at the exchange doesn't stop depositing manually... it's enough to destroy the coin by destroying confidence. I think btc38 standing bids can support such volume. They would definitely delist pts after such incident.

In the most optimistic (for the attacker) case, you could wipe all bids using just a few thousand pts by a dozen large double spends. I think btc38 only waits for one confirmation which makes it easier. Tight operation, the way heists are supposed to be

Right now a 51% attack on the network would cost about $30,000 per day.

So even by your calculation, it's only $1250 per hour, long enough for anything.

Even that is a cloud price, not-that-optimized gpu miner for 7970 gets 530cpm, which takes about 200W - $0.02 per hour in some places. Suddenly the number gets much smaller...

The vesting period does not reduce the number of miners

Because you say so... all restrictions are going to reduce the number of miners.

[bytemaster]

Final argument:
Few large miners -> low hashpower -> possibility of 51% attack even with large ec2 cloud (what about botnet?).

Even with protoshares, my ~200 g2.2xlarge ec2 instances at times (like 18th November) generated about 2%-3% of network's hashpower (calculated using bot on irc). The cost was about $27/hour (which includes vat), it would be ~$22 for someone not from EU. So ~$550 was enough for me to reverse even a confirmed transaction - time long enough to deposit a few thousand pts at btc38 and sell them for bitcoins. A complicated operation to be profitable (after all, a currency just got destroyed, so you have to cash out fast), but doable I think. I also rely on spot prices which is inaccurate with larger scaling (but not that much).
Also, it's was probably more profitable then to not attack the network.

Suppose you succeed and decrease hashpower by significant amount (compared to protoshares)... what now? Someone could try controling the network for fun, spending only $100.

The cost is similar now...

My goal isn't to decrease hash power, but to increase it.  I increase it by bringing in more people who are mining at a cost greater than the PTS they are receiving.  Every other crypto-currency has miners that are mining below the cost of what they mine.  Therefore, with lucky mining, the network will have more security for the same block reward than any other network.

The vesting period does not reduce the number of miners, it just changes the mining equation from 'current price' to 'future price'.   The result will be steady, long-term mining, that does not fluctuate with short-term price movements.   

Lastly, by incorporating coinage destroyed into the required difficulty calculation the most you could achieve through your attempted attack is to double spend your own PTS because extended DOS attack would not be possible because those including transactions that destroy coinage would have half the difficulty. 

Right now a 51% attack on the network would cost about $30,000 per day. 

[iruu]

Final argument:
Few large miners -> low hashpower -> possibility of 51% attack even with large ec2 cloud (what about botnet?).

Even with protoshares, my ~200 g2.2xlarge ec2 instances at times (like 18th November) generated about 2%-3% of network's hashpower (calculated using bot on irc). The cost was about $27/hour (which includes vat), it would be ~$22 for someone not from EU. So ~$550 was enough for me to reverse even a confirmed transaction - time long enough to deposit a few thousand pts at btc38 and sell them for bitcoins. A complicated operation to be profitable (after all, a currency just got destroyed, so you have to cash out fast), but doable I think. I also rely on spot prices which is inaccurate with larger scaling (but not that much).
Also, it's was probably more profitable then to not attack the network.

Suppose you succeed and decrease hashpower by significant amount (compared to protoshares)... what now? Someone could try controling the network for fun, spending only $100.

The cost is similar now...

[bytemaster]

If luckyshares were a currency, decentralization would be important but here I do not think it is.

It is more important to make sure the shares find their way into the hands of those who will most and best evangelize the DAC, so you actually don't want a 100% "fair" distribution.  You want a distribution that rewards people who are likely to work for the system.

Actually, it isn't about distribution at all.   A DAC wants to distribute as few shares as possible while maximizing the value it receives for the shares it does distribute.   So the value a DAC receives for distributing its shares include:

1) Validation and Securing of its Transaction Log
2) Marketing, Promotion, and Advertising
3) Incentivize investment in the ecosystem.
4) Avoiding control of any one individual.
5) Growing the community of interested individuals.

Fairness is only relevant from a marketing perspective.  If you want what I believe is 'fair', then Invictus should have sold 100% of all shares and then paid to secure the network on our own.   Despite being the most 'fair', it is not the best marketing and would not achieve other goals.   These 5 principles must be balanced and maximized by the design. 

So Lucky Mining:

Adds Marketing / Promotion / Advertising
Adds more Validation nodes and Hash Security at a fraction of the cost.
Lowers margins on Centralized Hashing Operations and thus decentralizes control
Grows the community of interested individuals from those just looking for a predictable ROI to those interested in hope.

It comes at the cost that some people may not consider it 'fair'.  The point is Lucky Mining actually results in Less Issuance of new currency and thus lower inflation and higher security.  Therefore, it makes the coin more valuable to all shareholders.

Something like LukcyShares would be dubious to operate as a centralized service so decentralization is VERY important.

[Lighthouse]

If luckyshares were a currency, decentralization would be important but here I do not think it is.

It is more important to make sure the shares find their way into the hands of those who will most and best evangelize the DAC, so you actually don't want a 100% "fair" distribution.  You want a distribution that rewards people who are likely to work for the system.

[bytemaster]

I think Lucky Mining adds a cheap thrill for certain people that helps decentralize mining while vesting requires miners or the people that hire the miners to think long-term and thus reduce the short-term volatility of hash power.

I agree, are people seeking a cheap thrill the type you are trying to reach with an equitable distribution.  Are all bodies and participants equally valuable?  I don't think they are, and just as you're not trying to appeal to your own type personality with this lotto mentality, I don't think it will appeal to the types of people whom you actually want.  You want people who are smart and can evangelize the product without falling back on the "It'll make you rich" argument. 

I liked the long term vesting idea a lot more, and I like the idea of long term predictable payouts being one end of the spectrum and low odds high payout being the other end, but allowing the balance to be selected by the individual.   If you believe in the project and want to work towards a long term development goal with it, you would very much prefer the slow but reliable payout because it means you are guaranteed to have a stake in what you are working towards as opposed to the lotto "Maybe I get a lot, maybe I get nothing" approach.  With that approach you are only invested if you are lucky.  You don't want people maybe being supporters, you want evangelists who know they are invested.

+1000

Those who are mining in the Lotto are unlikely to ever win anything, and yet they are securing the network and adding to decentralization.   

So this is my appeal to the rational:  LuckyShares is as decentralized as we can make it and we have pushed down the margins on mining to the point that the value produced by a mining pool is below the cost of electricity consumed.  As a result, we can confidently state that LuckyShares has more hash security relative to its value than any other crypto-currency.   Those who seek to mine in a pool, or mine solo (without lottery odds) do so 'at cost' and thus mining becomes a means to anonymously purchase the currency on a subscription basis and not a profit-center for large farms. 

So without taking any value from from the currency, LuckyMining is able to increase security and enhance decentralization both of which should add value to the currency. 

Remember this isn't an either-or... we can have both.

[Pocket Sand]

I think Lucky Mining adds a cheap thrill for certain people that helps decentralize mining while vesting requires miners or the people that hire the miners to think long-term and thus reduce the short-term volatility of hash power.

I agree, are people seeking a cheap thrill the type you are trying to reach with an equitable distribution.  Are all bodies and participants equally valuable?  I don't think they are, and just as you're not trying to appeal to your own type personality with this lotto mentality, I don't think it will appeal to the types of people whom you actually want.  You want people who are smart and can evangelize the product without falling back on the "It'll make you rich" argument. 

I liked the long term vesting idea a lot more, and I like the idea of long term predictable payouts being one end of the spectrum and low odds high payout being the other end, but allowing the balance to be selected by the individual.   If you believe in the project and want to work towards a long term development goal with it, you would very much prefer the slow but reliable payout because it means you are guaranteed to have a stake in what you are working towards as opposed to the lotto "Maybe I get a lot, maybe I get nothing" approach.  With that approach you are only invested if you are lucky.  You don't want people maybe being supporters, you want evangelists who know they are invested.

+1000

[super3]

A lottery is not just lower Odds, it is 50% lower payout per hash.   Pools are all about optimizing the payout per hash and any pool that decided to use loto-mining would end up donating 50% of their hash power to the network.

People will always be able to install 'malware' on library computers, but it would be far more profitable if they installed traditional miners rather than loto-miners. 

Remember, the goal of loto-mining is to make it less profitable and therefore irrational to engage in.  However, all such gambling is irrational and people do it for hope anyway.    Every single Loto-Miner reduces the margins available to the traditional miners and if enough people decide to 'play' then mining will continue even though it is no longer a profitable business!

I'd go more for the partial hashes we talked about. That seems like a more simplistic route, and then incorporating lotto later once you are sure that works(maybe I just like the idea of partials better, still working on the same incentive principle here). Lets be clear we want to eliminate pools(centralization), and go for a solo mining that everyone can agree on. Like you discussed there are bottleneck issues with making a decentralized pool, but this kinda solves to an extent.

Then again trying to shoot down that same idea, seems like solo miners would only want to connect to other solo mining peers. Would partial matches flood the network as we try to establish them in the next block? Now you also have the problem of collisions as well. If node 1 and node 2 submit the same partial hash who decides who gets the reward. A pool will give you a REJECT, but how does the network say REJECT also?

While it is possible to offer rewards for including partial hashes, each partial hash would add at least 200 bytes to the block which means that if we designed the system to support 100 partial hashes then we would be using 20KB of every block for these partial hashes.  Assuming difficulty got to the point where the expected time to find a result is 10 years, then the expected time to find a partial hash would be 5 weeks and the reward would be 1/100 of a normal block.  All things considered I do not think the partial hash solution scales.

You can use a decentralized pool, but these pools suffer from latency issues in their own right or everyone would have migrated to a P2P Pool for bitcoin mining in the name of decentralization and lower fees. 

My goal is not to eliminate pools, but to motivate solo mining and add a new dynamic to the coin experience that adds value without removing any value.   If people like it then they use it and everyone else just ignores it.

I hope someone does find a more decentralized solution to pools though, but that might be a way off for the reasons you just mentioned. I am glad that we are trying out some new ideas to get people to solo mine. I think it might take a few of these to find the golden egg perhaps.

[ruletheworld]

I think Lucky Mining adds a cheap thrill for certain people that helps decentralize mining while vesting requires miners or the people that hire the miners to think long-term and thus reduce the short-term volatility of hash power.

I agree, are people seeking a cheap thrill the type you are trying to reach with an equitable distribution.  Are all bodies and participants equally valuable?  I don't think they are, and just as you're not trying to appeal to your own type personality with this lotto mentality, I don't think it will appeal to the types of people whom you actually want.  You want people who are smart and can evangelize the product without falling back on the "It'll make you rich" argument. 

I liked the long term vesting idea a lot more, and I like the idea of long term predictable payouts being one end of the spectrum and low odds high payout being the other end, but allowing the balance to be selected by the individual.   If you believe in the project and want to work towards a long term development goal with it, you would very much prefer the slow but reliable payout because it means you are guaranteed to have a stake in what you are working towards as opposed to the lotto "Maybe I get a lot, maybe I get nothing" approach.  With that approach you are only invested if you are lucky.  You don't want people maybe being supporters, you want evangelists who know they are invested.

[Stan]

I think Lucky Mining adds a cheap thrill for certain people that helps decentralize mining while vesting requires miners or the people that hire the miners to think long-term and thus reduce the short-term volatility of hash power.

I agree, are people seeking a cheap thrill the type you are trying to reach with an equitable distribution.  Are all bodies and participants equally valuable?  I don't think they are, and just as you're not trying to appeal to your own type personality with this lotto mentality, I don't think it will appeal to the types of people whom you actually want.  You want people who are smart and can evangelize the product without falling back on the "It'll make you rich" argument. 

I liked the long term vesting idea a lot more, and I like the idea of long term predictable payouts being one end of the spectrum and low odds high payout being the other end, but allowing the balance to be selected by the individual.   If you believe in the project and want to work towards a long term development goal with it, you would very much prefer the slow but reliable payout because it means you are guaranteed to have a stake in what you are working towards as opposed to the lotto "Maybe I get a lot, maybe I get nothing" approach.  With that approach you are only invested if you are lucky.  You don't want people maybe being supporters, you want evangelists who know they are invested.

Since it's possible to test both hypotheses at the same time, why not?  If the goal is to motivate a lot of people to let us use their computer's wasted CPU cycles to get a wider distribution of nodes, what difference does it make why they decide to contribute their excess computing resources?  Why not even build miners into screen savers, routers, and toasters? Toaster owners don't need to even know their's a crypto currency involved as long as there's some benefit to owning one.   

[Lighthouse]

I think Lucky Mining adds a cheap thrill for certain people that helps decentralize mining while vesting requires miners or the people that hire the miners to think long-term and thus reduce the short-term volatility of hash power.

I agree, are people seeking a cheap thrill the type you are trying to reach with an equitable distribution.  Are all bodies and participants equally valuable?  I don't think they are, and just as you're not trying to appeal to your own type personality with this lotto mentality, I don't think it will appeal to the types of people whom you actually want.  You want people who are smart and can evangelize the product without falling back on the "It'll make you rich" argument. 

I liked the long term vesting idea a lot more, and I like the idea of long term predictable payouts being one end of the spectrum and low odds high payout being the other end, but allowing the balance to be selected by the individual.   If you believe in the project and want to work towards a long term development goal with it, you would very much prefer the slow but reliable payout because it means you are guaranteed to have a stake in what you are working towards as opposed to the lotto "Maybe I get a lot, maybe I get nothing" approach.  With that approach you are only invested if you are lucky.  You don't want people maybe being supporters, you want evangelists who know they are invested.

[bytemaster]

I think you're fighting the tide on this one Bytemaster, the type of people you want to incentivize and compensate for paying attention are the ones who see the potential and want to be invested in the idea as they help bring it to fruition through their personal actions.  The problem that pools solve is the difficulty of knowing if your work (computer mining) is going to give you a payout because as the popularity of a coin increases (in this case very quickly) the choice to mine by yourself starts looking like a stupid thing to do. 

Yes, there are calculators that say you'll find a block every 8 days but that's a lot of faith to put into a fast moving currency and sometimes the odds don't go in your favor and the difficulty moves past you.  The point of Mining is to equitably distribute tokens that individuals imbue with value through their interest and want to further build the project. 

So the solution is to figure out how to let people join a global pool, operated by the issuing company who can collect a very minimal %, and pay people equitably for their contribution.  Then it truly is a fire and forget sort of operation, and as the operator you can determine if you want to allow cloud miners or if they should be off in their own pool using miners they create themselves.

Solve the pool problem by catering to the need that demands Pools be popular.

The point of mining is to facilitate consensus and make it expensive to counterfeit.    If you have a global pool operated by the issuing company then the issuing company could be taken down and kill the DAC. 

I have no problem with cloud operators per-say, I want to maximize the value of the DAC and that means maximize the value of the shares.  To maximize the value of the shares you would to maximize their utility and appeal and use them to motivate others to improve their value.   I think Lucky Mining adds a cheap thrill for certain people that helps decentralize mining while vesting requires miners or the people that hire the miners to think long-term and thus reduce the short-term volatility of hash power.