Mining Difficulty Attack against Bitcoin

[crazy_rabbit]

As was recently experienced by the small alt-coin Terracoin, it might be theoretically possible to attack bitcoin via the difficulty adjustment (intentionally or unintentionally) rather then just 51% of the chain. What happened with the first version of Terracoin was that someone with vastly higher hashing power got onto the network and drove the difficulty into the stratosphere.

The network ground to a halt as soon as they left the chain because there was no longer enough hash power on the network to solve blocks at the sky-high difficulty.

Theoretically something similar could happen with bitcoin. Already we have a large number of former Bitcoin GPU miners now mining Litecoin and litecoin has become quite expensive. There could potentially be some combination of circumstances (for example future generation ASIC miners) that bring such enormously large computational power to the network that the rise in difficulty pushes a large number of miners off of bitcoin onto another chain for profitability reasons. Then if this large miner were to leave the network suddenly (could be intentional, could be unintentional, such as accident, some sort of connection failure, etc...) the network would be left with a very high difficulty and too few miners powerful enough to solve blocks to bring the difficulty back down in a reasonable period of time. Confirmation times could grow intolerably slow.

Something to think about- it was done successfully and intentionally against Terracoin, and while it's a much, much, smaller network- the principle behind the attack is the same.

[kjj]

One of the central assumptions of bitcoin is that a large fraction of available hashing power is active on the network at all times.  If that stops being true, the system doesn't work.  Fortunately, there doesn't appear to be any danger of that happening.

This has been happening to scamcoins since forever.  If a system is pointless, it will never attract enough work to protect it against a bored bitcoin miner with enough power to divert for amusement purposes.

FYI, the potential "fixes" to the problem actually make the situation worse, as ArtForz showed a long, long time ago.

[Sunny King]

It's not a problem for bitcoin as long as it remains the dominating proof-of-work consumer. But in long term the consumption of proof-of-work may reduce if bitcoin attempts to keep a low transaction fee, allowing other (newer) competing currencies to consume more and more proof-of-work. This could result in the similar scenario we observe in altcoins currently, i.e. massive miner migration due to exchange rate volatility.

Although this is not really something to worry too much about as I have already demonstrated in ppcoin how a continuous smooth adjustment could work to dampen miner migration impact.