What happens if pools try to maximize fees by congesting the network?

[Wind_FURY]

I think someone or people who are smart enough to to control that much hash rate won't be too dumb to know that this won't be economically viable long-term unless they aren't motivated by profit but to attack the network.

The end-result would still be the same. The community will kick them out of the network, and it would have been better for "those attackers" to be just honest and be paid in Bitcoin. All that money spent for buying ASICs and to pay for electricity = absolutely wasted.

[NotATether]

I think someone or people who are smart enough to to control that much hash rate won't be too dumb to know that this won't be economically viable long-term unless they aren't motivated by profit but to attack the network.

The end-result would still be the same. The community will kick them out of the network, and it would have been better for "those attackers" to be just honest and be paid in Bitcoin. All that money spent for buying ASICs and to pay for electricity = absolutely wasted.

The "community" can't kick mining pools out of the network, only revenue-sharing miners who are mining at their pool can do that. But the problem is, why would they have the incentive to do that, if they too are earning a bump in pay rates from the increased transaction fees?

Ultimately, the game theory design of Proof of Work only includes miners as participants in this game, as how it was envisioned in the whitepaper. So for full node users to wrest control of fees, they would need a second layer to govern. But however it ends up, it is certainly much better than using PoS (where only exchanges and rich entities have the absolute power).

[BlackHatCoiner]

With more than 50% of the hashpower, they have full control over which transactions are in blocks and which aren't.

Yes, but undermining the system their own wealth relies on outweighs the advantage of controlling which transactions are allowed in, apparently. Also, attacking the Bitcoin network can happen for a temporary time, because the miners will switch pool, and it will have serious financial damage to whoever attempts to do it. I don't hold my breath that the same applies if they pretend there's network congestion.

[Wind_FURY]

I think someone or people who are smart enough to to control that much hash rate won't be too dumb to know that this won't be economically viable long-term unless they aren't motivated by profit but to attack the network.

The end-result would still be the same. The community will kick them out of the network, and it would have been better for "those attackers" to be just honest and be paid in Bitcoin. All that money spent for buying ASICs and to pay for electricity = absolutely wasted.

The "community" can't kick mining pools out of the network, only revenue-sharing miners who are mining at their pool can do that.

I'm sorry for not making it clear, but what makes the Bitcoin community includes the developers, the miners, the economic majority, and our fellow users.

But the problem is, why would they have the incentive to do that, if they too are earning a bump in pay rates from the increased transaction fees?

I don't think it would be OK for the majority of the community if mining pools themselves turned into dishonest operators in the network. Kicking them out would easily get community consensus.

Ultimately, the game theory design of Proof of Work only includes miners as participants in this game, as how it was envisioned in the whitepaper. So for full node users to wrest control of fees, they would need a second layer to govern. But however it ends up, it is certainly much better than using PoS (where only exchanges and rich entities have the absolute power).

?


The Game Theory in Bitcoin revolves around incentives. It's what makes everything in the network stick together.

Before actually colluding, the pools will be asking themselves, "Would it be worth it to risk long term incentives for a few moments of high fees"?

[BlackHatCoiner]

I'm sorry for not making it clear, but what makes the Bitcoin community includes the developers, the miners, the economic majority, and our fellow users.

So everyone who's part of Bitcoin, one way or another. So mining pools included.

I don't think it would be OK for the majority of the community if mining pools themselves turned into dishonest operators in the network. Kicking them out would easily get community consensus.

You can't kick anyone out of a censorship-resistant, permissionless network.

The Game Theory in Bitcoin revolves around incentives. It's what makes everything in the network stick together.

Completely agree. That's why I made this thread. I just don't think it's entirely against their benefit to pretend there's network congestion.

[Faisal2202]

Honestly, I had never thought about this before, or at least I don't remember thinking about it.
.....
A problem, from the pool owners' side, is that they can get caught easily for doing it. Every person running a full node will notice unreasonable activity (the miner not including tx that pay much), and blocks mined by pools are known.

I was remembering the term for that person, who knows all the doors to bad portals/methods but still chose to go against them, Like a white hat hacker. So that i could call you that. But then i looked at your name an you already saying blackhatcoiner. Well, you raised a great point, TBVH, i had no idea of artificially increasing the pool fee by making a single group just like many shops in the market grouped together and artificially or by protest, want to increase the price of some goods.

Well, i went curious now and i have to do a short research about it and i will try to cover an article on it too. But for now, thanks for the new topic to keep me busy.

Well, you are suggesting, that miners if collude to manipulate fees then why do fee payers can make collude and come together at a single point, so that they only pay a fixed fee, in that way, people can also manipulate the market fee because then miners have to validate those transactions. But AFAIK, still in both scenarios of Miner Collusion and Fee payer Collusion, both need solid connectivity in between them and they are totally decentralized and anonymous to each other then how can 1 contact another, so that they could convince him/her to collude? Well, the possibility of this happening is very low because in this way those pools will lose the percentage that you aforementioned because those who value the BTC and BTC blockchain will leave those pools and as a result, their holding of 69% will decrease.

[Wind_FURY]

I'm sorry for not making it clear, but what makes the Bitcoin community includes the developers, the miners, the economic majority, and our fellow users.

So everyone who's part of Bitcoin, one way or another. So mining pools included.

Everyone.

I don't think it would be OK for the majority of the community if mining pools themselves turned into dishonest operators in the network. Kicking them out would easily get community consensus.

You can't kick anyone out of a censorship-resistant, permissionless network.

I'm not sure technically how it would happen, but if it was an incident as serious as your example, then the community would easily get behind the decision to block their nodes, or maybe call on miners to point their hashing power to honest pools.

Achow and gmaxwell might be the better people to ask what they would do from a Bitcoin developers' perspective.

The Game Theory in Bitcoin revolves around incentives. It's what makes everything in the network stick together.

Completely agree. That's why I made this thread. I just don't think it's entirely against their benefit to pretend there's network congestion.

You might have misunderstood. Because if they turned into dishonest operators, they risk long term incentives for short term profit. Why be dishonest if being a good actor makes sure that they get paid?

Miners and mining pools are actually the entities that should make sure that they are taking care of Bitcoin to ensure that Bitcoin takes care of them. They will risk everything they worked for if they turned into bad actors.

[dragonvslinux]

All it would take is collusion either way for malicious activity. The one reason pools became accepted and popular is because they were more profitable, as well as obviously allowed access to the market for individuals with low hash rate that would rarely ever gain any block rewards otherwise.

It wouldn't be that simple because everything is about the incentives and being incentivized.

Aside from the cost and incentives, my point stands. It really would be that simple, even if costly and destructive in nature. But I otherwise agree the development of this wasn't really preventable.

Would a group of miners/pools really want to attack the network and risk to be kicked out of it? Or would they prefer to be honest, keep mining Bitcoin, and be rewarded for it?

It's very unlikely I don't deny that, but ease/ability and likelihood/willingness to do so are different things...

The only reason is if these mining pools (for whatever reason) would consider winding down their operations, then they don't have anything to lose (like being informally blacklisted for example). Because ultimately if they were to perform such a malicious activity in order to achieve a massive double spend, then the coins double spent would never be blacklisted for obvious reasons.

I'm not saying it's a realistic likelihood, but it will always remain a possibility until the network becomes more decentralised.

Even if it was a lot more likely years ago when a single pool had (or almost had) 51% of the hash rate...

[tjtonmoy]

In theory, it is possible, but for that to happen is highly unlikely. Bitcoin is decentralized and everyone can access its transaction data. So the risk will be very high for those pools. They can get caught manipulating the transaction fees. Or even if they add their own transactions with higher fees and not mine it on their own in order to manipulate other users, individual miners or other pools could add them to their block in order to confirm them. So that won't really work for them! If one backs up from something, others will join there in order to take advantage.
And once get noticed, it will harm their reputation. In order to continue their work, they are not going to take that risk, IMO. But nothing is impossible, and we may see this happening someday. Or maybe it has happened before and no one noticed. Now that it has brought up to the public through this OP, I guess people will be more cautious and try to look for something like this happening from now in order to avoid such manipulation.

[stompix]

I don't think it would be OK for the majority of the community if mining pools themselves turned into dishonest operators in the network. Kicking them out would easily get community consensus.

You can't kick anyone out of a censorship-resistant, permissionless network.

 

I'm not sure technically how it would happen, but if it was an incident as serious as your example, then the community would easily get behind the decision to block their nodes, or maybe call on miners to point their hashing power to honest pools.

How could you even try to block "their" nodes, it takes only one node to accept those blocks to spread them and you will need to actively blacklist every single one of them. The interconnectivity that prevents a small player to launch a cybill attack against the network is also preventing this blacklist from working

Second, Foundry from which the topic started is not an open pool, it's basically an alliance of large US miners, so if they decided to go rogue there is no threat of losing hashrate for them. Same for Antpool, some estimate more than 2/3 is Bitmain alone.

You might have misunderstood. Because if they turned into dishonest operators, they risk long term incentives for short term profit. Why be dishonest if being a good actor makes sure that they get paid?

Hmm, Enron, Sheel, Nestle, Johnson, VW, Microsoft, and thousands more every single one of them had a solid business and it didn't prevent them from acting like that. Should we go with Bitcoin-related examples? How many exchanges, lenders, and payment gateways turned out to be assholes fleecing their customers, getting "hacked" and scamming their own clients? How many times have mining gear manufacturers turned to sell shitty products just for an extra $? Do you think miners are different? If facing bankruptcy with income barely covering cost do you think they will not think of trying anything?

[BlackHatCoiner]

What? I know it gets tiring to repeat it again and again, but as you can see, it isn't grasped yet.

Second, Foundry from which the topic started is not an open pool, it's basically an alliance of large US miners, so if they decided to go rogue there is no threat of losing hashrate for them.

Depends on how rogue. If they're about to establish a 51% attack, they're pretty much undermining their own money. What they don't lose is the hash rate (comparably to open pools).

Do you think miners are different?

This is precisely why we should be keeping an eye on, and not rely exclusively on "fairness theories". There might be bad incentives in the future.

[stompix]

What? I know it gets tiring to repeat it again and again, but as you can see, it isn't grasped yet.

Nothing   I just love when somebody else tries to get this herculean task done!
Also, I enjoy imagining the Pikachu faces those reading it are making!

Depends on how rogue. If they're about to establish a 51% attack, they're pretty much undermining their own money. What they don't lose is the hash rate (comparably to open pools).

In normal highly profitable times, of course, they wouldn't think of this!
In not-so-profitable ones and with no perspective other than bankruptcies, who knows!
Thinking of, 788769
vs  794641 11.433 BTC vs ‎6.519 BTC, I wonder in which situation would the miners be less eager to sabotage the network!

This is precisely why we should be keeping an eye on, and not rely exclusively on "fairness theories". There might be bad incentives in the future.

Yeah, but keeping an eye on it does nothing, and even if you realize the exact moment when they will do what they are planning on it will be too late. Without full control over the nodes or at least enough hashrate to make their challenge meaningless, so over 80-90% we will just sit and watch it happen!

Yeah, it doesn't sound nice, paints a really gloomy picture but right now this is reality. And if something hasn't been done about ordinals or blocksize or a ton of other things don't even dream about a change in mining!

[BlackHatCoiner]

Yeah, but keeping an eye on it does nothing

Well, sure, you can't stop a miner from doing anything at any moment, but my point isn't that. If we keep an eye on it, we can notice the differences of incentives overtime. Maybe, who knows, there might be a disincentive to protect the network sometime. Or an incentive to attack it. Quite hard to imagine, but since these aren't impossible, then maximizing profit from fees by congesting the network is right as well a possibility.