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1  Bitcoin / Development & Technical Discussion / Pool shutdown attack on: May 28, 2011, 10:50:16 PM
I just thought about one possible attack that could potentially disrupt block generation and potentially halt transaction confirmations. This could also happen by accident, if many of the largest mining pools were to shut down (e.g., by a hostile goverment).

Because of the increasing difficulty in block generation, bitcoin is moving towards an ecosystem of few large mining pools, which control most of the computation speed of the network. They are also highly centralized in nature. I think there is a risk associated with this.

If I understand correctly, the difficulty adjusts every N generated blocks. Now what if this difficulty has been adjusted to a very large value, and then suddenly most of the computing power is suddenly removed, e.g., by several of the largest mining pools shutting down. This would have the effect of significantly slowing down block generation rate (as most of the computing speed has been removed from the system), which would slow down transaction confirmations to a grinding halt. Many of the users in the pools have fairly slow hash rates, so they would most likely not start solo mining, as they would not see a steady income of bitcoins.

Has anybody though about this? Is there a safety mechanism to readjust the difficulty in case no blocks are generated in some period of time?
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