Block 209999 - a short history of the Bitcoin civil war

[EhVedadoOAnonimato]

The fees on queued transactions will pile up and eventually be taken by someone. It might take some time for fees to fund competition, but it will happen eventually.

To take the fees successfully your block must not be overwritten. It can't be just someone, it must be enough miners to produce blocks faster than the rogue miners.

That said, I don't think the scenario described by OP is likely to happen. If miners were willing to organize themselves like that, as OP says himself, they could do it right now.
My 2 cents on why they don't do it now, and won't do it then:

• Most people are not jerks like that. (Seriously, most people wouldn't deliberately break other people's stuff just for a little profit)
• Miners probably understand that the less bitcoins out there, the more they're worth. I'm basically talking about the same thing Littleshop said above.

[the founder]

It's not going to be a bitcoin civil war....   it's going to go to 25 BTC .. and I believe it's not soon enough...   I know I keep repeating myself.. but the fact is that we are printing off too many bitcoins at this time...   

If miners want to double the number of bitcoins allocated EVEN IF IT WORKED, which it won't,  the problem will be each bitcoin will be worth 1/2 as much...  in other words a zero sum game.

They'll just follow the path because it's a huge fight for ZERO gain.

[EhVedadoOAnonimato]

Oh, and there's another point. It would be difficult (expensive) to perform such attack. I explain:

Let's suppose 75% of miners (in terms or processing power, not absolute numbers) decide to collude to perform such 'coup'. Honestly, I find it way too much than what could possibly happen, but just for the sake of the argument let's keep it 75% against 25%.

In order to stop the network maintained by the remaining 25%, they would have to dedicate more than one third of all their mining power to create such fake chain. They would not be able to collect transaction fees and even the generation money they get from those 25BTC blocks would be frozen - even if they organize it well enough to make themselves capable of spending, what's not trivial, still, nobody else would be accepting bitcoins while the network is frozen like that.

So, they burn more than one third of their processing power on a chain they want to kill, and the remaining processing power they spend on a chain that, for the moment, is useless - with few to none hard guarantees it will ever be truly used. I find it more likely that bitcoins users and developers would accept to temporarily compromise the decentralization of the network in order to fight back this attack* (I would), than to surrender to these Bernanke-wannabe-miners.

It would be a risky (not to mention immoral) "investment" to perform such an attack. Maybe even riskier than just keep mining 25BTC blocks in the hope that, with less inflation, bitcoin's value will increase and pay off the expenses.


* You can fight a >50% attack by establishing a set of "trusted transaction pools" that would be observed by every bitcoin client. Clients could then only accept blocks that contain a minimum percentage of transactions that were present in these pools. Blocks with only fake transactions would be rejected. That obviously introduces centralization and for that reason is not at all desirable, but in an emergence situation like that, I might temporarily trust some of the developers to implement such thing.

[kjj]

Oh, and there has already been discussion about setting the stock client to reject blocks that don't contain enough transactions known by the node.  It was proposed in the context of a miner not including charity (zero fee) transactions, but can easily be extended to deal with this scenario.

As in, if a mining cabal wanted to mess with the system by producing an unending stream of empty blocks while transactions piled up in memory pools, the network could reject the hostile blocks and operate as usual.

[BubbleBoy]

Let's suppose 75% of miners (in terms or processing power, not absolute numbers) decide to collude to perform such 'coup'. Honestly, I find it way too much than what could possibly happen, but just for the sake of the argument let's keep it 75% against 25%.

In order to stop the network maintained by the remaining 25%, they would have to dedicate more than one third of all their mining power to create such fake chain. They would not be able to collect transaction fees and even the generation money they get from those 25BTC blocks would be frozen - even if they organize it well enough to make themselves capable of spending, what's not trivial, still, nobody else would be accepting bitcoins while the network is frozen like that.

So, they burn more than one third of their processing power on a chain they want to kill, and the remaining processing power they spend on a chain that, for the moment, is useless - with few to none hard guarantees it will ever be truly used. I find it more likely that bitcoins users and developers would accept to temporarily compromise the decentralization of the network in order to fight back this attack* (I would), than to surrender to these Bernanke-wannabe-miners.

Not at all. They are colluding on the main chain, so they mine 100% of it's blocks (as empty, but it does not matter as far as the 25BTC reward is concerned). They are defending the alternate chain, so they earn close to 100% of blocks there. When non-rebel miners start to migrate to the alternate chain, resources can be reallocated there so as to keep the rebels share high without loosing control of the main thread. When all miners have migrated to the alternate chain the rebels will have 75% there, the exact starting situation. It's a win-win situation regardless of the outcome of the revolution, so they are not risking anything.

* You can fight a >50% attack by establishing a set of "trusted transaction pools" that would be observed by every bitcoin client. Clients could then only accept blocks that contain a minimum percentage of transactions that were present in these pools. Blocks with only fake transactions would be rejected. That obviously introduces centralization and for that reason is not at all desirable, but in an emergence situation like that, I might temporarily trust some of the developers to implement such thing.

I can think of ways to combat this but a certain degree of centralisation would indeed kill the attack. In the extreme, a checkpointed blockchain published by the developers every day the attack continues. Any transaction would clear in at most a day despite the attack. However this would also require client upgrades, and set a dangerous precedent. Would you upgrade to the alternate but still distributed chain or to a centralised chain ?

[EhVedadoOAnonimato]

Not at all. They are colluding on the main chain, so they mine 100% of it's blocks (as empty, but it does not matter as far as the 25BTC reward is concerned). They are defending the alternate chain, so they earn close to 100% of blocks there. When non-rebel miners start to migrate to the alternate chain, resources can be reallocated there so as to keep the rebels share high without loosing control of the main thread. When all miners have migrated to the alternate chain the rebels will have 75% there, the exact starting situation. It's a win-win situation regardless of the outcome of the revolution, so they are not risking anything.

You're probably right... but still, they wouldn't be able to spend their coins while the attack lasts, as everybody else.

I can think of ways to combat this but a certain degree of centralisation would indeed kill the attack. In the extreme, a checkpointed blockchain published by the developers every day the attack continues. Any transaction would clear in at most a day despite the attack. However this would also require client upgrades, and set a dangerous precedent. Would you upgrade to the alternate but still distributed chain or to a centralised chain ?

I agree it sets a dangerous precedent, but to keep bitcoin principle of having a stable monetary base one day, I might be willing to accept some degree of centralization while the attack lasts.

[Etlase2]

Halving the subsidy impacts mining profitability in exactly the same way as doubling the difficulty. Many miners will drop out, the difficulty will be reduced, and then things will stabilize again at a lower network hash rate. This is not a huge deal, since the network already has way more computational power than it really needs.

heh except now you have half a network of angry miners with useless rigs

[memvola]

Halving the subsidy impacts mining profitability in exactly the same way as doubling the difficulty. Many miners will drop out, the difficulty will be reduced, and then things will stabilize again at a lower network hash rate. This is not a huge deal, since the network already has way more computational power than it really needs.

heh except now you have half a network of angry miners with useless rigs

That would be the case if this was an unexpected thing. You know the rules perfectly, and make your investment accordingly. I can get that some miners might be upset because of the recent downwards price trend, but it would be nonsensical to get upset about something you know about years in advance. This also the reason the difficulty switch will be mostly seamless. All serious miners will be prepared for this months in advance.

[BitcoinRedLight]

To the extent there is a 'civil war', it is not in the mining nor off in the future. It is in the economics of Bitcoin and it is in the now. It is a 'class war' in the sense that what Bitcoin most desperately needs is its own investors, Venture Capitalists.

https://bitcointalk.org/index.php?topic=45390.0

Otherwise it's just "Bitcoin-to-the-mooooon", aka Bruce Wagner mesmerizing the Bitcoin wealthy while the rest of us break rock for pyramid building, until we're so used up that we drop out.

Bitcoin is bloody brilliant, but without the Bitcoin wealthy being able to see that it is in their own best interest to invest, with major VC Bitcoin, then what I see coming is great swaths of idealists (one after another) falling on their swords for the cause.

[memvola]

Bitcoin is bloody brilliant, but without the Bitcoin wealthy being able to see that it is in their own best interest to invest, with major VC Bitcoin, then what I see coming is great swaths of idealists (one after another) falling on their swords for the cause.

This is true. What also is missing is a good rhetoric. My initial excitement about Bitcoin continues, and the reasons persist, but there aren't very convincing arguments put forward for people alien to hardcore computing or economy, and I realize that I can't put into words why the concept is very convincing for me. It's just that the humanity needs it, and there are a multitude of reasons why. As with a lot of free projects, we would all be better off if everyone used it, but the scene lacks coherence and simple introduction.

[Clark]

This is true. What also is missing is a good rhetoric. My initial excitement about Bitcoin continues, and the reasons persist, but there aren't very convincing arguments put forward for people alien to hardcore computing or economy, and I realize that I can't put into words why the concept is very convincing for me. It's just that the humanity needs it, and there are a multitude of reasons why. As with a lot of free projects, we would all be better off if everyone used it, but the scene lacks coherence and simple introduction.

I think that we must act quickly before Google/Apple/Amazon/Microsoft/Facebook launches a competing block chain (after having mined a few million themselves) and pushes their own version of secure cash to ~500 million users in one fell swoop.

The WeUseCoins video is great, as it's professionally done and coherent enough to get a good overview of Bitcoin. But we really need new videos & a better bitcoin.org that eases the newbie into the material without simply saying "it's in the wiki."

[iamzill]

Wouldn't this make the bitcoin supply infinite? IIRC the geometrically decreasing rewards is the only thing limiting the total bitcoin supply to 21 million.

At least it'll shut the "the hard limit of 21 million limits bitcoin's usefulness" crowd up.

They can change  the algorithm to keep the 21 million limit, and the block reward close to 50BTC for the foreseeable future, for example by adopting Pieter Wuille's curve. Instead of halving to 25 the reward drops gradually to 44 BTC after a half a year, and 39 BTC after a year. So they skew the curve to mine the coins faster than normal, and leave a smaller profit for miners of the future.

They can change the algorithm, I agree, but they won't. If this hypothetical group of rouge miners collectively vetoes Satoshi's original algorithm to protect their profits, then they will also veto any other algorithm which threatens their profits.

In other words, if they collectively chose to reject Satoshi's curve, then it logically follows that they will reject Pieter Wuille's curve. No offense to Pieter Wuille, but he's a nobody compared to Satoshi. Satoshi is literally the God of bitcoin. If the miners can reject the Word of God then they can reject any other community member's suggestion. 

Also, assuming the reward remains constant, an infinite expansion is not that bad. After 25 years of constant 50BTC/block expansion the total annual liquidity injected by miners falls bellow 4% of the outstanding monetary base, and that's much less than the FED is printing nowadays. The rebels could also implement a Friedmanian exponential expansion: 50 BTC for 25 years, and then 4% per year expansion after that: 52BTC in the 26th year, 54.1 in the 27 year, etc. This keeps the mining revenue a constant fraction of the monetary base and it's actually quite sound from a macro perspective, albeit inflationary.

I'm no fan of the global fiat printing consortium, but a little expansion of the money supply is definitely a good thing. It's even better when said expansion is:
1. Algorithmically determined (as opposed to a secret cabal of bankers)
2. Completely public (M3 anyone?)
3. Democratically chosen (don't like 4%? Get 51% of miners to join you and fork the chain. Quickest election in human history, with global participation)

This keeps the mining revenue a constant fraction of the monetary base and it's actually quite sound from a macro perspective, albeit inflationary.

Someone correct me if I'm wrong, but inflation only occur when the growth of the money supply outpaces the growth of the economy.

As per point #3 above, the democratic process will keep the bitcoin growth closely matching the bitcoin economy growth. When the two growth rate equal each other, zero inflation will result. Personally I think this solution is much better than both the Fed and Satoshi's 21 million hard limit.

If my understanding of the Austrian school is correct, they're against government-sponsored inflation, not growth of the money supply itself. I wager that the Austrian economists would rank this laissez faire scheme to grow the money supply higher than Satoshi's deflationary measures.

[P4man]

Rather than forking, perhaps an alternative inflationary chain could be developed that derives its value from bitcoin. Akin to the gold standard, where the gold becomes the bitcoins and the inflationary currency is linked to it. In the far future, I could even imagine printed money like our current currency, but backed by bitcoins. Bitcoins would become a storage of wealth (similar to gold), the other currency or even currencies,  a method to conduct financial transactions.

[allten]

Wow! A lot of speculating on the grand event of the reward being halved.

Here's my speculation and what I believe to be a more realistic scenario:


1) All the investors, speculators, and day traders see this as a sure sign that bitcoin prices will rise by at least 100% because the money injection rate will be halved and start pricing it in 3 to 6 months prior.
2) The mining profit will increase this will be followed by old miners returning and even some new miners trying it out for the first time.
3) Around the date (before and after), the prices become extremely volatile and will be great for day traders.
4) The Mid term price after this event will probably come off of it's peak by 25% to 50% followed by a longer trend of stabilizing somewhere between $8 dollars to $12 dollars.
5) As the price decreases from its peak in a long term decline, some miners will leave and the slightly profitable mining venture will be much like it is today.

The sure thing is I will continue mining even at a loss for Bitcoin's success and I will continue dropping $50 to $100 dollars a month for additional bitcoins.

Good luck to all.

[Elwar]

4) The Mid term price after this event will probably come off of it's peak by 25% to 50% followed by a longer trend of stabilizing somewhere between $8 dollars to $12 dollars.

Not a bad prediction for halving day price of $12.30

[FreeMoney]

Prepare block 420000 FUD!

Oh snap 420k get it get it? drug conspiracy imo.

[DeathAndTaxes]

Whew civil war averted.  We likely should immortalize some quotes for the historians on this day where we so narrowly avoided outright conflict.

A network divided can not stand.  

Author unknown - first cite shortly after block 210,000

I say to you today, my fellow miners, so even though we face the difficulties of this block havling and the next, I still have a dream. It is a dream deeply rooted in the Satoshi dream. I have a dream that one day this currency will rise up and live out the true meaning of its creed: "Strength In Numbers."  I have a dream that one day the last coin will be minted and the world will be safe forever from the ravaging effects of unchecked inflation.   I have a dream that banking cartels and central banks will fall by the wayside, and the people unshackled from the bondage of their own money live in an era of new hope and prosperity.

Author unknown - first cite shortly after block 210,000

So my fellow miners, ask not what the blockchain can do for you, ask what you can do for the blockchain.

Author unknown - first cite shortly after block 210,000

One hundred and fifty microscore* and one year ago our developers brought forth onto this network of networks**, a new protocol, conceived in openness, and dedicated to the proposition that all transactions are irreversible.  Now we are avert this great civil war, to avoid the brutalities of answer the question of whether a collection of independent pseudo-anonymous entities, or any such collection can long endure divided.  That this protocol, under Satoshi, and this currency of the people has not perish from the earth but endure long after we are gone, through the countless block halvings until the initial distribution is complete.

Author unknown - first cite shortly after block 210,000


Historical Footnotes:
*A score is 20 years so a micro score would be 20/1000 = 0.02 years.
** "network of networks" is old timey speak for the intertubes.