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Author Topic: What are the risks to bitcoin if an entity gets the majority of mining power?  (Read 525 times)
Rabber
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December 10, 2015, 05:24:04 AM
 #1

This is a newbie question from a non-programmer. I'm curious about possible risks from well funded sources like large banks that would like work together to take bitcoin down. If they worked together to gain to become a majority of the miners, could they be a real threat?

I came across this on a site.


Threats As a Function of Mining Power

Here's the definitive table of known strategies mining pools may follow as a function of their hash power. Where fixes are known, we note them:



Hash power >50%

    Loss of decentralized trust narrative, inability to differentiate Bitcoin from competing technologies.

    Double-spends against 6-confirmed transactions are certain to succeed.

    Selected miner targeting: Pool can reject any selected block found by any competing miner.

    Selected transaction targeting: Pool can reject any selected transaction and keep it out of the blockchain.

    Selected address blocking: Pool can block Bitcoin flows in or out of selected addresses.

    Transaction Differentiation: Pool can deprioritize certain transactions and rely on other miners to mine them unless a (hefty) fee is attached.

    Fee Extortion: Pool can deny transactions from a particular address unless a (hefty) fee is attached to those transactions.

    Complete denial of service: Pool can ignore and orphan every single block found by competitors, thus stop all Bitcoin transactions.

http://hackingdistributed.com/2014/06/16/how-a-mining-monopoly-can-attack-bitcoin/

That last one sounds pretty bad. Actually, they all sound pretty bad.

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December 10, 2015, 05:55:18 AM
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From a brief read of that article, that article is incorrect on many things that a 51% attack can achieve.


   Loss of decentralized trust narrative, inability to differentiate Bitcoin from competing technologies.
A 51% attack does cause centralization, but the system would still be different from other systems like PayPal because that central power at any point could lose their power.


   Double-spends against 6-confirmed transactions are certain to succeed.
Only those initiated by the party that has the majority hash power. Since private keys are required to create transactions, only the person who holds the private key to an address can create another transaction like a double spend. The risk of a double spend is the same if the other person is not the money. Only the money would be able to double spend anything.


   Selected miner targeting: Pool can reject any selected block found by any competing miner.
While possible, that money would need significantly more than 51% to continue to keep producing blocks every 10 minutes and would need to outpace other miners, which it can theoretically do, but the others could all get really lucky


   Selected transaction targeting: Pool can reject any selected transaction and keep it out of the blockchain.
They could, and miners now do that too to low fee transactions. There is no good reason to not include a transaction as they will be losing the fee.


   Selected address blocking: Pool can block Bitcoin flows in or out of selected addresses.
No. They can potentially prevent transactions from being confirmed, but it is not required to have a transaction be confirmed for it to be spent from.

   Transaction Differentiation: Pool can deprioritize certain transactions and rely on other miners to mine them unless a (hefty) fee is attached.

    Fee Extortion: Pool can deny transactions from a particular address unless a (hefty) fee is attached to those transactions.
See above. Pools can do that now, but there is no incentive to do that.


   Complete denial of service: Pool can ignore and orphan every single block found by competitors, thus stop all Bitcoin transactions..
See above.

There is also no fix for this, it is a risk with bitcoin but the likelihood of a pool reaching an amount of hash power is very low. There simply is no incentive for miners to be malicious if they do achieve enough hash power to do damage. While yes it is feasible to pull it off, you need to keep in mind that miners spend a lot if money mining and mining profits are pretty low. If they were to prevent bitcoin from being usable, then they would not be able to exchange the bitcoin for fiat that they need to pay the bills. It is not in their best interests to make bitcoin unusable.

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