The Economics of Bitcoin Mining Centralization

[tokeweed]

Bitcoin mining centralization has been a point of concern in the community for a while now. People are worried that the growing size of mining firms will continue until one of them attains 51% or more of the network’s hashing power. Although a firm holding the majority of the hashing power would not inherently compromise the network, it would certainly centralize the creation of bitcoin and the confirmation of transactions. Such centralization opens the door for a 51% attack, in which a nefarious actor initiates a double spend. This particular attack is highly feared in the Bitcoin community, because a successful double spend would ruin Bitcoin’s reputation for being a trustless monetary system.

http://insidebitcoins.com/news/the-economics-of-bitcoin-mining-centralization/31833

[spartacusrex]

I'm one of those who thinks there will be a solution to this particular issue..

Let's play. (Hypothetically)

First - What would happen if it were possible to run a heat-efficient bitcoin mining chip on every android/iOS phone made. Not software, ASIC. Built into the phone itself. Would 1-5 billion people mining in a round-robin style p2pool crush the current mining honchos ? (If we assume the chips are the same, the mining powerhouses would need 1-5 billion chips. Seems a lot.. And the chips in your phone update as you buy new phones, of course.)

And..  

HARD FORK Mining Centralisation Fix Idea..

Take elements of p2pool and integrate them directly into the Bitcoin protocol.

On the the NEW chain :

Every block pays out to the last 144 block miners (one day of blocks).

Each miner can set a custom difficulty multiplier. A more difficult block obviously pays out more proportional to the difficulty increase. Incentivise the miners to win 1 block a day, but as difficult a block as they can manage, by increasing there stake in the payouts by 1-2% (Or some small number) if they are at 144x difficulty. (Any more than 144 and they do actually have 51% hash power so no point..)

Just as in p2pool, a miner's block is not worth more, in regards to chain selection, than another block because of the multiplier. That just means they get paid more.

This allows, and incentivises, more miners onto the chain. This is good.

And, as a bonus, the miners going for a harder block once a day, have to be connected to the network, all day. So this is also good for the network.

..Tear down ?
 

[NUFCrichard]

Bitcoin mining centralization has been a point of concern in the community for a while now. People are worried that the growing size of mining firms will continue until one of them attains 51% or more of the network’s hashing power. Although a firm holding the majority of the hashing power would not inherently compromise the network, it would certainly centralize the creation of bitcoin and the confirmation of transactions. Such centralization opens the door for a 51% attack, in which a nefarious actor initiates a double spend. This particular attack is highly feared in the Bitcoin community, because a successful double spend would ruin Bitcoin’s reputation for being a trustless monetary system.

http://insidebitcoins.com/news/the-economics-of-bitcoin-mining-centralization/31833

I thought the chances of a 51% attack were highes last year when some mining company, I forget who, almost got to 50%.  They said that they would not do anything to attack the blockchain though and since then the mining has become more evenly spread...

If someone is willing to spend massive amounts to get a 51% hold of mining, then double spend, they will just destroy bitcoin and have wasted their money..
That could be possible if someone, like a government, wanted to destroy bitcoin, but as an a idea to make money, it's stupid.

[sikaxchange]

i am of the opinion that we should allow the bitcoin centralization to get to it's peak maybe the 51% and then see how it goes maybe it would be stagnant dont know

[Jammalan the Prophet]

I'm one of those who thinks there will be a solution to this particular issue..

Let's play. (Hypothetically)

First - What would happen if it were possible to run a heat-efficient bitcoin mining chip on every android/iOS phone made. Not software, ASIC. Built into the phone itself. Would 1-5 billion people mining in a round-robin style p2pool crush the current mining honchos ? (If we assume the chips are the same, the mining powerhouses would need 1-5 billion chips. Seems a lot.. And the chips in your phone update as you buy new phones, of course.)

You'll either get 10khash or the phone will burn your pants
Forget that the phone will have to be always connected and the battery will last one hour while mining.

[Troonetpt]

The Mining Centralization have happened already, Everyone mine is out of date.
It is inevitable.
But the point is no one can keep their share forever, as you see last year this time G.hash share more than 40% hash rate, but today it's only have 3% share.

[BitUsher]

I am still hoping that mining comes in cycles of centralization-decentralization where asic appliances will be introduced to re-decentralize mining.

[Amph]

Bitcoin mining centralization has been a point of concern in the community for a while now. People are worried that the growing size of mining firms will continue until one of them attains 51% or more of the network’s hashing power. Although a firm holding the majority of the hashing power would not inherently compromise the network, it would certainly centralize the creation of bitcoin and the confirmation of transactions. Such centralization opens the door for a 51% attack, in which a nefarious actor initiates a double spend. This particular attack is highly feared in the Bitcoin community, because a successful double spend would ruin Bitcoin’s reputation for being a trustless monetary system.

http://insidebitcoins.com/news/the-economics-of-bitcoin-mining-centralization/31833

I thought the chances of a 51% attack were highes last year when some mining company, I forget who, almost got to 50%.  They said that they would not do anything to attack the blockchain though and since then the mining has become more evenly spread...

If someone is willing to spend massive amounts to get a 51% hold of mining, then double spend, they will just destroy bitcoin and have wasted their money..
That could be possible if someone, like a government, wanted to destroy bitcoin, but as an a idea to make money, it's stupid.

it was gigahash.io, and there were some double spending addresses as well, then they raised the fee to decrease the number of users

however there is a difference between farm with big hash that come from their own miners and farms with big hash that come from multiple users, the latter are not centralized at all

the first instead are the real problem, like those china farm...