Bitcoin Forum

Upon my analysis and experience in the bitcoin ecosystem, I have discovered the flaws of Bitcoin, and I would like to hear your opinions about it:


1) Nodes don't get rewards from Mining

This is the biggest flaw that I can imagine. It was a basic assumption of satoshi that mining will remain decentralized since he assumed that 1 miner will be 1 node, and everyone will mine on his PC with the CPU. However the SHA mining alhorithm is not ASIC resistant and when ASICs became widespread, mining was centralized. This is not particularly bad because mining will either way get more efficient.

What is bad is that the nodes are not incentivized, and as mining is centralized. So that only the miners will be nodes in the future and hardly anyone will run a full node. Now because of this we cannot hardfork because the node count will shrink more and more. This really fucked up the entire bitcoin system, how can such fatal flaw not be obvious to satoshi?

2) Bitcoin mining is not ASIC resistant

As explained above, because of this mining gets centralized very fast. It will either centralize, but this way its too fast, and it's now in 1 political zone, which threatens bitcoin's existence.

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My Solution:
https://bitcointalk.org/index.php?topic=1730728.0

If you receive many payment, it's an incentive for you to run a full node. Why should it be free? If you want to be 100% sure about your payment and check yourself for it, why should you be paid by network to do it?  

From http://www.coindesk.com/how-to-save-bitcoins-node-network-from-centralization/ :


Every payment processor/merchant gains advantage from running a full node, that means thousands of node in the world.

They do get rewards. But the reward is zero. One should do more useful work for more reward.

There is no such thing as asic-resistance.

This is incorrect. Satoshi had this to say on the subject.

(Sauce) (https://bitcointalk.org/index.php?topic=532.msg6306#msg6306)

The scenarios are playing out as expected with an end game of a cartel of miners, users with web wallets and the occasional hipster running their own full node.

The idea of economic incentives for full nodes is an attempt for already committed early adopters, to squeeze a few crumbs from the miners' table in the face of the inevitable. In the end, most full nodes will be run by the miners so it is a zero-sum game.

And that is where I disagree with Satoshi...if that really was his intention, then he designed Bitcoin to centralize over time.

I've been working on a centralization resistant consensus algorithm for around 3 years now and its ready for prime time.   It gets rid of the wasteful scourge that is mining, and replaces it with a lightweight, efficient, low barrier to entry, node incentivizing algorithm instead called EVEI.

imho the biggest flaw is the fact that satoshi (whoever it might be) could still possess private keys to the 1kk wallet. its a sort of a trojan horse so to speak. we might never find out, but once that wallet moves..

First of all, that quote from Satoshi is predicting the centralization of Mining Pools and Mining Farms
in the future and not the centralization and loss of non-mining nodes. The burden he is referring to is the
difficulty increase in mining, not hardware capabilities. Satoshi does not address the question asked by the OP.

Because his original design was 1 CPU = 1 Vote, and he was blinded by that higher goal, he disregarded the
inevitable separation of the two systems (mining & non-mining nodes) due to different factors and thus failed
to design and account for a corresponding system to "incentive" the "transaction nodes" so to ensure a large
enough network for a truly attack resistant and globally decentralization verification network.

Your answer to the OP is essentially Satoshi designed a decentralized network only as a gimmick and intended to
make a centralized attack prone network within 3 years. Either you are correct and we are attempting to remedy this,
or you are wrong and reading more into Satoshi's words than even he knew at the time.

Your answer to the OP lacks imagination and assumes stagnation.

Everyone says that, but what is the wallet address or wallet addresses?


Lots of altcoins claim to be asic-resistant. I don't know if there is any fact to that (or only stating that the current asics won't be able to mine).

keep a full node requires resources. Volume and fast hard drive. Good internet connection.
So it would be good to get some reward for it.

Just too bad that we're going to centralization.
I think Satoshi gave us this technology, but we need to improve it.

ASIC resistance depends purely on the algorithm in play and its design.   You can't just make a blanket statement that there is no such thing as ASIC-resistance unless you know details of all algorithms past present and future.

For example, a "data hard" consensus algorithm, should there ever be such a thing, would be very ASIC resistant providing that the data set required changed for each consensus round.  The bottleneck then becomes IO.

ASICs are good at number crunching, not number fetching :)

Large mining pools appeared not because ASICs became widespread, it happened long before. It's not ASICs what makes people grouping in pools, it's that their share of total hashpower is too small.
Imagine a million of miners having equal hashpower mining Bitcoin (doesn't matter they use CPUs, GPUs, ASICs or some 'alienware'), it's still only ~144 blocks which they mine together in 24 hours. Individual miner still has only about 5% chance of finding a block in a year. That's why miners unite in pools. And they started doing so long before ASICs.
Today mining is more decentralised than it was before ASICs were introduced, when some pools (like Deepbit, BTCGuild) were dominating (each at its time), having around 50% and even more of total hashpower.

True.
However, I see "ASIC resistance" used more as a blanket term for the phrase "Is it more cost effective to mine my coin using general hardware as opposed to making an 'Application Specific Integrated Circuit', whatever that 'circuit' may be" and its variants. That is, a purely economic term. Of course, if you subscribe to the supposition that a "specific circuit" will always be better than a "general circuit" for the specific case it is designed for.

Cost has nothing to do with it. The meaning is established. ASICS scale by parallelism. If an algorithm is atomic and memory light then ASICS are a good choice. They only have a fixed number of gates and creating memory out of those gates uses a lot of them.

As an example. The current hash calculation needs only the hash states and a simple counter for the on-chip memory which can then be applied to a non-changing memory of transactions-a constant, if you will. This can easily be scaled to multiple hash calculations in parallel on a single memory list of transactions.

If, instead of a counter, the hash was calculated on a varying number of transactions (1 then 2 then 3 and so on) then this is not the case. Scaling up the hash alone yields the same hash if the transaction list is constant and in order to calculate the hash for each (1,2,3...) transaction lists would require a huge amount of resources which the ASIC is unlikely to have. This method would be ASIC resistant.

Agree to both reply's.
There is no such thing possible as asic-resistance, because people will always find way to bypass this anti-asic mechanism whatever that would be.
To the first point of 0 reward from running full node. There is reward, safe bitcoin network. You will see that when need arise, people will massively put new full nodes on their own expenses. Why? To secure bitcoin because they are either invested or admiring bitcoin technology.

DRAM is quite fetching :-)

Yea so basically in 10 years bitcoin will become a government supervized, central bank mining and node hosted currency with fractional reserve lending system patch integrated in 5 years. Good job folks!


And this sucks a lot, perhaps in a few years I will have to switch to Litecoin or something,because this is very bad.


But why is the majority of miners in Communist China?

Certainly private property will be very respected there when you have collectivized farming lol.

Bullshit, that is again the "common good" fallacy. People will never act for the best of the group's interest on their own.

People always act on their own self interest.

Why should I setup a full node that would cost like 100$/month with VPS, internet, electrucity, etc, when other people can do it?

Everyone thinks like that, and then nobody does it, except a few punks, but I doubt Bitcoin can sustainably survive on a few punks's altruism.

It should have had an incentivized node system, hey not a lot, perhaps give 1% of the mining profit to the nodes, it's not a big deal, but better then 0.


Nonsense,  people can just verify their transaction through 10 different random SPV nodes, that should be as accurate as a full node.

Besides if in the future some transaction verification system becomes available, then it's fucked.

Nodes will have 0 incentive to run, and the netwok will collapse.

You should not (unless you have reasons to do it)

It will not survive. Leave it.

I disagree, the decision to build specific hardware is a purely economic one - as it has been in all industries so far.
If a one percent increase in performance over generalized hardware is a cost effective move, specific hardware will be designed and built.

It is not true that there is no such thing as ASIC-resistance.

Algorithms can be formulated that are not simple to manufacture ASICs for, like the Cuckoo Cycle. The reasoning goes that the more difficult it is to make an ASIC, the less of an advantage it will have against general consumer-grade computers. On the flipside, the complication raises the barrier to entry of competing ASIC manufacturers, thereby potentially centralizing the ASIC suppliers.

More importantly, it misses the forest for the trees. ASICs are not the core reason for centralization of mining, it doesn't even appear to be a significant factor. The most significant cause is comparative advantage in energy costs, which is just as advantageous even if you had an ASIC-proof algorithm.

While it's strictly true that running a node is not rewarded, rewarding them would not aid in decentralization. After all, it's trivial to run more than one node in a centralized manner, and a reward would only encourage that behavior.

Centralization is evidence that operating a node is non-trivial and that centralization offers a significant advantage and reward.

Ideally, we would like to see the cost of mining exceed the block reward in order to drive out centralized high-overhead competitors, while the charitable miners remain, while simultaneously hoping that the Work is high enough to secure the blockchain. When the problem is phrased like that, it's apparent that ASIC-resistance and node reward won't get you there.

In order for this to happen, casual users must be willing and able to operate a mining node while investing trivial time and resources to do so. In this regard, ASIC-resistance could be useful because it could negate the need to purchase specialized hardware. On the other hand consumer-grade ASICs could potentially make POW easier to offload from their devices. Regardless, just like they aren't the most significant factor leading to mining centralization, ASICs are not the most significant reason nodes are not trivial to operate.

The elephant in the room is the size of the blockchain. For a casual user, it's slow and tedious to download and verify, and it takes up enough space to be annoying. There is also the problem that the software is still not settled and prone to potentially consensus breaking behavior, meaning a node cannot be left to run without any user intervention.

1.) Running a node and mining should be unprofitable.
    a.) Mining should be done charitably.
        a.) Providing work should be trivial and easy to get started.
            a.) Bitcoin's consensus code needs to be settled indefinitely.
            b.) The blockchain needs to become easier and cheaper to download.
        b.) Some sort of religion. (Lottery?)

ASIC-resistance, higher inflation, POW substitutes, and larger block sizes have all been proposed as ways to achieve a higher quantity of decentralized nodes. ASIC-resistance is at best an incomplete solution. The rest make the problem worse.

That's my 2 cents, anyway.

I was going to ask the same question today: Why full nodes don't get a reward for their support?

Because nobody pays them.

Because they are not important enough for the security of the network?

Nobody thinks about importance of anything. If you have an option to pay or not to pay - you will not pay. Point.

Because it is based on the idea of being Peer-to-Peer and just like any other P2P network peers are not thinking about money when they are sharing data with each other.

For example right now Ubuntu 16.04.1 torrent has over 4000 active seeds and even more peers and they are not getting paid to share this file like millions of other files they are sharing over torrent network.

Ok then on that logic why not just redesign the bitcoin network and stop paying miners.

And let;s just rely on the altruism of miners to setup million dollar farms to do the hashing.

If miners would not get paid then a lot of them would leave ,and it would be more decentralized so that everyone could mine with CPU, VOLUNTARILY FOR NO PAYMENT.

How about that?

-Either both miners and node dont get paid = voluntary work in the name of altruism
-Or both get paid = for profit business


You cant mix them, as it is contradictory.


Payment doesnt have to be material. Besides I can start up an Ubuntu Seed in 5 minutes, right now.

I have to wait at least 2 days though to setp a bitcoin node, since i dont have it installed and needs to be downloaded first.

I can

Yes. Mining is altruism, declared by Satoshi. This is not profitable buisness by concept

I agree with this statement.

It is possible to create a non-exploitable incentive node system, but it needs more thinking  
through of everything than some here seem to want to give attention to.

It is one thing to say it can't currently be done, it's another to tell people not to bother.

I think it will be the new holy grail race in Bitcoin. Blocksize and other such debates are
about financial and user pumping, but incentivized nodes are about the ensured decentralized
future, security, and non-regulatability of the Bitcoin network.
Without that, what is really the point in using bitcoin?

Some space can be reserved in blocks for transactions from node runners.
This can be enforced by requiring transactions in the reserved area to have proof of node.
Proof of node can be a scrypt-like system (look up entry corresponding to transaction hash, hash this with the transaction hash, look up entry corresponding to this hash, repeat, chech final hash against difficulty (should be hard enough to prevent spam, but not enough to tie up nodes)) over the block-chain, that requires having the entire block-chain to preform, but can be checked quite easily (about as hard as checking for double-spends on inputs). This would provide an incentive for businesses that want many transactions confirmed quickly with less fees to run a node.

Yep. (and if it did-- what would you run it on, your CPU is an asic too!)

https://download.wpsoftware.net/bitcoin/asic-faq.pdf


Then I just have one node and pretend to be thousands of nodes. You've just reinvented mining but in a cumbersome way, and failed to benefit the system.

If you have a node, you would tack on PoN to any transactions you care about (to you or away from you) and thus use your privileges to get them confirmed quick, but you would not have incentive to use your processing power to spam up the reserved space with transactions between strangers. A market for PoN may develop, but that would just incentivise nodes more.

This is a false dichotomy.

When one wants broadband to the home, one requires an access point. This is in addition to the LLC, fibre and all the infrastructure owned by the provider. Having an access point is a requirement to participate.. They don't pay one for having an access point. The same argument can be made for the required parts of the Bitcoin system and, indeed, it was with the first implementations where one had to have mining, full node and wallet.

So the choice isn't altruism or financial reward, it is a requirement to participate or financial reward for infrastructure support.

The problem is exactly the negation of that statement, you don't need a node to use bitcoin, there is little incentive to run one (I am not saying that everyone should be required to run a node to use bitcoin, that would reduce the accesability of using bitcoin).

You misunderstand. I am proposing that we make it a requirement to participate, just like the access point. Then all wallets are supportive of the network and the argument about finance vs altruism is moot.

This would just increase the digital divide, people with a poor internet connection and little hard drive space to spare would not be able to participate.
One of the nice things about bitcoin is its accessibility, an impoverished farmer can walk into a dilapidated shed, connect to the dial up connection with the crash-prone 2003 computer, and spend his hard-earned milli-bitcoins on a sack of grain.
Requiring users to run a node would turn bitcoin into an elitist system that can only be used by people with fancy computers, fast connections and large hard drives.

My PoN idea gives a privilege to node runners, but still lets others use the system, they just have to wait for their turn while the node-runners skip to the front of the line.

I thought the argument against this was "Moores Law means technology will be dirt cheap"? At least that was what everyone keeps saying.

However. I have hinted at a distributed block chain that would mean an on-disk size less than 1GB regardless of chain size meaning the concept of a full node as one that has to have the entire chain is irrelevant.

A CPU is not an Application Specific Integrated Circuit. It is application agnostic.

i386sx is not Application Specific Integrated Circuit compared with Intel Core i5
But Intel Core i5 is Application Specific Integrated Circuit compared to i386sx

Yes it is-- the circuit it implements is universal, meaning that it can emulate any other circuit.  But it's built exactly like a mining asic is, mining asics just are more optimized for that task and don't waste space for parts that aren't needed.

The term ASIC is a comparison to early "integrated circuits"-- devices that had many semiconductor parts integrated into a single chip, but still exposed them to the outside world as generic parts. An application specific part builds the application (like "computer cpu") into it to achieve much higher levels of integration.

Then by your own definition it is not "Application Specific". I think we will just have to agree to disagree on this one.

The real problem is if we did as you suggest then users would run their node only for transactions
and as soon as it is broadcasted and within a block, they would just shut down that node.

The real discussion by the OP is about having 24/7 full nodes that help distribute the security and
risk through global decentralization which is encouraged by directly incentivizing the transaction node
users. Miners are doing their jobs 24/7 and not intermittently. Nodes should be doing their jobs 24/7
as well, like guards on distant mountains keeping watch of their territory.

Average joe users do not need to nor should run full nodes, it is beyond their capabilities, but
full nodes should be incentivized in some way to encourage new capable people into the full
node field, so we can get the Bitcoin node network from 5,000 to around 50,000+.

An increase in legitimate 24/7 full nodes distributed worldwide is the goal.

Nodes are incentivised to stay online since if they restart, they will have to regenerate their NodeID and re-index the block chain. After an initial index this will be until at least 1 old checkpoint and at least 2 new checkpoints have been verified. The return will not be instantaneous.

So the nuisance of syncing the whole chain, which only increases in time, is the incentive not to turn it off?
Interesting, because I think that is one of the reasons why average users just use SPVs instead.

So what's the incentive for others, that currently don't run it, to turn it on in the first place?

One wouldn't have to synch the whole chain. Only back to the old checkpoint (which is already verified back to the genesis block from the initial start).

The incentive is that the on-disk size is less than 1GB regardless of total chain size.

If it can be programmed then it is not "Application Specific". It is not a relative term at all.
FPGAs blur the boundary slightly but are still not considered ASICs. FPGAs are often used to prototype ASIC designs.

About that ASIC flaw. I am not observing Zcash - this coin has memory-hard proof of work known as Equihash and apparently it is coded in a way to prevent any kind of ASIC mining.
I will be nice to see how mining of this coin will evolve and whether it will be truly decentralized after some time - then we will compare it to bitcoin mining and draw conclusions.

Thinking a little more about this. It would actually solve the block size issue.

So. Instead of an incrementing counter being used to generate a new hash of the transactions on each round. The counter is removed and the order or number of transactions is changed. Although a minimum block size of 1MB could be retained for spam protection, miners would be free to use an unlimited block size. In reality there would be an optimum based on the technology used, the fees and the method (reorg/add).

It could also be argued, that miners are incentivised to use larger than 1MB blocks to gain more fees (higher tx throughput) and the spam could become valuable, in the absence of larger paying transactions, to generate their hashes. The minimum 1MB block could no longer be required except for a guaranteed minimum throughput. Miners could become ravenous for any transaction including those that are zero fee.

Of course. This would require a hard-fork and obviate all current ASIC miners  ;D

Best comment over here, i'll put it on first post.

Actually most nodes have low speed internet connections as well. That is a big drawdown.

Would a hardfork be feasible if the average internet bandwitdth capability of the nodes would increase?

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Currently 1 of the arguments against the 2mb block increase is the number of nodes that have crappy internet. But if they would have better internet, would the hardfork be feasible?

Its seems to be working well for Dash.  Perhaps the number of these nodes can be limited as test.

DASH is not decentralized it has those masternodes and crap like that. I dont think its resilient against a huge enemy.

Node rewards is a topic I've mentioned many times, and the only solution I could think of was to make it possible for nodes to become miners. Clearly this is not viable. Neither is taking a part of the transaction fee - that would really complicate the processing, and raises the issue of the value of the 1,000th confirmation of a transaction. Some nodes could gain some value from their associated services. Blockchain information sites could run some advertising, and so could wallet recovery and security services. Another area is the operation of sidechains.

What other 3rd party services could be run to earn rewards in return for running a node?

That is fake altruism.

Just wait until some 3rd party will provide hosting services for those kinds of businesses, sort of like how you can buy amazon hosting or whatever instead of setting up your own server farm in your firm.

The number of nodes will drop drastically, altruism can't sustain an economy, wonder why communism doesn't work, this is why!


Only capitalism is sustainable, and for that you need profit incentive, Bitcoin will fail in the longterm without that.  :(

The point is that you guys are a bunch of communists who think that Bitcoin can survive on the altruism of people, without any profit motive at all.


But people dont give a shit about Bitcoin or the full nodes. Most people already prefer using lightweight clients (me included), because they dont get any benefit from running a full node, in fact it would be a big hassle to run a full node. So they get negative profit from it.

People never do things that are losing them money, this is the first rule. And just for the "greater good", nobody will sacrifice their money, voluntarly. Anyone who thinks that people will selflessly sacrifice their money and bandwidth for Bitcoin is naive, brainwashed in communist ideology.


People are selfish, this is the fundamental truth, and people dont care so much about full nodes, that they infact rather use centralized mobile app wallets with no privacy whatsoever and no control over private keys, instead of running a full node and paying for electricity, bandwidth, and consuming all those computer resources.



If people would care for Bitcoin, then you would have atleast a 80%-20% user node distribution, we would have minimum 1,000,000 NODES, instead you have 5000. Haha stupid communists thinking that people will give away money for free!

One day, an altruist will arise, who will bring balance to the system, through incentivization.

If you want to play big in bitcoin, either with pure investing or mining, you just have to run enough own nodes in order to ensure the safety of your bitcoins.

If our world will adopt bitcoin in big size, than distribution comes back and node and miner numbers will be sufficient.

This is just the beginning. Take your popcorns and wait. Bigger problems are in the scaling!

This problem dirrectly affects scaling. If the node count is not incentivized then block size cant be increased.

that's right  :D :D :D

bump anyone wants to discuss this?

There is no such thing as ASIC resistant. Some algorithms try to do this by being memory intensive but that will fail because GPU farms can still provide sizeable hashing power.

You can make ASICs harder to manufacture, i.e scrypt ones are more difficult than SHA256 but still... These are not the only flaws, purists wanting to keep 1MB blocks forever or scale to unlimited size or have a band-aid fix of a one time increase are in my opinion deluded, but that's my own opinion. One of my indian clients is struggling to give me daily payments of my articles due to TX fee size, this is becoming a problem for Bitcoin. No one has considered countries which do not have a lot of money, a 20p TX fee is too much for example. Now we are switching to every few days which I am fine with, if this carries on we may move to Litecoin for a more clear blockchain.


Segwit is the best option for those who wish to run full network nodes even though it takes more power, imagine unlimited having 64MB blocks? This wont even come close to visa or mastercards transaction volume but it would make blocks insanely hard to propagate and store.

ASIC resistance is a myth, you can make a dedicated chip for anything if theres enough desire and someone with the cash decides to do it, design it and have a foundry make it for them. You can make it harder and less cost effective (i.e scrypt and cryptonight) A CPU is simply a chip designed to do Multiple tasks, a GPU is like a CPU which can do many SINGLE tasks of one's choice, one at a time, an ASIC is a chip designed for a SINGLE task, no other task can ever be done or adapted for it, but it can do it better than the other two. For example if Bitcoin crashed and no sha256 coin took its place, all the ASICs become a doorstop. This can be designed for any particular task, some ASICs can be used for video decoding if desired for a single algorithm. Cheap MP3 players would have an ASIC to decode the MP3s. Someone designed an ASIC to crack 64 bit DES keys.

But slowing down the research is he point not to stop it. If you make ASIC chips very expensive to research and manufacture then the centralization will halt.

Someone smater/better than you came up with asics and is rich now. Too bad for you. Anyways how do you suggest we fix the flaws you pointed out? You're free to make an altcoin anytime you want (or are you just bitching but have literally no abilities to change the code at all?). Either way, you fix it since you're obviously smarter than the people trying to do it right now.

making bitcoin do scrypt in the hopes of averting asic farms is futile.

it would take just a few months to make one and we would be in the position we are now in, in 6 months
the reason no one is bothering with scrypt asics is not technical. its economics.

litecoin doesnt have the same utility as bitcoin. no one cares about it much. so no on cares to make a scrypt asic.
the price of litecoin is crap, being able to spend litecoin is crap. so no on is bothered.

but if bitcoin went over to scrypt. people would be bothered and see the benefit of doing it. so it would happen quickly

I'm not really into the technical side of Bitcoin at all. But am I wrong to think that when a Bitcoin miner mines some bitcoins, that he gets to keep them? If he keeps them, aren't they enough reward when he cashes them in or buys product with them?

Please explain very briefly, to the point, if this thinking of mine is wrong.

8)

Unfortunately this altcoin is dead but it seems completely asic resistant as the mining is kind of like a captcha and is human mineable only.

https://bitcointalk.org/index.php?topic=1445528.0

Forget the fees for transacting in Bitcoin. Do it by supply and demand.

Let a miner get his fee rewards ONLY in the bitcoins he mines. If this isn't enough for him, what will happen? He will quit mining. Then the difficulty will come down so that he will be encouraged to start mining again.

We don't need any stinkin' fees. They only serve to make the whole Bitcoin thing a more centralized thing.

8)

Oh boy why cant people argue logically?

I am not against ASICS or ASIC makers. I am against centralized mining.


I have no problem with the miners nor the chip makers, the problem is that too much power is in the hands of too few.

And that is precisely because the mining in BTC is too easy. I even wrote a paper on this, how to replace mining with CAPTCHA system:

https://bitcointalk.org/index.php?topic=1730728.0