Concern? over 50% of miners controlled by two pools

[GhostInTheBlockchain]

...There is no problem with a pool having more than 50% of the hash power as long as they don't abuse that power.

Here's a thought experiment...How about have just one big pool and every miner is automatically a member of that pool.  That pool would of course get every block award.  The pool operator sends out the appropriate fractions of block award based on the hashing contribution of each miner.  As long as the pool operator didn't abuse their power this would be the most fair system.  Of course that degree of centralization would be ripe for abuse and corruption, if history is any guide.  Even if the operator *wanted* to be fair others could find ways to coerce the operator to allocate shares unfairly and cook the books to hide it by manipulating the statistics showing how many miners there are and their relative hash power.  It seems clear to me that having 1 pool with %100 of the hash power is bad.  That raises the question: Is 2 pools split 80%/20% any better?  How about 3 pools 60/35/5%?  Actually, when bitcoin really hits the big time (e.g. $5000 per coin?) then I believe any sufficiently large pool operator becomes a target of the sorts of people who are good at forced manipulation (e.g. governments, criminal organizations).


I think as long as people are in charge of operating mining pools there are opportunities for extortion, abuse, and corruption.

[1714706561]

1714706561

[smooth]

what happen with p2pool?

P2pool is doing fine. It's on the chart linked above, but it's too small. The problem with p2pool is that the interface is not really user friendly and it can be finicky to get working especially with certain miners. If you really want to help the pool concentration problem, volunteer to help with p2pool. That doesn't have to be coding, it can be better guides and cheat sheets, pretty stats sites, etc.

[vpitcher07]

Even if the 2 pools hypothetically pulled off a 51% attack, who gains? If they do it, the market will instantly crash, the value for their saved coins is nothing.

[Walsoraj]

Even if the 2 pools hypothetically pulled off a 51% attack, who gains? If they do it, the market will instantly crash, the value for their saved coins is nothing.

Cash out before the panic crash or invest in whichever altcoin is likely to rocket upon news of a 51% attack on bitcoin. Millions to be made.

[DeepCryptoanalist3]

So does anyone here are really know what 51% attack is? The worst thing it could do is to ignore some transactions by request even though it will be obvious to everyone and because of this it will immediately trigger the lowering price of bitcoin and the pool will collapse, all its participants will leave it as a free will. No one want to mine coins when its price lowering and the pools are almost identical.
51% attack do not allow you to steel money from someone else.
In case of any possible 51% attack market will not even feel this it will be like a sudden drop of price for a minute and it will raise back in hours.

[Lucky Cris]

This isn't intentional - As the authority on the network (so to speak), clients will believe the pool's hashed transaction block over any other. That means the pool will win all transaction conflicts, and get the rewards.

Epic confusion.

A 51% attack is then the attacker blockchain voluntarily ignore every other blocks. An honest 51% holder would accept the blocks found by other people.
[/quote]

Well I'm sure as hell confused now if I weren't before. Are you talking about a blockchain fork, pseudo blockchains and such? No... wait, that can be done if the powerhouse pool wanted to do such a thing... but just to make sure I understand.... you're saying that if the pool with the majority of computing power is honest, it will accept other pools' blocks? Forgive my confusion... I just don't understand what this has to do with the price of rice in China.

[quone17]

Yes I always thought part of the allure of BTC was how many many people would mine and make sure there was never a 51% attack/collusion to maintain fairness.  I suppose pool members could switch to a different pool if the pool gets too big and the owner abuses their power, assuming those miners care about BTC as a whole.

[CoinCidental]

This isn't intentional - As the authority on the network (so to speak), clients will believe the pool's hashed transaction block over any other. That means the pool will win all transaction conflicts, and get the rewards.

Epic confusion.

A 51% attack is then the attacker blockchain voluntarily ignore every other blocks. An honest 51% holder would accept the blocks found by other people.

Well I'm sure as hell confused now if I weren't before. Are you talking about a blockchain fork, pseudo blockchains and such? No... wait, that can be done if the powerhouse pool wanted to do such a thing... but just to make sure I understand.... you're saying that if the pool with the majority of computing power is honest, it will accept other pools' blocks? Forgive my confusion... I just don't understand what this has to do with the price of rice in China.


[/quote]

dont believe the hype
the possibility of a  51% attack has been analysed ad hominum already and it will not result in everyones previously saved coins
being suddenly worth "nothing" as someone just claimed
this has been talked about for years even when satoshi was still an active developer i think  and it hasnt changed the general opinoion much
if there was any chance  all the  previously mined btc would become worthless due to a 51% attack i think they would have factored it in already

its not like were talking about monkey nuts here ,people have millions or even possible billions at stake so i think theyve analysed the risk sufficiently for now anyway

[Gabi]

51% attack do not allow you to steel money from someone else.

Wrong.
It can. It can rewrite the whole blockchain.

[CoinCidental]

51% attack do not allow you to steel money from someone else.

Wrong.
It can. It can rewrite the whole blockchain.

rewrite the entire bloackchain from the genisis block until now  ? i dont think so

my undertanding was that such an attack would only work in the short term for a few recent blocks 
but if the network was this vulnerable it would have happened already

[cr1776]

Please don't talk down to people like that, it's not constructive, and given the nature of a lot of the conversations on this board, I don't think this was an invalid question.

If the two pools collude for a 51% attack, what would they gain?  A double spend?  What would the double spend get them?  

Suppose it was for something like a Lamborghini which would be a good sized purchase.  Probably won't happen because the dealer is going to wait a reasonable number of confirmations - more than 6 no doubt - or use escrow.  So large purchases are pretty much out.  So it would be for something less.  What happens after a double spend for $10,000 then?  The double spend is seen (whomever the double-spend is against will point it out ASAP if it is of any size and/or it will be noticed by others), and the pools lose 95% of their members within hours or days.  The pool is done and the operator loses a lot of recurring income from fees.  So it seems unlikely.

Alternatively, what happens to the bitcoin price if the two pools collude and the miners stay with them to help keep the collusion going?  The price of bitcoin plummets and the pools and miners lose out again.  

No rational miners will stay with pools colluding so any attack will be short-lived, so it would only be attempted for a large reward, but no large transaction will be accepted without many confirmations or escrow making a double-spend unlikely to be profitable for the pools.

Perhaps a state-sponorsored pool might try it solely to destroy bitcoin, but every day that becomes less likely due to the increasing hash rate. Perhaps 3 years ago pre-GPUs it would have been easy.  With the GPUs, it was still possible, but 2013's ASIC explosion has made it much more difficult and much more expensive to even consider.  With the miners shipping now and next year it will become even more unlikely.

Obviously more decentralization is better as various people have said with regard to p2pool, but some ASICs can't mine with it reliably, and it is not nearly as easy to set up.  I believe this will improve with time.  I certainly hope it will because p2pool-like mining is an important part of the future of bitcoin.

Regarding the quote above, people get frustrated because the same question has been asked and discussed hundreds of times on here.  His questions are valid because if the person can't answer them, then they may not be clear on some of the concepts, and so the question comes from misconceptions.  

;-)

[Lucky Cris]

51% attack do not allow you to steel money from someone else.

Wrong.
It can. It can rewrite the whole blockchain.

Can I do this one!!! Give me a shot! --

Epic Confusion.

No, IT (not really sure what you're referring to here) can't rewrite the whole blockchain, but someone can create a fake or alternate blockchain with all the previous transactions up to the point... wait, why am I even explaining this?

You're confused; and I thought it was me. Consult with Google on Blockchain forks.   

[Lucky Cris]

dont believe the hype
the possibility of a  51% attack has been analysed ad hominum already and it will not result in everyones previously saved coins
being suddenly worth "nothing" as someone just claimed

if there was any chance  all the  previously mined btc would become worthless due to a 51% attack i think they would have factored it in already Smiley

Concur.

[Lucky Cris]

If the two pools collude for a 51% attack, what would they gain?  A double spend?  What would the double spend get them? 

There's more to gain than just double spending. Double spending is something the pool can do if it chooses. If they created a fork in the blockchain, they could double spend some coins and get away with it, which is what I think another post was referring to, coins getting lost forever. But say for example we're the powerhouse pool and we wanted to be bad... {Girl power!} Crap, am I by myself here? Damn it.

Anyhoo, we created our version of the blockchain and it has all real transactions up until yesterday's. Today's transactions are bogus btw... we sent some coins there, and over there. Since we're the authoritative bitch (majority of computing power) theoretically we could force other pools to point to our 'fake' blockchain and accept our made up transactions from today. But I suspect we'd eventually get caught doing it this way. We should probably just pluck random, semi-large transactions.

I think we're getting too caught up with the term attack. We want to think of a 51% attack as being intentionally malicious... Agreed, a pool out for gain intentionally exploiting their power/network can do some damage. But what about the unintentional consequence of having over 51% of the hashing power? Are we just going to dismiss this and focus on the bad stuff they can accomplish?

A 51% Attack doesn't have to be intentional, does it? If any pool had 60% of the hashing power, an attack would be forthcoming. The pool doesn't have to try to do it, it will, which is why the pools cap themselves. Blocks other miners solve would be orphaned left and right... The longest chain always win the conflict, right? That isn't to say it was done intentionally or with malice. But whoever has the upper hand would benefit from the block rewards and transactions fees of those resolved 'conflicts.'  On the other hand, if a pool wanted to orchestrate an attack... well, I guess that's another topic.

Can you explain how it works, or how the pool can prevent from abusing that power? Can that power be abused - oh, hell yes! I'm not talking about the many things that a pool powerhouse has the ability to do.... But how can said pool prevent from NOT taking other miners' block rewards and transaction fees? This isn't intentional - As the authority on the network (so to speak), clients will believe the pool's hashed transaction block over any other. That means the pool will win all transaction conflicts, and get the rewards.

Anybody? Or am I over-analyzing. For the purpose of your response, let's say it's an "honest pool."

[greyman]

It is already described in the wiki what the 51% attacker can and can't do:

https://en.bitcoin.it/wiki/Weaknesses#Attacker_has_a_lot_of_computing_power

The attacker can:
    Reverse transactions that he sends while he's in control. This has the potential to double-spend transactions that previously had already been seen in the block chain.
    Prevent some or all transactions from gaining any confirmations
    Prevent some or all other miners from mining any valid blocks

The attacker can't:
    Reverse other people's transactions
    Prevent transactions from being sent at all (they'll show as 0/unconfirmed)
    Change the number of coins generated per block
    Create coins out of thin air
    Send coins that never belonged to him

Note: So the attacker can potentially do double-spend, but, please correct me if I am wrong, this only applies if it is really one attacker with 51% hashpower, in other words, he can deploy his own patched "dishonest" client to all his nodes. But can this be applied to pools? How will the pool owner force the attacking behavior to his poll members?

[taltamir]

Let's do a mind experiment.  Assume BTC guild, right now, has 60% of all the hashing power.

ok

why they would do it.

Someone tracked down the one guy who owns BTC guild and put a gun/warrant to his head.

I think a bigger question is the how.

[taltamir]

It is already described in the wiki what the 51% attacker can and can't do:

https://en.bitcoin.it/wiki/Weaknesses#Attacker_has_a_lot_of_computing_power

The attacker can:
    Reverse transactions that he sends while he's in control. This has the potential to double-spend transactions that previously had already been seen in the block chain.
    Prevent some or all transactions from gaining any confirmations
    Prevent some or all other miners from mining any valid blocks

The attacker can't:
    Reverse other people's transactions
    Prevent transactions from being sent at all (they'll show as 0/unconfirmed)
    Change the number of coins generated per block
    Create coins out of thin air
    Send coins that never belonged to him

Note: So the attacker can potentially do double-spend, but, please correct me if I am wrong, this only applies if it is really one attacker with 51% hashpower, in other words, he can deploy his own patched "dishonest" client to all his nodes. But can this be applied to pools? How will the pool owner force the attacking behavior to his poll members?

What happens if a coalition of governments publishes a modified client that allows reversing transactions and freezing of funds by a central authority regulated by the WTO.
They mandate by law that all must use this client.
They raid the biggest guilds for IP address of their users to track down and arrest those who do not make the switch.
90% of users & 90% miners switch to this new version. What happens to the 10% that don't switch? does the currency split up into 2 seperate ones or are the 10% who don't switch suddenly unable to get any transactions to complete?

Also, the above assumes it is still fairly small, in a few years with major banks using it as well as many merchants accepting it they can merely release a law saying to use the government made versions, provided to you by your bank, and 99% of user switch over because they aren't libertarians. No need for raids and arrests

Hypothetical 2:
What happens if instead of the above, you have JP morgan, intel, samsung, etc build giant mining facilities that end up controling 90% of mining. Those companies are approached by governments who bribe/coerce/cajole/whatever them into using such a modified client. Such that 90% of mining is done by new client, but 99% of users are still using the old client.

PS. these aren't rhetorical questions meant to insinuate that bitcoin is doomed. I am actually curious as to what the answer is. If the protocol is designed in such a way that the above attempts will merely result in governments wasting a lot of its time and money and failing to do anything I would be very happy

[Lucky Cris]

What happens if a coalition of governments publishes a modified client....

Wouldn't surprise me. And I guess some of us would become mining criminals. But if there were a 'split' technically you'll have two coins, right? So they can keep client they made.

What happens if instead of the above, you have JP morgan, intel, samsung, etc build giant mining facilities that end up controling 90% of mining.

Don't think the government would have to do much bribing. But all they'd have to do is build the biggest, baddest miner to take over.

• Addresses would become the new social security number.
• We'd be taxed of course.
• All transactions would be monitored; anything suspect and it'll never get confirmed.
• Our balance would be allowed to go in the red.
• Bitcoin loan companies would sprout out like liquor stores.
• Uncle Sam will always get its cut first. Hope you don't owe taxes or gov't debt.
• They'd create a world wide lottery via the blockchain. No need to go out and buy tickets anymore.
• It's the gov't so expect slow confirmation times.
• Blockchain shutdown during holidays perhaps.
• It's the gov't so expect lots of errors.

Man, that list could go on and on!

[coins101]

if everyone created a back-up pool, then there shouldn't be a problem.

Temptation for skimming hash rates, now there is a potential problem - does anyone carry out an impartial audit of these pools?

[MikeyVeez]

No concern because im a blind bitcoin follower.