Fixing Bitcoin's 2nd big issue..

[spartacusrex]

Blocksize is the 1st issue.

That's not what this post is about. There are lots of people saying lots of things, and eventually, something will happen and this issue will be fixed. Of that I have no doubt.

But there is another issue. One that does not seem to have any, let alone many solutions being put forward.

That is the issue of mining centralisation.

From a 'technical' point of view is there anything that can be done ? (There has been discussion of this before, but not for a while.. thought we could revisit /re-examine)

Well.. How about this :

Currently miners are incentivised to mine every block. The more blocks they find the more they get paid. Simple.

Therefore, a miner is happiest if he is paid every block.

This doesn't leave much/any room on the blockchain for smaller miners, who may through cunning and guile become bigger actors if allowed to continue. They can only continue by joining pools, and boom!, we start seeing centralisation again.

What we need is a chain that actually doesn't incentivise miners to find every block.. can this be done ?

Well - P2Pool had a nice solution. It allowed miners to increase their individual difficulty, so they were actually looking for even harder blocks, and when they found those, they would be paid EXTRA (proportionally to their extra work).

In blockchain terms you could do this :

1) Every block that is found also includes a field (greater than 1) that is the extra proportional difficulty a miner chooses for his block. So if you have an individual difficulty of 2, your blocks are twice as difficult as a regular block. So a miner that was finding a block every 10 blocks, would now find one every 20.

2) Every block that is found, pays the last 144 miners (1 day's worth - could be more). Proportionally based on the individual difficulties. So a block that is twice as hard gets paid twice as much as a block that is normal difficulty. There are still only 25btc (or whatever) per block, but that amount is divided up. All the difficulties are proportional to each other.

3) A Miner makes EVEN MORE for finding a harder block. Say up to  1% if he chooses a difficulty of 144. (This is to be decided)

The point is, that now, miners need only find 1 block per day, and they will still be paid every block.

AND - if they are looking for harder blocks they will actually make slightly more, but not a lot more. So they are incentivised to do it. Why not.

This way there is lots of room on the chain, for lots of miners. In a perfect world, 144.

From there, new miners may rise, and be able to survive, in the dog-eat-dog blockchain-miner's world.  

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[DumbFruit]

You're begging the question by assuming the last 144 miners are different entities and so haven't addressed the problem you correctly observed is separate from the block size issue.
In other words, if we can assume the last 144 miners are different, then you've assumed the problem has already been fixed to that extent, and so your solution couldn't be inside the scope of the problem according to your own assumption.

There is a paradox in Bitcoin that we want nodes to be trivially easy to run while also providing a substantial amount of Work. I suppose the goal should be for mining to be unprofitable, to keep big entities at bay, and instead many individuals need to perform the service charitably.

[spartacusrex]

hmm.. sorry.. not sure I get what you are saying..

Yes - I am assuming the last 144 miners are different entities. Or at least would like to be. Since :

Using this system, finding 10 blocks at Level 1, is less profitable than finding 1 block at Level 10.

Therefore, I would say that all miners would try and find as few blocks as possible per day, and make each block as hard as possible.

So there would be no point to a miner splitting himself up and trying to find blocks as separate users. He makes more as one miner, finding one block, than as many finding many.

[DumbFruit]

So there would be no point to a miner splitting himself up and trying to find blocks as separate users. He makes more as one miner, finding one block, than as many finding many.

If it's profitable for smaller miners to "split up" and mine these less difficult blocks, then A Fortiori it's going to be profitable for a centralized miner to mine them. So you haven't shown how this is going to prevent a centralized miner from mining all blocks in precisely the same fashion as they do so absent the protocol.

[spartacusrex]

So there would be no point to a miner splitting himself up and trying to find blocks as separate users. He makes more as one miner, finding one block, than as many finding many.

If it's profitable for smaller miners to "split up" and mine these less difficulty blocks, then A Fortiori it's going to be profitable for a centralized miner to mine them. So you haven't shown how this is going to prevent a centralized miner from mining all blocks in precisely the same fashion as they do so absent the protocol.

??

It's not profitable for individual miners to split up. Big or small.

[DumbFruit]

So there would be no point to a miner splitting himself up and trying to find blocks as separate users. He makes more as one miner, finding one block, than as many finding many.

If it's profitable for smaller miners to "split up" and mine these less difficulty blocks, then A Fortiori it's going to be profitable for a centralized miner to mine them. So you haven't shown how this is going to prevent a centralized miner from mining all blocks in precisely the same fashion as they do so absent the protocol.

??

It's not profitable for individual miners to split up. Big or small.

So it's more profitable to be a single big mining entity.. So what were we debating again?

[spartacusrex]

Ah.. I now see what you are saying..

The extra 1%..

I'm not so sure mining operations would give up their independence so easily, for what would probably be much less than 1% increase in revenue.  ( you need to be 144x difficulty for that )

At twice difficulty you would only make 0.014% more. Hardly worth jumping ship for.

If you removed that extra incentive, a miner would make the same whether they went for harder blocks or not. Whether they split up or not. But you couldn't tell.

Would miners still go for less blocks, harder blocks, if they made the same amount? If it were just for the health of the network. Doubtful..

[tromp]

Using this system, finding 10 blocks at Level 1, is less profitable than finding 1 block at Level 10.

Suppose there are equal numbers of level1 and level10 miners and no others.
Let the level1 block reward be 25BTC, and the level10 one be 250BTC,
each spread out over the last 144 blocks.

The expected payout for a level1 block is then 1*25BTC/144 + 143*(10/11*25BTC+1/11*250BTC)/144
= (25BTC/144)*(1+143*20/11) = 25BTC * 29/16.

For a level10 block it is 1*250BTC/144 + 143*(10/11*25BTC+1/11*250BTC)/144
= (25BTC/144)*(10+143*20/11) = 25BTC * 30/16.

Finding 10 level1 blocks is clearly WAY more profitable.

[spartacusrex]

Using this system, finding 10 blocks at Level 1, is less profitable than finding 1 block at Level 10.

Suppose there are equal numbers of level1 and level10 miners and no others.
Let the level1 block reward be 25BTC, and the level10 one be 250BTC,
each spread out over the last 144 blocks.

The expected payout for a level1 block is then 1*25BTC/144 + 143*(10/11*25BTC+1/11*250BTC)/144
= (25BTC/144)*(1+143*20/11) = 25BTC * 29/16.

For a level10 block it is 1*250BTC/144 + 143*(10/11*25BTC+1/11*250BTC)/144
= (25BTC/144)*(10+143*20/11) = 25BTC * 30/16.

Finding 10 level1 blocks is clearly WAY more profitable.

No. There is no 250btc reward for level 10 miners. There is just the same block reward for everyone.

The 'levels' are all relative to each other.

Level 10 miners make 10 times more than level 1 miners. But there is only the usual 25btc per block to share.

If all the miners are level 10 difficulty, they all make the same, just as if they were all at level 1.

[PHP.guru]

the only thing I'm sure is that the more miners the best it would be. I cannot imagine bitcoin running only on few centralized miners-"institutions" ...

[eddie13]

I suppose the goal should be for mining to be unprofitable, to keep big entities at bay, and instead many individuals need to perform the service charitably.

I agree with this somewhat, and think that it is exactly where we are headed..

[spartacusrex]

the only thing I'm sure is that the more miners the best it would be. I cannot imagine bitcoin running only on few centralized miners-"institutions" ...

I agree.

And to make more miners take part, I am saying you need to let more miners onto the main chain.

Mining as part of a pool is not the same as mining as an individual entity.

One is trust free, one is not.

So, DumbFruit's astute comments about everyone merging into one massive mining pool so as to maximise profits, I think, has some caveats.

In the system described in the OP, a mining operation that manages to get on the main chain once a day, gets paid every block. AND doesn't need to trust anybody.

That is why the EXTRA incentive I mention, up to 1% IF you are at 144x difficulty, is small.

Just enough for an individual mining operation to do it, thereby allowing more miners on chain, but not enough to entice you away from your trust free mining setup, to become a pooled miner.

[spartacusrex]

So not a lot of action here..

Has anyone got any other ideas about how to combat Mining Centralisation.. ?

Because trying to get the miners to fork bitcoin in a way that will make mining less profitable, as some have stated.. isn't going to happen..

[spartacusrex]

Ho hum.. just talking to myself here..  

How about this :

Make it so that the miner's centralised hash power can't compete with the masses.

..

There are 1 billion android phones out there.

If Android phones (unsure if Apple would jump onboard with this..) started to come out with heat efficient, low power, mining chips and excellent low-bandwidth mining pool integration, would that help..

I'm not up on how powerful a small SHA256 chip is at the moment.. Can someone who knows chip in.. ?

Do 1 billion times that number amount to more than a hill of beans in this crazy bitcoin miner's world ?

If so, the pool operators, would make their cut (and if using the original OP scheme there could be many of them), but the Hashing would be left to the users..

[tromp]

Ho hum.. just talking to myself here..  

How about this :

Make it so that the miner's centralised hash power can't compete with the masses.

..

There are 1 billion android phones out there.

If Android phones (unsure if Apple would jump onboard with this..) started to come out with heat efficient, low power, mining chips and excellent low-bandwidth mining pool integration, would that help..

Phones already have heat efficient, low power, mining chips: DRAM.

You just need to use a PoW for which reading and writing billions of bits at random locations
forms the bottleneck...

[NUFCrichard]

Ho hum.. just talking to myself here..  

How about this :

Make it so that the miner's centralised hash power can't compete with the masses.

..

There are 1 billion android phones out there.

If Android phones (unsure if Apple would jump onboard with this..) started to come out with heat efficient, low power, mining chips and excellent low-bandwidth mining pool integration, would that help..

I'm not up on how powerful a small SHA256 chip is at the moment.. Can someone who knows chip in.. ?

Do 1 billion times that number amount to more than a hill of beans in this crazy bitcoin miner's world ?

If so, the pool operators, would make their cut (and if using the original OP scheme there could be many of them), but the Hashing would be left to the users..

A comment about your idea.  Would that not mean that some of the major miners would start mining blocks less frequently, leaving the majority of blocks to be mined by an even smaller number of miners, should they choose to mine at the lowest difficulty/reward?  That could result in more consecutive blocks being mined, with the dangers inherent to that increasing too.

It's hard to stop centralization, large miners are basically self selecting, i.e. somewhere with free electricity and good internet. What Bitcoin need is something like in a PoS coin, where there is a disadvantage or lull after mining your last block. I have no idea how that would work though.

[cjmoles]

Well, as long as we're using our imaginations here, I might as well throw my wild thoughts in too.  Why not just change the whole mining incentive idea into one that is more "lottery" based.  One where there is no advantage to pointing more hashing power at the chain but one based on just running a full node.  One where it's not who finds the block that's rewarded but some random node that gets the reward....It seems like that would encourage more participation; therefore, decentralizing the hashing power.  A larger distribution of small chunks of power could still provide the power necessary to run the network....I'm sure there are a lot of problems with that idea but why not throw some brain cells at them?

[digaran]

Bit coin has a BIG issue that is quantum computers, and if anybody says there are none then they are blind.
How ever I think that quantum computers consume a lot of electricity to ever be profitable for them to mine bitcoin.
But every day goes by we come closer to solving that issue and then only 3 big companies become bitcoin network owner since only they have quantum chips.
And for other issue, in centralized currencies usually banks destroy old and used money and cut down a lot of trees to make new money.
But I guess bitcoin is worse than them to force people to use a lot of natural sources to mine bitcoin.
What happened to the idea to make the world a better place not to compete and see it destroyed even faster.?

[bob123]

Quantum computer are a problem for btc. thats true.
But it still need quite a lot of time until quantum computers are invented.

[tromp]

Quantum computer are a problem for btc. thats true.
But it still need quite a lot of time until quantum computers are

made to scale.

Fixed that for you...


Btw, quantum mining is a tiny problem compared to being able to steal money from any address that's ever spent money,
by using Shor's algorithm to recover the private key from the public key...