One Trillion dollars marketcap: How does it escalate technical challenges?

[aliashraf]

Everybody is happy, BTC is skyrocketing and many dreams are becoming true, it feels so good, looking in the skeptics eyes, telling the magical 3 words: I Told You, right?

But I'm getting a bit nervous as well:
Isn't it too much of a technical burden for Bitcoin, maintaining such a mission ever increasingly critical network?

I'm afraid it is, at the time of this writing, each Bitcoin block is switching hundreds of millions of dollars, being happy and proud does not change the fact that as much as bitcoin surges so does incentives for adversarial behavior, hence, RISKS.

How do you think? What are the risks involved? I think it is time to discuss it seriously and in a very responsible manner, actually I'm surprised not seeing such a dialogue here! It is not a PR forum, we don't need to be cautious about stupid investors who may reconsider their plans hearing the scary word "RISK", they don't come here, at least in this sub-forum, D&T Discussion, and the smart ones will become more enthusiastic realizing that it is not just about cheering and applauding and there are people who take care of the risks as well.

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[NotATether]

What kind of technological challenges are you referring to?

Those hundreds of millions with of value spread out in a block's transactions are unmodifiable by the miner who mines it, because they do not have the private keys to them. That's one risk mitigated.

Adverse mining group wants to take over more than half of the network? Well they have to risk having more than $310K in mining rewards for each fake block they mined voided after a chain reorg. No sane miner is going to risk throwing away one million dollars that can be otherwise obtained from mining three blocks honestly. Another risk mitigated.

The only real risk I see is since the global hashrate is now mostly centralized in a handful of companies' hands, one of them is going to use their hashpower to agree with some idiot regulation that censors part of the protocol for some people. I swear there was this one miner who already supported such a regulation, it was a US bill to audit bitcoin addresses made in the US and they controlled like 7% of the global hashrate, it was fairly recent too, like 1-3 years ago but I forgot their name (if anyone can find it, I will give one merit).

[bitmover]

Everybody is happy, BTC is skyrocketing and many dreams are becoming true, it feels so good, looking in the skeptics eyes, telling the magical 3 words: I Told You, right?

But I'm getting a bit nervous as well:
Isn't it too much of a technical burden for Bitcoin, maintaining such a mission ever increasingly critical network?

I think I understand your fear. Someone may sploit a bug, or something may just go wrong and billions of dollars are lost forever, and it is a protocol fault?

I think this trillion market cap was slowly build over those 11, nearly 12 years. The network is already heavily tested.
Different from many altcoins, such as ethereum, which became extremely valuable very fast... then someone found a smartcontract bug in dao and you know the rest..

This why bitcoin must be extremely conservative. New technologies, new algorithms (like pos), and things like that should be tested in altcoins.  There is no room for error or miscalculation in bitcoin network

[amishmanish]

while the higher valuation may make it normal to think that the value at risk is greater, the actual risk of a successful attack resulting in breaking of network is still the same as it has always been. If anything, the skyrocketing prices of mining hardware makes it costlier still to attack the network itself. I think this is one of the biggest advantages of being a PoW coin unlike PoS.

Yet, as @aliashraf said, this should be a topic of discussion. One of the risks i can think of has more to do with the aspect of manpower management than purely technical challenges. Bitcoin is a decentralized entity but we all know that it is equally dependent on individual brilliance like everything else of value in this world. There are several changes and updates planned for the network. There are individuals involved who do it out of dedication and belief. Yet, like all of us, those individuals have compulsions that can lead to weaknesses. The recent example of Core devs removing references to Bitcoin whitepaper in the face of litigation threat is one such example, albeit small one and something that was quickly addressed. (which also shows the importance of truly anonymous benefactors).

The risk is that Bitcoin is more dependent on individuals than we realize. As the market cap continues to grow and more value is added, it keeps putting these individuals under more pressure as BTC continues to become a juicier target for some. Bitcoin has always successfully dealt all these challenges, either as community or by anonymous benefactors (The 30 BTC anonymous donation to Antonopoulous come to mind as an example when someone anonymous decided that AA was important enough for the community to be taken care of). How long this will continue and does Bitcoin have a robust enough plan, in the sense that a plan can be made within a decentralized network like BTC?

[ABCbits]

As @NotATether mentioned, what exactly technical challenge you're talking about? Few example i could think,

1. Block size limit problem, which affect bitcoin transaction fee and hinder adaption.
2. Bitcoin full node client is dominated by Bitcoin Core, even when there are many alternative implementation out there.
3. Mining pool forced to comply with regulation where pool blacklist certain address/transaction
4. All kinds of attack performed by miner which doesn't violate Bitcoin protocol such as block withholding or mining empty block

[Lucius]

The only real risk I see is since the global hashrate is now mostly centralized in a handful of companies' hands, one of them is going to use their hashpower to agree with some idiot regulation that censors part of the protocol for some people. I swear there was this one miner who already supported such a regulation, it was a US bill to audit bitcoin addresses made in the US and they controlled like 7% of the global hashrate, it was fairly recent too, like 1-3 years ago but I forgot their name (if anyone can find it, I will give one merit).

Personally, I don't remember anything like that happening in the US a few years ago - but what recently appeared in the media is definitely on that trail - and these are crypto miners who should work according to some pre-determined rules - which would mean that they will mine only those transactions that will be clean.

Although there’s no clear connection between custodial rules and the Bitcoin mining industry, DCMNA isn’t taking any chances. The DCMNA is pioneering a technique it calls “clean mining,” meaning it selects which transactions to process based on wallet information instead of the most lucrative fee options. In other words, they're promising to only mine transactions that the government approves of, even if it means revenue takes a hit.

“We can tell regulators our mining pools are not doing business with child traffickers, terrorists, or miners in Iran,” Okamoto said. “We’ll lose about 0.35% of our potential business. We think that’s a small price to pay for being able to say we are the good guys, according to the U.S. Treasury... if I point my business toward Chinese pools, they might be doing business with those bad actors.”

Combined, DCMNA's two current members claim to make up almost 8 percent of the entire Bitcoin network’s hashrate. That's nothing to sniff at, and they're looking to swell their ranks with more miners willing to only process U.S. government-friendly transactions.

[aliashraf]

As @NotATether mentioned, what exactly technical challenge you're talking about? Few example i could think,

1. Block size limit problem, which affect bitcoin transaction fee and hinder adaption.
2. Bitcoin full node client is dominated by Bitcoin Core, even when there are many alternative implementation out there.
3. Mining pool forced to comply with regulation where pool blacklist certain address/transaction
4. All kinds of attack performed by miner which doesn't violate Bitcoin protocol such as block withholding or mining empty block

Thank you for the listing, I'd classify the threats you already mentioned, in two categories:

Category 1: Structural shortcomings of the system being exposed to ever-increasing expectations. Bitcoin scaling problem is one important example here.

Category 2: Incentivized adversary behaviors being escalated because of stakes getting higher and higher. Regulatory intervention and censorship threats fit in this class.

In this thread, after a few more challenges have been reminded by users, I'm trying to show how not only the first but also the second class of threats are basically and essentially pure technical challenges to bitcoin and should be addressed asap by technical contribution.

[Pythagoras33]

What kind of technological challenges are you referring to?

Those hundreds of millions with of value spread out in a block's transactions are unmodifiable by the miner who mines it, because they do not have the private keys to them...

The private key is becoming less and less private...

https://billatnapier.medium.com/ecdsa-revealing-the-private-key-from-four-signed-message-two-keys-and-shared-nonces-secp256k1-5758f1258b1d

[NotATether]

The only real risk I see is since the global hashrate is now mostly centralized in a handful of companies' hands, one of them is going to use their hashpower to agree with some idiot regulation that censors part of the protocol for some people. I swear there was this one miner who already supported such a regulation, it was a US bill to audit bitcoin addresses made in the US and they controlled like 7% of the global hashrate, it was fairly recent too, like 1-3 years ago but I forgot their name (if anyone can find it, I will give one merit).

Personally, I don't remember anything like that happening in the US a few years ago - but what recently appeared in the media is definitely on that trail - and these are crypto miners who should work according to some pre-determined rules - which would mean that they will mine only those transactions that will be clean.

~

Yeah, absolutely Orwellian mining rules they have there. I now also remember that some weird blockchain company called DMG recently launched a mining pool where they classify all addresses and comply with OFAC ie blacklist addresses coming from Iran, Syria, Sudan etc etc. Notwithstanding that sending your money through a mixer easily evades all that.

But they also enforce full KYC verification on all their pool users so talk about shooting yourself in the user adoption foot 

Marathon was trying to shoehorn some other weird crap into the consensus like requiring KYC for all transactions with a USD value of >$3000. In fact they made a shell organization with DMG to "only process transactions that comply with American laws" (to use the vice article's words) and this was exactly what I was trying to remember.

And then there's this gem (same article):

“We can tell regulators our mining pools are not doing business with child traffickers, terrorists, or miners in Iran,” Okamoto said. “We’ll lose about 0.35% of our potential business. We think that’s a small price to pay for being able to say we are the good guys, according to the U.S. Treasury... if I point my business toward Chinese pools, they might be doing business with those bad actors.”

LOL assuming that most people in sanctioned countries are criminals, so these service providers are trying to pull bitcoin into US-China foreign relations blame game. My sats are betting that they're going to fall flat on their face once they realize that classifying countries of wallets based on exchange login IP address is too fuzzy (and doesn't work against real full nodes like Bitcoin a Core, or SPVs like Electrum - yet more reasons to be your own bank).

The private key is becoming less and less private...

https://billatnapier.medium.com/ecdsa-revealing-the-private-key-from-four-signed-message-two-keys-and-shared-nonces-secp256k1-5758f1258b1d

No, that is a completely insecure way to construct signatures in the first place. I keep saying this over and over, you should never reuse the nonce for different signatures. Heck, even some android wallet users lost money in 2013 or so because their wallet software reused nonces in signatures.

[pooya87]

The private key is becoming less and less private...

When you want to move a hot frying pan, the correct way is to use its handle. If you ignore this and use the metal part you will burn yourself. That doesn't make frying pans less safe.
Similarly when you ignore the correct way of generating an ECDSA signature and reuse the same k that doesn't make ECDSA any less safe or private keys "less private", it is the same as posting your private key on the internet!

[0xEFF0]

I think I understand your fear. Someone may sploit a bug, or something may just go wrong and billions of dollars are lost forever, and it is a protocol fault?

There was one bug in the bitcoin codebase once which was very critical but not exploited before it got patched. Infrastructure bugs are always scary.
Plus humans are pretty stupid (coders) etc. .
Best is to hope that humans don't commit code with scary bugs or that the bugs aren't discovered and exploited in time before they got patched.

[pooya87]

Best is to hope that humans don't commit code with scary bugs or that the bugs aren't discovered and exploited in time before they got patched.

It is best to find a solution for the inevitable instead of hoping it doesn't happen.
For example if core v0.13 doesn't have the same bug as v0.14 running both or better yet running core and another implementation is a good option to avoid such disaster scenarios. Those with bigger stake in the game are already doing it by the way.

[Lucius]

~snip~

Of course, this all seems a bit tragicomic, because what they are trying to do is centralize Bitcoin as much as possible to supposedly prevent illegal transactions. What seems to me is that the main reason for such actions is not ordinary users, but they are most bothered by transactions involving those countries that the US has under sanctions.

Given that Iran is currently the number one enemy of the US (which is actually ridiculous in every sense) - and the fact that some of their companies use BTC to avoid sanctions leads me personally to think that such moves are aimed at such countries. I recently read that Chinese miners are moving en masse to Iran, which has even cheaper electricity than China - and that they have already caused very serious problems with power shortages across the country.

I also think that US miners cannot do any serious damage on their own - but if their idea starts to apply in some other countries than some transactions could have problems with confirmations - at one point we could really have two types of miners - independent and those who would work according to state rules.

[pooya87]

I recently read that Chinese miners are moving en masse to Iran, which has even cheaper electricity than China

That is greatly exaggerated.
The story starts with temperature dropping in winter this year (I believe -20 C was the lowest) consequently the usage of natural gasses shoots up as people use it to warm their homes, there is a shortage so the power plants switch to burning liquid fuel (more specifically mazut) which creates pollution to the point where the levels enter dangerous territory, power plants shut down part of their operation to help reduce the pollution, it causes blackouts.
Who is the easiest to blame? Bitcoin miners! And it is not all lies because there has been an increased number of miners in Iran and they have been putting some pressure on the network. But as I said it is greatly exaggerated.

[aliashraf]

It may be somehow premature, but I'm concluding that the most concerning issue according to you guys is centralization of mining to be leveraged by governments for interventional purposes, most importantly censorship purposes. Yes?

[Lucius]

By independent, do you mean become solo miner or join peer to peer such as P2Pool (where you need to run full node client)?

I generally meant those who will not work according to the rules of their own or some other government and will process every transaction. Since miners get part of their income from fees, and as the reward per block decreases every 4 years - those who check each transaction and reject them for some reason will certainly be left without part of the income. P2Pool is definitely an interesting idea for those who have the resources for something like that.

[aliashraf]

It may be somehow premature, but I'm concluding that the most concerning issue according to you guys is centralization of mining to be leveraged by governments for interventional purposes, most importantly censorship purposes. Yes?

P2Pool exist and it just need more promotion/contribution, so it's not most concerning issue to me.

I'm afraid that P2Pool has failed its mission as a historical fact, and it is not going to improve ever because of the core idea suffering inherent flaws.
I'm not aware of any serious critical review of P2Pool, actually I didn't bother looking for such reviews because once I started learning about it (with good faith just like you), I became deeply disappointed in the very first steps.

For P2Pool, the idea is to run a separate p2p network with lower difficulty than the actual Bitcoin network where miners adjust the coinbase transaction such that it allocates rewards to (multiple) peers on a Pay-Per-Last-N-Shares, PPNLS, convention. Obviously shares have to be propagated to and  verified by all participating miners.

Although P2Pool is a highly crafted protocol with lots of built-in mechanisms to resist malicious actions and attacks, it fails to help with pooling pressure flaw in bitcoin because of one brutal fact: it is not scalable!

Current implementation sets a rough 20 times constant as the order by which the actual Bitcoin network difficulty is considered to be lowered while bad news is: you can't touch this number to cover actual small/medium size miners, they need ways more reduced difficulties to keep paying their costs, for current network, difficulty should be adjustable in ranges between 10,000 up to 1,000,000 and further for any practical purpose. Unfortunately, P2Pool can't approach anything like that, 20 times difficulty reduction is the best it can offer!

In P2Pool, the so-called sharechain is supposed to generate a share every 30 seconds (in average) which is a complete block that needs both propagation and verification just like the original network blocks, as I've mentioned earlier. The 30 seconds round time is a direct result of the magical 20 times easier rule. The number, 20, is not an arbitrary number for P2Pool, it is the limit the protocol is bound to because it is not feasible to have any shorter round time.

Tragic, isn't it? But there is still  hope:
What about implementing the idea recursively, like in a hierarchical model, say in 5  layers redirecting miners to 2⁵ partitions having difficulty being reduced up to millions of times? Sounds nice, doesn't it? But here comes another bottleneck built into the protocol: reward distribution.

I'm not going to discuss more details here, the conclusion is obvious anyway: p2Pool is not ready for the job operationally, nor it is matured enough theoretically.

P.S. since there are many technical challenge/issue, IMO there'll be more discussion if a thread is created each challenge/issue.

I started this to stress on the escalating consequences of the latest price rally, spotting the most critical challenges, it is ok to have separate threads for each issue, respectively and I think we have a candidate right now: centralized mining scene.

[Wind_FURY]

As @NotATether mentioned, what exactly technical challenge you're talking about? Few example i could think,

1. Block size limit problem, which affect bitcoin transaction fee and hinder adaption.
2. Bitcoin full node client is dominated by Bitcoin Core, even when there are many alternative implementation out there.
3. Mining pool forced to comply with regulation where pool blacklist certain address/transaction
4. All kinds of attack performed by miner which doesn't violate Bitcoin protocol such as block withholding or mining empty block

Thank you for the listing, I'd classify the threats you already mentioned, in two categories:

Category 1: Structural shortcomings of the system being exposed to ever-increasing expectations. Bitcoin scaling problem is one important example here.

It’s why exchanges, merchants, and other services should be together in support in building, and development of the Lightning Network.

Category 2: Incentivized adversary behaviors being escalated because of stakes getting higher and higher. Regulatory intervention and censorship threats fit in this class.

Regulatory intervention, we already know, censorship threats, we can circumvent, what other adversary behaviors does Bitcoin have? Miner co-opting the protocol? I believe BIP148 showed they follow the economic majority.

[Karartma1]

Interesting thread with many great insights 
In the good old days when I was able to mine bitcoins I felt so fortunate as I could earn a small reward and I could contribute to the safety of the network. This is one of the main reason why paying the fees shouldn't be seen as something bad but that's an integral part of the whole game.

I wish we could be able to mine again and I would argue that  what we need the most is not only technical excellence but also some good strategy because bitcoiners should think of supporting the network again.

It's good to have our own node but since war is coming from the mining side we need to find ways to outnumber the newcomers.
How? I honestly don't know. But I would certainly pay a small crowdsourced sum to know that I support a mining pool which cares about people's privacy.

Si vis pacem, para bellum

[Heisenberg_Hunter]

Good thread at a much needed time which could be discussed only in a board like this. Well, recently I have been thinking how a protocol which is still pretty new and not hundreds of thousands of devs working on it is handling trillions of dollars which is surely a hectic burden on the minimized developer community. We never really know how many bad actors are watching the code and trying to find a bug in the source code and we should not regret the fact that if a critical issue is found in Core, devs announce them only after a patch has been produced but what if the malicious actors has exploited the bug before?

As @ETFbitcoin said, scalability still pose a major problem : what if I don't really have money to open a channel in LN? Exorbitant mining fees and extremely slow on chain confirmations will pose a threat if more and more countries start adopting bitcoin as a currency. Yes, we are here to discuss bitcoin as a currency rather than a digital gold concept and that's what satoshi envisioned and that's what developers are working towards too. We all accept that Core implementation is dominating the network and very few open source developers are working on Core software full time! We do say we are a decentralized network but still only a very few developers are getting in for meaningful contribution so every trillion dollars relies upon them which shouldn't happen.

To prevent this issue, onboarding new developers should happen from time to time and this should be a necessity for the future trillions. As of 2018 reports we have 20-22 million software developers in the world but only less than 1000 have contributed to the open source money. Third World countries still have handful of newbie developers who are searching for job for $300pm job and they could probably bring meaningful contributions and find bugs better than the senior devs.

BTCrink is a great attempt to onboard new people working on Core, but we need more and more attempts in third world countries where even $300-$500 per month is more than enough to fund great devs working on full time for Core. Onboarding more can bring not only new approaches to scalability issue but would have faster code improvements. Recently Jack Dorsey and Jay-Z are giving 500 bitcoin for Bitcoin Development in Africa and India but this shouldn't end up with centralized shit cunts like exchange owners! But I firmly believe onboarding more and more can bring a refreshing change!