For those who think that Bitcoin is ruled by miners

[theymos]

I'm often frustrated that a lot of people think that Bitcoin is absolutely ruled by the majority of miners, and that miners are kept honest only by various magical incentives. This is false, of course, but for those who believe it, I have a proposal for a far better new cryptocurrency:

The cryptocurrency has two chains, the mining chain and the transaction chain. The mining chain works just like Bitcoin except that it has a target time of 6 hours between blocks, and these blocks don't contain any transactions. Like Bitcoin, miners who mine a block on the mining chain get some coins. Say that the most recent block on the mining chain is MBlock 0. The miners who mined MBlocks 21 through 60 are designated "transaction signers".

To send a transaction, you create it, sign it, and send it to all of the current transaction signers. (In their blocks, signers will publish a public key and some IP addresses for contacting them.) If the transaction is valid, the signers will sign and date the transaction and return it to the sender. Signers get a small fee for this. The sender then gives the signed transaction to the recipient directly. The recipient knows it's valid because it's signed by a majority of the current transaction signers.

To keep track of the current ledger, the miners maintain amongst themselves a no-PoW transaction chain, which could just be one transaction per block. Since all transactions will be signed and dated by a majority of transaction signers, there can be no ambiguity about the correct ordering of transactions. Double-spending is impossible unless there's tampering by miners.

This has several advantages over Bitcoin:
- Transactions are always confirmed in seconds, and once confirmed they always have the maximum level of security (no need for a variable number of confirmations).
- End-users just need to download the mining chain's headers, which will be only a few MB in total, plus the most recent couple hundred full mining chain blocks, which will be another few MB. Non-miners only need to download their own incoming transactions.
- Since only miners need to maintain the current ledger info and see global transaction traffic, this is far more scalable than Bitcoin.

As far as I can tell, this network would have exactly the same level of security as a hypothetical Bitcoin network in which miners have 100% control over everything. For those who believe that Bitcoin is ruled by miners in this way, I put forward the following questions:

- If Bitcoin was intended to be ruled by miners, then why didn't Satoshi design Bitcoin as I described above? It'd be far simpler and better.
- If you see any problems with the above design, why don't they apply to your view of how Bitcoin works?
- In this design, what incentive do miners have not to collude together in order to create more coins than originally planned, or to steal coins from people? Maybe they wouldn't want to risk causing people to lose faith in the system, but whenever there is any possible justification for such action (deflation, stolen coins, etc), why wouldn't they jump at the chance?
- In the above design, what is the point of the mining chain at all? Wouldn't it be better to carefully select 20-40 extremely trustworthy entities to do the signing? In light of this, how do you justify any of Bitcoin's design?

In reality, Bitcoin is not ruled by miners because full nodes will ignore blocks that actively break the rules, no matter how many miners support such blocks, and full nodes can (and must) change the PoW function if miners are maliciously blocking or reordering transactions. It is absolutely essential for Bitcoin's security that a large chunk of the economy be backed by full nodes, or else Bitcoin devolves into a particularly inefficient version of the cryptocurrency I described above.

[franky1]

lol

well i think you are proposing a second database where each transaction accumulates upto 6000 signatures (because there are 6000 nodes) making a transaction chain bloated.

looks like you took a pinch of Liquids concept and a bit of Weak blocks concept. and tried to make it sound like something that would work.

but practically it wont work and would cause more issues, rather than benefits.

[theymos]

but practically it wont work and would cause more issues, rather than benefits.

I'm not proposing this. I'm putting forward a system that is to my mind clearly broken, but then I claim that this is no different from the hypothetical Bitcoin in which miners have ultimate control, which is how a lot of people believe Bitcoin actually works.

well i think you are proposing a second database where each transaction accumulates upto 6000 signatures (because there are 6000 nodes) making a transaction chain bloated.

Only up to 40 distinct nodes are selected to be signers at any one time, and only 20 of them actually have to sign any particular transaction.

[franky1]

so 20 signers.....

lol now your centralizing your idea.. way to go, you just backtracked into a worse concept then bitcoin.

but even with 20 signers.. thats 20 signatures per transaction. again think about bloat..
if you are now revising your idea to say that the transactions that hit the 6hour "main chain" wont include the 20 signatures to reduce bloat on the main chain. then there can be some manipulation occurring in the middle due to the lack of need of 20 signatures in the main chain. which renders the 20 signatures effectively useless in the end.

also 6 hour blocks on main chain.
think about it.. bitcoin averages 2500tx every 10 minutes. thats 90000 tx every 6 hours.. which for best security purposes should include all the signature data too.. now those blocks will be more then just a few MB..

i think peer-confirmation (liquids concept) has its place if there are only 20 businesses that want to privately trade their 'reserves' collectively, but as a concept for controlling millions of peoples funds instead of the 20 businesses 'reserves', is risky and very much centralized

now lets get to some other points.
you mention bitcoin miners "stealing coins" ... im guessing you forgot the whole security of private keys that make that practically impossible.
you mention bitcoin miners ignoring transactions.. im guessing you forgot that the only transactions that get dropped from mempool are ones that dont meet the "fee market price" and linger in mempool too long.. which can be solved by allowing more buffer space per block to add more transactions per block to reduce the fee war, so that more transactions get added without a fee war or 12-48 hour delay/drop off.

im going to presume you will suggest that its the miners causing the fee war for profit. yet its not. its the blocklimit. i know i know you will twist the argument some more to blame miners in some other way, but the short and curlies of it is that transactions are not delayed or dropped and people dont have coins stolen due to miners..

im guessing you might be trying to think of a way to highlight "empty blocks" scenario as a ploy to push your rhetoric. well if you look at the empty blocks you will see the timing of their solutions is under 2 minutes. this is because they have been "lucky" to solve a block before they have even had a chance to completely verify the previous block to know which transactions remain unconfirmed to then add to the new block.. this is not deception this is just starting a new block as soon as a competing solution is broadcasting rather than working on old data while they verify the competing solution is valid or not

the only issue about miners is the racist mindset that somehow 1.2billion people in one country must be somehow colluding together. yet i didnt hear you cry the same racist cries when america dominated the mining arena.. a couple years ago.

the way to solve the racist saga is in 2 clear and defined ways
1. stop being racist.
2. get american/european companies to make cheap mining rigs to run, instead of buying them from the chinese at retail prices. then we wont be handing the chinese free hashing power which they buy through the profits on the retail prices.

by this i mean. when bitmain sells a rig for $1000 to the west the build cost is maybe $200.. so for every rig the west controls china is now running 4 of their own, literally paid for by the west but not control or owned by the west. so if the west want to dominate again. they need to build their own cheap rigs to compete again

[HCP]

You had me confused there for a second... being relatively new to the cryptocurrency world... and will all the Altcoins popping up everywhere, I actually thought you were seriously proposing a new "far better cryptocurrency"... haha

Thankfully I did more than read the first 2 paragraphs before launching into a "You're crazy, that's totally broken" type rant...

I think though, that a lot of people overestimate how much influence the miners actually have on Bitcoin... plus the added bonus of baseless fears/racism/xenophobia related to a large part of the mining being done by "The Chinese"™.

It seems pretty logical, that the miners need Bitcoin to work, just as much as we'd like Bitcoin to work. They get coins from doing a lot of the grunt work, but if no one is using or wants these coins, all their work is effectively worthless... They have a big enough vested interest for that to be their incentive to not mess with the system. Likewise, if they all disappeared tomorrow, then it is easy enough for other people to pick up the slack and keep the system going.

@franky1, I think you missed the point of the OPs post... he isn't blaming miners for anything... he is trying to point out (albeit in a slightly obtuse way) the common misconceptions of people who think that Bitcoin is run/controlled by the miners... when clearly, it isn't...

[Decoded]

I may or may not have fueled the idea of the system being controlled by miners 

But isn't it true? For things like hard forks, miners have control. If they decide to move or stay, whatever network that will have a higher hashing power will end up being the favoured one by users?

[franky1]

@franky1, I think you missed the point of the OPs post... he isn't blaming miners for anything... he is trying to point out (albeit in a slightly obtuse way) the common misconceptions of people who think that Bitcoin is run/controlled by the miners... when clearly, it isn't...

i didnt miss the point i just didnt (for once) want to get into the debate about how developers vetoing expansion idea's have more control thus making the users limited in their choices/abilities.. and instead just wanted to address the 'miner' issue the op was crying about

[franky1]

I may or may not have fueled the idea of the system being controlled by miners  

But isn't it true? For things like hard forks, miners have control. If they decide to move or stay, whatever network that will have a higher hashing power will end up being the favoured one by users?

for a hard fork to succeed the USERS need to be running an implementation that accepts the hard fork, otherwise it gets instantly rejected. thus miners will not hard fork unless they are sure USERS will accept the hard fork (research: consensus).. if users are not accepting them then miners are spending $$$$ big money mining blocks that are rejected where rewards are unspendable.

so ofcourse miners wont hard fork with a large orphan/reject risk.

[Xester]

I may or may not have fueled the idea of the system being controlled by miners  

But isn't it true? For things like hard forks, miners have control. If they decide to move or stay, whatever network that will have a higher hashing power will end up being the favoured one by users?

for a hard fork to succeed the USERS need to be running an implementation that accepts the hard fork, otherwise it gets instantly rejected. thus miners will not hard fork unless they are sure USERS will accept the hard fork (research: consensus).. if users are not accepting them then miners are spending $$$$ big money mining blocks that are rejected where rewards are unspendable.

so ofcourse miners wont hard fork with a large orphan/reject risk.

The author will help many users who are worried that bitcoin has control over bitcoins because they own the largest mining farms in the industry of bitcoins.

As you have said there are two sides of the coins the users who are making transactions and the miners. If there are no transactions then miners will go bankrupt and if there are no miners transaction will took a long time or not process at all.

[Quickseller]

As far as I can tell, this network would have exactly the same level of security as a hypothetical Bitcoin network in which miners have 100% control over everything.

I disagree:

*It would be much less expensive to attack the network via a spam attack, which will result in a larger number of successful double spend attacks -- even if there is no hard coded transaction volume limit, miners will self-impose some limits due to the costs of signing transactions, and the costs of broadcasting transactions.

*The blockchain bloat will result in higher transaction costs, which will push people into using more off-chain services. The prevalence of off-chain services will entice scammers to open their own services, which will result in additional financial theft/loss

*This will give power to mining pools, not miners. A pool acting maliciously will have control over Bitcoin for a very long time under your proposial, while if today's miners had control over Bitcoin, then miners would have the option of quickly leaving a pool at the first sign of malicious activity. Look at what happened to ghash when they started to find nearly 50% of the blocks.   



For those who believe that Bitcoin is ruled by miners in this way, I put forward the following questions:

- If Bitcoin was intended to be ruled by miners, then why didn't Satoshi design Bitcoin as I described above? It'd be far simpler and better.
[/quote]Probably primarily because the blockchain bloat would make it very expensive to use Bitcoin.

- In this design, what incentive do miners have not to collude together in order to create more coins than originally planned, or to steal coins from people? Maybe they wouldn't want to risk causing people to lose faith in the system, but whenever there is any possible justification for such action (deflation, stolen coins, etc), why wouldn't they jump at the chance?

The miners do not have 100% control over Bitcoin. However they do have a great amount of influence over Bitcoin. The miners provide security to Bitcoin transactions, which is partially why merchants are willing to accept bitcoin as payment, which is what gives bitcoin value.

I would speculate that, as of 2-3 years ago, if say 75% of the miners (yes this is dangerously low) were to suddenly announce that they are going to start mining on a forked version of Bitcoin that has a maximum block size of 2MB and/or that changes the security of Bitcoin that is reasonably more secure, as of a block ~2 weeks in the future, that merchants, users (and "full nodes") would rush to upgrade (yes this is also a dangerously short amount of time to upgrade). The reason being is that this really does not change Bitcoin all that much, all the important qualities of Bitcoin would still be intact, and not upgrading would result in significant decline in security (also upgrading would result in ~the same amount of security). The miners are not unlike "employees" of the Bitcoin network, and this kind of situation would not be unlike an employee (or a group of employees) requesting a change in the way that they work, that is not unreasonable, and the boss (the network and economy) would reasonably allow this.

On the other hand, if 75% of the miners were to suddenly announce that they are going to start mining on a forked version of Bitcoin that changes the inflation schedule then the entire economy would most likely ignore any blocks generated on this branch.

- In the above design, what is the point of the mining chain at all? Wouldn't it be better to carefully select 20-40 extremely trustworthy entities to do the signing? In light of this, how do you justify any of Bitcoin's design?

Who is trustworthy and who is not trustworthy can change over time. Someone who has processed 50kBTC worth of withdrawals one day, might decide to accept a large payment in exchange for promoting a website that he knows will scam thousands of BTC the next day. The small number of entities that dominate the mining pool industry are trustworthy today, but if any of the mining pool operators were to start to misbehave then it would be trivial for the owners of the mining equipment to point their miners to a different pool.

Additionally, the owners of mining equipment need to post a bond via the price of their miners to not do things that will be damaging to Bitcoin.

In reality, Bitcoin is not ruled by miners because full nodes will ignore blocks that actively break the rules, no matter how many miners support such blocks, and full nodes can (and must) change the PoW function if miners are maliciously blocking or reordering transactions.

It is essentially impossible to prove that miners are maliciously blocking transactions, especially with blocks being as full as they are today. The reason for this is due to pools can accept payment for transaction fees separately (and/or in addition to) from the transaction.

The change that is generally wanted by the miners (larger maximum block size) are also generally wanted by most of the economy, so the nodes would really have no reason to reject blocks that break the specific rule of the maximum block size. In fact, I have really not seen any reasonable argument as to why the maximum block size cannot be raised (to address the issue of large transactions that take a long time to validate, a simple solution might be to set the maximum transaction size to say 250kB -- although this may not solve the issue as I do not fully understand the problem).

Changing the way that blocks are mined is almost certainly going to result in overwhelming rejection by the economy. One reason is that the owners of ASIC miners are also deeply connected to other parts of the economy. Another reason would be that such alternate method of mining would be untested in securing any large sum of money and large volume of transactions, and because it would be horribly centralized.

[eternalgloom]

the only issue about miners is the racist mindset that somehow 1.2billion people in one country must be somehow colluding together. yet i didnt hear you cry the same racist cries when america dominated the mining arena.. a couple years ago.

the way to solve the racist saga is in 2 clear and defined ways
1. stop being racist.
2. get american/european companies to make cheap mining rigs to run, instead of buying them from the chinese at retail prices. then we wont be handing the chinese free hashing power which they buy through the profits on the retail prices.

by this i mean. when bitmain sells a rig for $1000 to the west the build cost is maybe $200.. so for every rig the west controls china is now running 4 of their own, literally paid for by the west but not control or owned by the west. so if the west want to dominate again. they need to build their own cheap rigs to compete again

The issue you highlight in point 2, how would it be possible to achieve something like this? Would it even be an option to produce such a cheap mining rig in Europe, without looking towards China for mass production?

Not sure about this, but I assume that Europe does have the right infrastructure to do so, but the biggest problem would be the labour costs in your scenario.
You might be able to solve this by working through a co-operative perhaps and getting people to take a pay-cut at the beginning?

Interesting idea, but I really wonder if it could be done.

[vodaljepa]

If no miners existed the bitcoin network would not move, simple as that
Yes miners control the bitcoin network in a way to keep it moving and working

[coinsocieties]

You have to understand that Miners are exactly that, miners.  If you relate Bitcoin Miners to today's work, miners are those people stocking Walmart shelves every day.  If it was not for those cheap workers, Wal-Mart would not exists, but at the same time, if we people did not show there, the miners would loose their jobs!!  Same goes here, we stop using bitcoin for payments and the miners are useless and are nothing but a pile of scrap metal!!

[franky1]

2. get american/european companies to make cheap mining rigs to run, instead of buying them from the chinese at retail prices. then we wont be handing the chinese free hashing power which they buy through the profits on the retail prices.

The issue you highlight in point 2, how would it be possible to achieve something like this? Would it even be an option to produce such a cheap mining rig in Europe, without looking towards China for mass production?

china is not the cheapest labour in the world. nor the coolest climate nor the best internet..

people may think india, due to labour costs, but the issue with india is the climate is to warm to also run the rigs within the 100mile radius of the production warehouse to ensure the rigs are running within 2 hours of being produced to maximize efficiency..

however there are some other countries that have low labour costs with a cooler climate that would allow for best chance of production, running and operating.

here is china's minimum wage $0.80 an hour
here is china's average temperature 6.95'c

i will list countries outside of "bad naughty china" where wages are under $1 and temperatures average under 8 degrees Celsius, from
https://en.wikipedia.org/wiki/List_of_countries_by_average_yearly_temperature
https://en.wikipedia.org/wiki/List_of_minimum_wages_by_country

armenia $0.76 an hour : 7.15'c
bhutan $0.35 an hour : 7.4'c
georgia  $0.07 an hour : 5.8'c
Kyrgyzstan $0.10 : 1.55'c
mongolia $0.60 : -0.7'c
russia $0.93 : -5.1'c
Tajikistan $0.29 : 2'c

now the only issue is running fibre optic cables
knowing china is 3.6mb average speed
https://en.wikipedia.org/wiki/List_of_countries_by_Internet_connection_speeds
seems mongola and russia are the only ones with results, and both seem alot more promising compared to china.

im guessing people will think mongolia is still "asian" so it looks like russia is the place to be.

[HCP]

But the overriding cost is probably electricity. Have you factored that into your equations at all?

I assume you are factoring the labour costs in purely as that impacts on the production cost of the mining rig. However, even a $200 mining rig needs electricity to run... so if you're paying $1/kW as opposed to $0.02/kW for running a $1000 mining rig... there will be a point where the more expensive rig starts to win out.

So, what are the costs of electricity production in those countries that you have listed? I dare say they are not as cheap as one might think... This is where countries like Iceland with boatloads of very cheap electricity through thermal electricity generation AND a cold climate will come to the fore

[Quickseller]

You have to understand that Miners are exactly that, miners.  If you relate Bitcoin Miners to today's work, miners are those people stocking Walmart shelves every day.  If it was not for those cheap workers, Wal-Mart would not exists, but at the same time, if we people did not show there, the miners would loose their jobs!!  Same goes here, we stop using bitcoin for payments and the miners are useless and are nothing but a pile of scrap metal!!

I disagree with your analogy. There are essentially no qualifications necessary to be a Wal-Mart stock boy, however it takes a lot of R&D resources, among many other things to devolop and create ASIC mining equipment. The miners do work that is highly specialized, and equipment is generally distributed so that mining is currently distributed so that mining is decentralized.   

The miners are more like heart surgeons at a group of large hospitals. It takes a lot of training and experience to be able to perform surgery on the heart, and heart surgeons cannot easily be replaced. However it may be possible for other surgeons to receive additional training to perform heart surgery if absolutely necessary. If heat surgeons as a group wanted to slightly change the way they work, that would most likely result in an overall better experience for their patients without any real risks, then there is no legitimate reason to try to stop them.

[abugseuf]

i think miners and the transactors are the supporter of each one, one cannot do work without  the other. because if the miner stop mining what will the investors do from where will they receive bitcoin and the second is that if the transactors and investors show no interest in bitcoin then what will the minor do they will become bankrupted.

[franky1]

But the overriding cost is probably electricity. Have you factored that into your equations at all?

I assume you are factoring the labour costs in purely as that impacts on the production cost of the mining rig. However, even a $200 mining rig needs electricity to run... so if you're paying $1/kW as opposed to $0.02/kW for running a $1000 mining rig... there will be a point where the more expensive rig starts to win out.

So, what are the costs of electricity production in those countries that you have listed? I dare say they are not as cheap as one might think... This is where countries like Iceland with boatloads of very cheap electricity through thermal electricity generation AND a cold climate will come to the fore

cost of electricity is variable, it can be cheap inner city compared to rural,, however solar, hydro alternatives can control prices to be equal and cheaper whether rural or urban.

electricity is not that big of a deal if your clever enough. the main cost is ofcourse the initial build, setup costs.

put it this way the difference between 10cent/kwh and 20cent/kwh is $2.40 a day.. or $201.60 per 3 months..

however having to buy a rig at $1000 and pay $100 shipping/customs (totalling $1100)
is a big difference compared to $200 production cost.

the electricity saving going from a 20cent area to a 10cent area is only $200 saving.. but making your own rig and running it nearby can be $900 saving