risk of centralization of bitcoin.

[cafter]

what are the potential ethical issues and challenges arising from the increasing centralization of mining power and wealth in very few dominant mining pools in the Bitcoin network and what can the bitcoin community do? what measures can be taken to maintain decentralization of the network while addressing these concerns? 

like the risk of 51% attack when big pools have more power, etc.

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[ranochigo]

Centralization is always present in Bitcoin or any other Crypto. PoW will always encourage centralization because it encourages people to amass hashpower and mine together. The only thing keeping them from attacking Bitcoin would be game theory. At present, the rewards from attacking Bitcoin with a 51% attack is overwhelmingly low and it is not remotely profitable for them to do so. The opportunity costs of executing any attack on Bitcoin is far higher than the benefits.

There is nothing much that you can do to discourage centralization as long as people are willing to mine in pools. Pools have controlled more than 51% of the hashrate for many instances but nothing much has happened.

[Bureau]

Mining pools are composed of many miners and not an individual. If such an issue arises which I doubt miners can switch pools to save the network. I won't dismiss the risk but for more than a decade no one tried it and no one will be able to do it.

[sesterceshop]

Here are a few ideas to maintain decentralization:

• Supporting more decentralized pools
• Using easily installable software that allows anyone to create a high-quality mining pool would create more competition and diversity among miners
• Adopting 16nm ASICs could reduce the gap between large and small miners by making mining more efficient and affordable
• Educating and incentivizing miners: Miners should be aware of the risks and benefits of joining different pools and make informed decisions based on their values and goals. Miners should also be incentivized to switch pools if they notice that mining centralization is affecting the network’s health or price.

[Tytanowy Janusz]

like the risk of 51% attack when big pools have more power, etc.

even the fact that some pool/miner will reach 51% someday does not mean that it will be profitable for him to attack. If the attack were to be made by a miner, bitcoin is not mined with the help of GPUs, which can then be resold to players, but with the help of specialized devices used only for bitcoin mining. Hence, in the event of a bitcoin collapse or a sharp drop in prices related to an attack, mining units go to the trash because they have no other use, and we are talking about billions of dollars in hardware. If the pool were to attack, individual miners will automatically turn away from it to avoid the scenario described above eliminating future profits.

[Upgrade00]

what measures can be taken to maintain decentralization of the network while addressing these concerns?

What can be done is for the network to overwhelming reject any alternate chain created by a miner with majority hashrate making it unprofitable for them.
Other than this it's a capitalist game. Miners should of course abandon a pool if they try anything malicious, meaning they will drastically lose their hashrate power, further making it unattractive for anyone to even attempt to attack the network.

• Supporting more decentralized pools
• Using easily installable software that allows anyone to create a high-quality mining pool would create more competition and diversity among miners

• What do you mean by decentralized pools? There are just pools, the centralization occurs when the too pools gets majority of hashrate, this does not mean that they are trying to hurt the network.
• Creating a pool is one thing, having enough hashrate to be competitive is another.

[blckhawk]

Easy, when the mining power becomes centralized then that can only mean that bitcoin will just become any other banking institution that prioritizes the well-being of their own rather than the people that bitcoin was made for. It's unlikely to happen though, I'm sure that the major players are going to be in support of decentralization which increases even more the unlikeliness that a centralization happens. but I think that's what's going to happen when bitcoin becomes centralized.

Unless, they create a fucking consortium

[paid2]

what are the potential ethical issues and challenges arising from the increasing centralization of mining power and wealth in very few dominant mining pools in the Bitcoin network and what can the bitcoin community do? what measures can be taken to maintain decentralization of the network while addressing these concerns? 

like the risk of 51% attack when big pools have more power, etc.

From my point of view, laws and legislation represent a non-negligible risk when it comes to centralising the BTC hashrate.

I will quote an excellent message posted by mikeywith recently :

If you follow this topic from start you will see that situation changed a lot, and having more than 51% of hashrate was always problematic.

Before the China ban it was Bitmain with their pools (Antpool, BTC.com and Viabtc) arguably even Poolin which was founded by an ex-Bitmain employee before the 2020 lawsuit, and then, on the other side, you had F2pool, those pools combined always had well over 50% of the total hashrate, and don't be fooled by all the names, essentially, 2-4 Chinese men sitting in closed room had the final say on what to do with all that hashrate.

Fast forward, China banned mining, and U.S players started to get into the business, creating their own mining pools, and now it's no more 2-3 Chinese men, it's 1-2 Chinese and 1-2 Americas, still the same number of entities who control well over 50% of the total hashrate, and since BTC doesn't care about those folk's nationality or names, nothing has changed in terms of hashrate distribution.

I have been professionally mining BTC long before this topic took place, and I have been following hashrate distribution years before Foundry USA pool came into existence and the fact that 2-3 entities owning over 50% of the hashrate have been the case since at least 2016, it's a lot more than just looking at a pie chart and thinking you solved the puzzle, you need to understand how are all these pools are connected, then use that knowledge to compare hashrate distribution for the past decade, and you will come to the same conclusion.

Furthermore, pool distribution is pretty irrelevant compared to gear ownership and the physical location of that hash power, at least 80% of the hashrate comes from a single manufacturer, that's more to worry about than some random pool distribution which can change drastically over the course of a few hours, the physical location of the gears and the law which they operate under is also a serious matter.

I'd rather see 3 large pools each owning 33% but hashrate divided between 50 different countries where no country has over 10% of it, rather than seeing 100 pools, each with 1% hashrate but 70% of that hashrate located in the same countries with the same laws and regulation, even worse, that majority of that 70% is owned by a single entity.

I agree with him 100%, the importance of geographical situation of miners is too often underestimated, I think that a distribution in more countries would be beneficial to the general health of the Bitcoin hashrate. With too large a majority of miners concentrated in just 2 or 3 countries, the risks associated with a change in legislation are too big.

[ABCbits]

In short, i would suggest these idea which could majorly reduce risk of ms-use of hashrate by pool,
1. Revive P2Pool which is decentralized pool.
2. Encourage miner to keep up-to-date with Bitcoin news and prepare switch to different pool anytime in case certain mining pool doing something malicious.

[tbct_mt2]

2. Encourage miner to keep up-to-date with Bitcoin news and prepare switch to different pool anytime in case certain mining pool doing something malicious.

Miners will have to check news and change their mining pools if their current mining pools have too high hashrate that potentially can do malicious thing like attacking the network.

They can read news to stay up to date with the network status but more professional entities like exchanges, mining pools will have and run their full nodes together with some special tools to detect malicious things and switch their ASICs and hashrate to keep the network as most decentralized as possible to prevent against network attacks.

Detection is key as after that, they can switch their ASICs very quickly and easily. Just connect their ASICs to other pools with simple configurations.

[Who is John Galt?]

like the risk of 51% attack when big pools have more power, etc.

Theoretically, a situation may arise when a number of sufficiently large miners at some stage will cooperate in order to carry out a 51% attack. But it must have a purpose, right? After all, then there will be other miners who will connect more equipment and be able to regain control over the network. That is, we are talking about some kind of short-term action, the main purpose of which can only be to damage the reputation of bitcoin. But why do miners need it?

In addition, in order for so many large miners to cooperate for something destructive, it is necessary that they all have the same interests at the same time, and at the same time no one has option to connect additional equipment so that the first group of miners again had less control over the network.

I am not saying that we shouldn't think about how to increase the level of decentralization and reduce risks. It's still necessary. But it’s also not worth worrying too much about possible risks, they are practically zero today.

[Dave1]

what are the potential ethical issues and challenges arising from the increasing centralization of mining power and wealth in very few dominant mining pools in the Bitcoin network and what can the bitcoin community do? what measures can be taken to maintain decentralization of the network while addressing these concerns? 

like the risk of 51% attack when big pools have more power, etc.

It's already 2023 and we are still talking about the 51% attack? Not saying that it can't be done, but it's impossible at this point to even think about it. It will take a lot of money to execute it and not sure what will be the incentives to do that.

As for centralisation, it is also possible, but we can see that it is distributed across, from US to Asia and even to some remote region in Russia and Europe. So again, it is present, but not seeing that it will disrupt the ecosystem.

[joniboini]

As for centralisation, it is also possible, but we can see that it is distributed across, from US to Asia and even to some remote region in Russia and Europe. So again, it is present, but not seeing that it will disrupt the ecosystem.

It is still not ideal as mentioned above. I believe others already said it better, but you don't want to make miners concentrated in one or two countries. I think some people are trying to discourage this by encouraging miners to move to other countries, but that is not ideal since every miner's condition is different. At the end of the day, they are doing that for profit. I guess the worst scenario would be a huge decrease in hash rate and then a period of slow confirmation if something terrible happened to miners due to regulation.

[ranochigo]

In short, i would suggest these idea which could majorly reduce risk of ms-use of hashrate by pool,
1. Revive P2Pool which is decentralized pool.
2. Encourage miner to keep up-to-date with Bitcoin news and prepare switch to different pool anytime in case certain mining pool doing something malicious.

Miners don't really care, at least the large ones. I've had a small farm at one point in time and switching pools took a good amount of time, especially if the webui isn't very intuitive. They probably don't want to have to deal with the hassle of going into every one of the machines and changing the pools for no good reason. If anything malicious can be detected, it is already too late. P2Pool is just not really that good.

Anyways, BTCGuild and GHash.io were the closest in recent memory. BTCGuild was more proactive in this regard and had a proposal with cascading fee structures. The onus is largely on the pool owners to force pool users to move.

[kryptqnick]

I don't think that the centralization of mining is on the rise. There was a time when mining was concentrated in China, and since China is an authoritarian state and a single country, I could see how some were concerned. But since the bad, mining spread a bit, largely into the USA and Kazakhstan. Unfortunately, I can't find any recent reliable data that analyzes the amount of mining happening in different countries, but there's no reason to think it's more centralized than it was years ago.
Moreover, a major deterrent of the 51% attack in am immense financial resource that's going to just get burned to attempt the attack.

[coupable]

There is nothing much that you can do to discourage centralization as long as people are willing to mine in pools. Pools have controlled more than 51% of the hashrate for many instances but nothing much has happened.

All miners, including large pools or individual miners, are mainly beneficiaries of Bitcoin's popularity which is derived from its decentralized nature. It would be stupid for a central authority to control any of the rules of the protocol or try to manipulate the network in any possible way, because this would have a catastrophic effect on the entire Bitcoin market, because users would lose confidence in the characteristics of Bitcoin, and this would lead to a decline in its use and perhaps a complete collapse of the price.
Theoretically, all hypotheses are valid. In practice, the market still has a good degree of decentralization in a way that does not allow one party to monopolize.

[PX-Z]

Mining pools are businesses relying in bitcoin mining rewards. Attacking the network means suicide for the business and they will do harm than good, i mean they will gain more loss than profit — we are talking of millions of dollars here, so no one on their right mind will do that.

[CarnagexD]

what are the potential ethical issues and challenges arising from the increasing centralization of mining power and wealth in very few dominant mining pools in the Bitcoin network and what can the bitcoin community do? what measures can be taken to maintain decentralization of the network while addressing these concerns? 

like the risk of 51% attack when big pools have more power, etc.

The only that it have is you'll lose your fund that you put in that centralized exchange. Well of course having your money in an centralize exchange like bybit and binance, you let those company manage your money. It also have some features of staking and saving. So you put your whole trust in that as an exchange. It also help to circulate the liquidity of BTC and other Altcoins because with these centralize exchange being user friendly and easier to use. More people are able to participate in the marketplace.

[jrrsparkles]

As for centralisation, it is also possible, but we can see that it is distributed across, from US to Asia and even to some remote region in Russia and Europe. So again, it is present, but not seeing that it will disrupt the ecosystem.

It is still not ideal as mentioned above. I believe others already said it better, but you don't want to make miners concentrated in one or two countries. I think some people are trying to discourage this by encouraging miners to move to other countries, but that is not ideal since every miner's condition is different. At the end of the day, they are doing that for profit. I guess the worst scenario would be a huge decrease in hash rate and then a period of slow confirmation if something terrible happened to miners due to regulation.

Unfortunately miners choose to pick the locations where the regulations and conditions are favorable for them because at the end of the day its the money making job so they will do it in the way that will be more favorable for them. But over the time when people can afford to mine on their own geo location due to the development which will lessen the mining setup cost so at that time we can expect the more decentralized mining operations from all over the world which will eliminate the risk involved if one country is trying to get rid of mining operation.

[ImThour]

The 51% attack will never be executed on Bitcoin network, not in million years as there will never be any organization which will be able to get a control of 51% Bitcoin mining hashpower. There is no need of halting the process and anyone thinking about doing that is simply wasting their time in my honest opinion. Also, their resources. And even if the mining pool decide to do an attack on the Bitcoin network, they will simply lose their business and revenue. So nah, not possible.

[pooya87]

Miners don't really care, at least the large ones.

I wouldn't say they don't care, instead they probably see the risk as being small enough to neglect, which is not wrong either the risk is not the biggest. But if that chances and they feel the threat as being big enough that can damage their "investment" they do care and specially the big ones because they have more at stake. If you think about it, a successful attack on bitcoin will harm those who have more money invested in bitcoin and bitcoin mining.

In fact we saw how much miners care when they feel the risk rising about 7 years ago when ghash.io grew too big that they controlled more than 50% of the hashrate. Miners did make the effort and started switching pool and left their service to reduce the risk.

[BlackHatCoiner]

The 51% attack will never be executed on Bitcoin network, not in million years as there will never be any organization which will be able to get a control of 51% Bitcoin mining hashpower.

I mean, that's a very arrogant stance to have. First of all, there has been a time in history when a pool owned more than 50% of the hashrate. It quickly tried to get rid of it, and did, but there was. Second, why will it never be executed? What makes you so sure that there will never be an incentive to attack the network? How come other cryptos have been attacked?

[ranochigo]

I wouldn't say they don't care, instead they probably see the risk as being small enough to neglect, which is not wrong either the risk is not the biggest. But if that chances and they feel the threat as being big enough that can damage their "investment" they do care and specially the big ones because they have more at stake. If you think about it, a successful attack on bitcoin will harm those who have more money invested in bitcoin and bitcoin mining.

In fact we saw how much miners care when they feel the risk rising about 7 years ago when ghash.io grew too big that they controlled more than 50% of the hashrate. Miners did make the effort and started switching pool and left their service to reduce the risk.

The timing matters too, and BTCGuild adopted more of a preemptive approach as compared to Ghash.io which only released statements after crossing the threshold. As much as I can remember, they didn't really end up adopting any measures to dissuade miners from mining on their pool and miners had to leave willingly. The key reason for people to leave was mainly the fact that there was a bout of DDOS attack with tons of downtime shortly thereafter. Correct me if I'm wrong though.

Pools and miners should care, but it felt like miners were still joining and increasing the hashrate at GHash.io during that period of time and the switching of pools in response to that threat wasn't particularly significant or was just plain slow.

[Wind_FURY]

what are the potential ethical issues and challenges arising from the increasing centralization of mining power and wealth in very few dominant mining pools in the Bitcoin network and what can the bitcoin community do? what measures can be taken to maintain decentralization of the network while addressing these concerns?

like the risk of 51% attack when big pools have more power, etc.

They could try, but network participants are incentivized to be honest. If an entity gains 51% of the hashing power and decides to censor "some transactions" or do some double spends, don't you think that it's merely wasting the resources spent on the network? Because the community, given a live or die situation, could actually come into consensus to hard fork the network and exclude the bad miner.

Contrastingly, if the bad actors mined honestly instead, they would be rewarded in Bitcoin.

[jrrsparkles]

The 51% attack will never be executed on Bitcoin network, not in million years as there will never be any organization which will be able to get a control of 51% Bitcoin mining hashpower.

I mean, that's a very arrogant stance to have. First of all, there has been a time in history when a pool owned more than 50% of the hashrate. It quickly tried to get rid of it, and did, but there was. Second, why will it never be executed? What makes you so sure that there will never be an incentive to attack the network? How come other cryptos have been attacked?

Deepbit in 2011 - https://bitcointalk.org/index.php?topic=26656
BTCGuild in 2013 - https://bitcointalk.org/index.php?topic=152296.0
GHash.IO in 2014 - https://bitcointalk.org/index.php?topic=645056.0

There are the times that mining pools had over 51% hashrate but they never turned into malicious ones but it proves that 51% is not impossible at all but it was way back when the hash rates were low compared to now. But the fact is the there is no incentive to the miners if they become malicious but have to keep operating it buy burning billions to keep the attack on the network which makes it no one really would do that with the motive of money.

[ranochigo]

That's true. But i expect some miners consider if pool use hashrate for malicious purpose, that pool might might cheat on them as well.

Definitely. Pools are rational actors as well, as much as the miners and they would gain more in the long term by being honest. This is the presumption that miners make and are thus unwilling to switch pools even if it nears 51%. Besides, a good bulk of the hashrate for the pools are associated with large farms, which could very well be given a discount for choosing their pools over the others.

I wouldn't say it's already too late since the damage could be reduced if miner switch to different pool. Certain attack such as 51% require some time and could be stopped/slowed before it specific amount of block re-org.

Yeah, but it's not like there are other option which offer both decentralization and combining miners hashrate. And with 5% of Monero miner use P2Pool, it shows it's not bad idea attempt to revive P2Pool (for Bitcoin).

Depends on how easy it is to detect, but generally it would go undetected until real harm is done and the inertia for miners to switch pool would only gain traction then. P2Pool is okay, but there is definitely a good reason why it isn't used. Namely how much variance affects payout, favours small pools, etc.

[BlackHatCoiner]

but it was way back when the hash rates were low compared to now.

Yes, but even now, there are like two pools which produce most of the work; Foundry USA and Antpool; 52.04% of the total hashrate there. That isn't progress.

But the fact is the there is no incentive to the miners if they become malicious

How can you be so certain? The numerous 51% attacks in other such cryptocurrencies should have already convinced you that the game theory is only partly correct.

[Wind_FURY]

but it was way back when the hash rates were low compared to now.

Yes, but even now, there are like two pools which produce most of the work; Foundry USA and Antpool; 52.04% of the total hashrate there. That isn't progress.

But the fact is the there is no incentive to the miners if they become malicious

How can you be so certain? The numerous 51% attacks in other such cryptocurrencies should have already convinced you that the game theory is only partly correct.

What where those "other cryptocurrencies"? Nascent POW shitcoins? I believe 51% attacks towards those networks would require the attacker considerably less resources than they would if they attacked a POW giant such as Bitcoin. Would Foundry USA and Antpool really risk everything just to attempt a double spend?

[jrrsparkles]

but it was way back when the hash rates were low compared to now.

Yes, but even now, there are like two pools which produce most of the work; Foundry USA and Antpool; 52.04% of the total hashrate there. That isn't progress.

You were right that based on the last 6 months has rate distribution then Foundry USA 31.61%(8,375 mined blocks) and AntPool 21.24%(5,626 mined blocks) but in the last 2 years distribution AntPool 15.79%(25,178 mined blocks) and Foundry USA 7.50%(11,957 mined blocks)

https://www.blockchain.com/explorer/charts/pools-timeseries

And the reason for this in my opinion is mainly due to the restrictions from Chinese government for bitcoin mining operations so the miners were moved to where they can make money. So I just assume he mining landscape is dynamic and can change over time.

But the fact is the there is no incentive to the miners if they become malicious

How can you be so certain? The numerous 51% attacks in other such cryptocurrencies should have already convinced you that the game theory is only partly correct.

Other crypto currencies never had such hashpower rate to compare with bitcoin which makes up that why they are never going to do it for making money because miners has to act rationally to maximize their profits in long run.

[BlackHatCoiner]

What where those "other cryptocurrencies"?

Ethereum classic, Bitcoin Gold, Verge, Feathercoin, Litecoin Cash, probably more.

I believe 51% attacks towards those networks would require the attacker considerably less resources than they would if they attacked a POW giant such as Bitcoin.

Obviously, but it's a matter of numbers from that point on. You could argue that no sane person would attack the other cryptocurrencies either, but they were attacked. This is evidence that the game theory is only partially correct. It's correct as long as the incentives to protect are greater than to attack; you can't be 100% certain that will last forever.

You were right that based on the last 6 months has rate distribution then Foundry USA 31.61%(8,375 mined blocks) and AntPool 21.24%(5,626 mined blocks) but in the last 2 years distribution AntPool 15.79%(25,178 mined blocks) and Foundry USA 7.50%(11,957 mined blocks)

Sure, but present is what matters, and at the moment only 2-3 pools dominate.

[BenCodie]

what are the potential ethical issues and challenges arising from the increasing centralization of mining power and wealth in very few dominant mining pools in the Bitcoin network and what can the bitcoin community do? what measures can be taken to maintain decentralization of the network while addressing these concerns?

like the risk of 51% attack when big pools have more power, etc.

If a 51% is successfully carried out, the miner could have the ability to modify the blockchains' history. In this event, it would render the entire validity of Bitcoin as questionable. This would have a monumental effect on Bitcoin, as the fact that its data has been maintained since its inception is one of the things that make it so valuable in so many ways; use-case, technology, trust in concept strength. These value propositions being weakened or questioned would not be good for Bitcoin.

Though on a lighter note, the likelihood of this happening? Unlikely. When was the last time 51% of the world's power pushed all of their efforts in order to gain collective control? It's one thing to have the idea, but achieving it is much different. If it were to be If it were to ever be achieved at this point, then some countries who might not get along will have to get along, peace might be somewhat restored in the world. That would be a good sacrifice for Bitcoin to lose its credibility - but even then, I don't think it would just go away. Better solutions will exist and Bitcoin will have served its purpose of achieving a balance between people and power...
...
...
that is, if the other 49% don't start a war over the effect that 51% had over the changes to Bitcoin's ledger.

So to conduct a 51% attack right now you need, what?
- 51% dominance over resources being put toward Bitcoin
- A political plan that would not cause war OR an arsenal ready for the retaliation of effected countries (unless suicide is on the table, I don't think Russia or the USA have this kind of power, or they would have pursued already).

Computing probability of the above ... ... ... 1%. I'd have said 0%, though the 1% is needed for insurance on my opinion

[Wind_FURY]

What where those "other cryptocurrencies"?

Ethereum classic, Bitcoin Gold, Verge, Feathercoin, Litecoin Cash, probably more.

I believe 51% attacks towards those networks would require the attacker considerably less resources than they would if they attacked a POW giant such as Bitcoin.

Obviously, but it's a matter of numbers from that point on. You could argue that no sane person would attack the other cryptocurrencies either, but they were attacked. This is evidence that the game theory is only partially correct. It's correct as long as the incentives to protect are greater than to attack; you can't be 100% certain that will last forever.

No, for nascent shitcoins there's no debate. Because the incentives to attack those chains would potentially be MORE compared to the cost of attacking it. Why be honest if attacking it gives more incentives? In Bitcoin, if it pays more to be honest, then there's no point in attacking it.

The game theory fully works.

[DooMAD]

The 51% attack will never be executed on Bitcoin network, not in million years as there will never be any organization which will be able to get a control of 51% Bitcoin mining hashpower.

And it's not just the challenge of obtaining the hashpower to do it.  It's also about the game theory and incentivisation.  There's always a greater incentive to secure the network than there is to attack it.  If you invested money in all that hardware, you'd find it far more lucrative to use your ASICs to gain block rewards and tx fees than to destroy the network and have a bunch of expensive space-heaters.

[flyingcarpet]

The 51% attack will never be executed on Bitcoin network, not in million years as there will never be any organization which will be able to get a control of 51% Bitcoin mining hashpower.

And it's not just the challenge of obtaining the hashpower to do it.  It's also about the game theory and incentivisation.  There's always a greater incentive to secure the network than there is to attack it.  If you invested money in all that hardware, you'd find it far more lucrative to use your ASICs to gain block rewards and tx fees than to destroy the network and have a bunch of expensive space-heaters.

No organization engages in any behavior that does not benefit it. And if that behavior is too costly, why would they do it? And you wouldn't go the other way if it gives you more return to benefit from it. I've never worried about that, and that question will be asked from time to time, and we'll never see it happen.

The idea of such an attack goes against the logic of bitcoin and what it wants to do. Probably, while it was originally designed, the possibility of such an attack was considered today, and it was calculated that the thought of this attack would become more difficult day by day.

[Blitzboy]

Your point is well-made. Concentrating mining power is a red flag. What if a few large guys cheat? 51% assault, etc. Fearsome, huh? That's like poking your hand in a swarm. You may get honey or stung, but it won't be fun. The Bitcoin community won't rest. People are considering protocol tweaks to discourage centralization. Heard of P2Pool? The power is distributed in this decentralised mining pool that anyone can join. The proof-of-work model's hardware dependence is also being debated, but that's another issue

[pooya87]

No organization engages in any behavior that does not benefit it. And if that behavior is too costly, why would they do it?

It may not be the "organization" itself that does something damaging to itself willingly. They may be forced into it which is always a risk. For example we know MARA pool which is located in United States is a pool that complies with what US regime dictates and actively censors transactions that they are ordered to. Imagine if MARA pool had a much bigger hashrate or multiple pools were located in one jurisdiction complying with what the dictatorships tell them to do...

[BlackHatCoiner]

No, for nascent shitcoins there's no debate. Because the incentives to attack those chains would potentially be MORE compared to the cost of attacking it.

Every cryptocurrency is potentially profitable to attack, because there might be people benefiting from reversing transactions, or destroying the network altogether. There may be in bitcoin. Sure, there are legitimate users, and sure there's an order of magnitude greater incentive to protect the network, but there might be an equivalently potential incentive to attack it.

[Ale88]

Centralization is always present in Bitcoin or any other Crypto. PoW will always encourage centralization because it encourages people to amass hashpower and mine together. The only thing keeping them from attacking Bitcoin would be game theory. At present, the rewards from attacking Bitcoin with a 51% attack is overwhelmingly low and it is not remotely profitable for them to do so. The opportunity costs of executing any attack on Bitcoin is far higher than the benefits.

You pretty much explained it all. Doing a 51% attack at this point doesn't make any sense because of the cost, and let's not forget that probably the value of bitcoin once the news is out would plum, another reason why it would be pointless. You control something that lost a lot of value and costed you a lot of money, it doesn't make any sense unless you just want to actually ruin bitcoin and you don't care about the profits/losses.

[coiningz]

51% attack is no longer the main risk. After blackrock etf approve they will have incredible amount of btc and all their fiat to manipilate the industry.

[Good_Doctor]

what are the potential ethical issues and challenges arising from the increasing centralization of mining power and wealth in very few dominant mining pools

Simply, this can result to Monopoly.

what measures can be taken to maintain decentralization of the network while addressing these concerns? 

Encouraging decentralization entails many things like structural changes, stiffening rules of larger mining pools thus reducing the numbers of large mining pools that may have tendencies to overwhelming the Bitcoin to the point of wanting to be in control. In other words promotion of smaller mining pools to ensure even distribution.
We also have technological developments that will encourage decentralization too and many others favourable actions .

[The Cryptovator]

Until now, there hasn't been any recorded instance of a 51% attack on the Bitcoin network, as far as I'm aware. It's mostly a theoretical fear rather than a reality. Any mining pool attempting such an attack would require substantial energy and mining equipment. However, other miners would likely prevent such an attack from happening, which is one of the reasons why Bitcoin remains decentralized. Nowadays, carrying out such an attack is not an easy task, reaffirming Bitcoin's decentralization.

[usekevin]

Bitcoin is the decentralized crypto currency and it's the only reason for the survival of bitcoin over a decade in the market.It's not possible for the bitcoin to get centralized,because the control of bitcoin was not in single hand.The mining of bitcoin was limited now,So the bitcoin was not get into the centralized form.The country can do some control over bitcoin by legalization of bitcoin in their country,but the full control of bitcoin can't hold by any people.

[serjent05]

what are the potential ethical issues and challenges arising from the increasing centralization of mining power and wealth in very few dominant mining pools in the Bitcoin network and what can the bitcoin community do? what measures can be taken to maintain decentralization of the network while addressing these concerns? 

like the risk of 51% attack when big pools have more power, etc.

A mining pool is just a gathering of hashes from different parts of the world.  It is where the miners are pointing their hashes and does not mean that only one person owns all those hashes that is on the mining pool.  Mining farm owners can prevent such centralization by pointing their hashes on the different mining pools, or evenly distributing hashes across all the mining pools.

I believe there is always a program monitoring each mining pool and will trigger an alarm or notification is some mining pool are reaching the critical percentage, and this can be solved by diverting some of the miners of that mining pool to other mining pools.

[Wiwo]

By centralization what I understand from your point is that Bitcoin proof of stake possible risk right?

If that be it then we must be sincere with ourselves that Bitcoin will become more centralized and security threatened if it network adopts the proof of stake instead of the current proof of work POW vs POS,  because both have their unique features that place the miners in various categories and conditions.

But meanwhile bitcoin centralization is a deliberate act to weaken fhs Bitcoin's dominance as a decentralized financial tool.

[darkv0rt3x]

Centralization is always present in Bitcoin or any other Crypto. PoW will always encourage centralization because it encourages people to amass hashpower and mine together. The only thing keeping them from attacking Bitcoin would be game theory. At present, the rewards from attacking Bitcoin with a 51% attack is overwhelmingly low and it is not remotely profitable for them to do so. The opportunity costs of executing any attack on Bitcoin is far higher than the benefits.

There is nothing much that you can do to discourage centralization as long as people are willing to mine in pools. Pools have controlled more than 51% of the hashrate for many instances but nothing much has happened.

One hypothetical idea was when Bitcoin is mass adopted, to start building houses with one miner included. And the electricity cost could not penalize the family buying the house, or course. But this way, could be good to spread many miners around the world. Also, this could encourage neigbouhrs to have their own "mini-pools" and help with decentralisation. This is utopic for now, of course, but it was an idea! With many flaws for sure but it's still an idea. xD

[jeraldskie11]

 
like the risk of 51% attack when big pools have more power, etc.

In my opinion, there will be no more interested to do the 51% attack against Bitcoin because it's too expensive if they're going to do it nowadays. Imagine you can buy the best miner with $3000 but only gives you a less than 1% of total mining hash rate. It's not worth it while they can only do is just to manipulate the transactions. This attacks commonly happened on small crypto or newly launch crypto because most of them only have few miners.

[Fivestar4everMVP]

Gone are the days when individuals could mine bitcoin on their laptop or desktop computers, assuming mining bitcoin on just about any type of computer was still possible, even though the reward be really small, I would have suggested individual mining to be a solution to the problem, in fact, if it was possible to mine bitcoin on laptops and desktop computers, we wouldn't have to be discussing this topic right now, because with billions of computers mining bitcoin in millions of home, the bitcoin network will be the highest decentralized network in the world, and there can never be a time when a 51% attack will ever be possible because with billions of computers mining, it will be practically impossible for any computer to gain up to 5 percent of the total network's hashrate, not to talk of 50 to 51 percent.

[Silberman]

You pretty much explained it all. Doing a 51% attack at this point doesn't make any sense because of the cost, and let's not forget that probably the value of bitcoin once the news is out would plum, another reason why it would be pointless. You control something that lost a lot of value and costed you a lot of money, it doesn't make any sense unless you just want to actually ruin bitcoin and you don't care about the profits/losses.

The only ones which could be interested in doing this are the governments, they have money to spare as they can literally print as much of it as they want or they could raise taxes, and they do not care about profiting from such move as once again they can print all the money they want anyway, so governments could actually try to attack bitcoin on the future in such a way, however if they tried to do this then this would tell us the global adoption of bitcoin is going incredibly well, otherwise governments will not be that desperate to try something like this.

[Wind_FURY]

No, for nascent shitcoins there's no debate. Because the incentives to attack those chains would potentially be MORE compared to the cost of attacking it.

Every cryptocurrency is potentially profitable to attack, because there might be people benefiting from reversing transactions, or destroying the network altogether. There may be in bitcoin. Sure, there are legitimate users, and sure there's an order of magnitude greater incentive to protect the network, but there might be an equivalently potential incentive to attack it.

That's the point of the Game Theory behind Bitcoin, there may or may not be. How much should an entity spend to start a 51% attack on Bitcoin? If the entity is willing to spend millions to profit in millions more, then OK. But in Bitcoin that probability is much MUCH lower than what you're trying to suggest because it makes more sense to be honest and be incentivized in Bitcoin.

[WatChe]

Until now, there hasn't been any recorded instance of a 51% attack on the Bitcoin network, as far as I'm aware. It's mostly a theoretical fear rather than a reality. Any mining pool attempting such an attack would require substantial energy and mining equipment. However, other miners would likely prevent such an attack from happening, which is one of the reasons why Bitcoin remains decentralized. Nowadays, carrying out such an attack is not an easy task, reaffirming Bitcoin's decentralization.

The amount of computing power and resources required to carry out 51% attack will surpass the resulting monetary advantage. Moreover there are thousands of nodes globally distributed that are maintaining the Bitcoin network. So its very difficult rather impossible to centralised the Bitcoin. We haven't seen any instance where some centralised entity has taken control of Bitcoin network and that makes the network more robust.

[mikeywith]

I believe there is always a program monitoring each mining pool and will trigger an alarm or notification is some mining pool are reaching the critical percentage, and this can be solved by diverting some of the miners of that mining pool to other mining pools.

How would you define what critical percentage is? Bitmain has had roughly half the global hashrate for many years, via the different pools it operates and/or owns directly or indirectly, the same thing can still happen, the same person could be operating 5 different pools with hashrate combined reaching 51% without anyone knowing.

Given that the general public is so paranoid over this 51% figure, no pool would allow itself to grow this big on a single domain, they can keep half the hashrate and proxy the other half to another pool they own and you won't know that the same pool has found half the blocks under different random text in the coinbase and a different node that propagated the blocks.

In fact, many of the small pools are nothing but a proxy, you think you are doing Bitcoin a favor and point your gears to a small pool only to find out that your hashrate is being redirected to the same pool you left because you thought it was "too big".

The Bitcoin community won't rest. People are considering protocol tweaks to discourage centralization. Heard of P2Pool? The power is distributed in this decentralised mining pool that anyone can join.

The community is well-rested, to be honest,  . P2Pool is a dying project (assuming it's not already dead), more than 80% of blocks are found by a few large PPS pools, even the large PPLNS pools have started to fall apart.

There is something that many people chose to ignore or simply not understand, the majority of miners will follow where the steady profits are, mining is a very difficult business and you are more likely to end up losing money than making any, adding variance by mining to P2Pool or any other small pool that doesn't guarantee you daily payouts just increases your risks.

Eventually, the safest place as far as payout is concerned would be large pools that pay PPS, and to own and operate a large PPS pool you will need a lot of BTC in reserves  to avoid bankruptcy as well as to operate, while I don't view the current mining distribution between pools as a risk, the only way to mitigate that would be launching a community PPS pool, there is no other way around.

You just can't tell miners to start making less profit or to be exposed to more variance just to improve decentralization, you need to offer them a similar product owned by the community then they will be more than happy to join it.

Three years ago I proposed something to Theymos;  forum funds could be used to start a PPS pool, he had some good reasons why that wasn't needed then, alongside some other valid points, and I do seem to agree with him, we are not at a high-risk level whereby we need to start such a pool.

He proposed a greater idea which I studied further and found that could work, I created a topic regarding my discussion with him which could be found here "Catastrophe Bonds Based Mining Pool ".

[ABCbits]

Gone are the days when individuals could mine bitcoin on their laptop or desktop computers, assuming mining bitcoin on just about any type of computer was still possible, even though the reward be really small, I would have suggested individual mining to be a solution to the problem, in fact, if it was possible to mine bitcoin on laptops and desktop computers, we wouldn't have to be discussing this topic right now, because with billions of computers mining bitcoin in millions of home, the bitcoin network will be the highest decentralized network in the world, and there can never be a time when a 51% attack will ever be possible because with billions of computers mining, it will be practically impossible for any computer to gain up to 5 percent of the total network's hashrate, not to talk of 50 to 51 percent.

That's not true, discussion about 51% on altcoin (which can be mined with computer) also exist. Few example,
Monero: https://finance.yahoo.com/news/monero-under-51-attack-threat-182244867.html
Ethereum (in past it use PoW): https://ethereum.stackexchange.com/questions/542/during-a-51-attack-what-can-the-attacker-actually-accomplish
Chia: https://www.reddit.com/r/chia/comments/nk50x2/cost_of_51_attack_on_chia/

And in practice, average people still can't mine profitable if they have high electricity price or old generation of CPU/GPU.

The Bitcoin community won't rest. People are considering protocol tweaks to discourage centralization. Heard of P2Pool? The power is distributed in this decentralised mining pool that anyone can join.

The community is well-rested, to be honest,  . P2Pool is a dying project (assuming it's not already dead), more than 80% of blocks are found by a few large PPS pools, even the large PPLNS pools have started to fall apart.

P2Pool (on Bitcoin network) is dead. Although it's doing well on Monero community where it has about 5% hashrate.

[Wind_FURY]

Until now, there hasn't been any recorded instance of a 51% attack on the Bitcoin network, as far as I'm aware. It's mostly a theoretical fear rather than a reality. Any mining pool attempting such an attack would require substantial energy and mining equipment. However, other miners would likely prevent such an attack from happening, which is one of the reasons why Bitcoin remains decentralized. Nowadays, carrying out such an attack is not an easy task, reaffirming Bitcoin's decentralization.

The amount of computing power and resources required to carry out 51% attack will surpass the resulting monetary advantage. Moreover there are thousands of nodes globally distributed that are maintaining the Bitcoin network. So its very difficult rather impossible to centralised the Bitcoin. We haven't seen any instance where some centralised entity has taken control of Bitcoin network and that makes the network more robust.

Plus while the "attacking-entity" is secretly investing a lot of money accumulating ASICs and booting them up to start mining Bitcoin, in theory, the entitly might have found out that it's actually better to be honest and be rewarded in Bitcoin. Haha.

What we plebs might have misunderstood about Game Theory is, it's about finding an equilibrium to do what's good for the individual, and the group. If the Game Theory behind Bitcoin is flawed then the network would probably have already died.

[DooMAD]

Three years ago I proposed something to Theymos;  forum funds could be used to start a PPS pool, he had some good reasons why that wasn't needed then, alongside some other valid points, and I do seem to agree with him, we are not at a high-risk level whereby we need to start such a pool.

He proposed a greater idea which I studied further and found that could work, I created a topic regarding my discussion with him which could be found here "Catastrophe Bonds Based Mining Pool ".

I see, so the discussion about the concept got kinda drowned out by the arguments over math.  The high-level stuff definitely go beyond my comprehension, but the theory seems sound enough.  It's difficult to tell what level of engagement there might be with limited RoI, but it's worth looking into.

Is it better to continue discussing the concept in this thread, rather than resurrecting the 2020 one (and possibly the resulting math argument again)?

[Twentyonepaylots]

Bitcoin is the decentralized crypto currency and it's the only reason for the survival of bitcoin over a decade in the market.It's not possible for the bitcoin to get centralized,because the control of bitcoin was not in single hand.The mining of bitcoin was limited now,So the bitcoin was not get into the centralized form.The country can do some control over bitcoin by legalization of bitcoin in their country,but the full control of bitcoin can't hold by any people.

I also think Bitcoin cannot be centralized due to its decentralized nature. The entire network is built on a peer-to-peer system without central authority or control. There is no person or entity has control over the network, making it impossible to centralize. Personally, I would like to keep it that way because people see Bitcoin as a viable investment option because of its decentralization, which allows users to have more control over their money, make transactions without the need for intermediaries, and have no restrictions with the government regulating body.

[mikeywith]

I see, so the discussion about the concept got kinda drowned out by the arguments over math.  The high-level stuff definitely go beyond my comprehension, but the theory seems sound enough.  It's difficult to tell what level of engagement there might be with limited RoI, but it's worth looking into.

Is it better to continue discussing the concept in this thread, rather than resurrecting the 2020 one (and possibly the resulting math argument again)?

The idea that theymos suggested is brilliant but doesn't really solve much of the problem unless the share/bonds holders are "average community members who care about bitcoin", what if we deploy such a pool and then Bitmain ends up buying all the bonds?

The funding itself needs to come from the community, but then running a PPS pool is no easy, there are two things that you need

1- Enough reserves to avoid bankruptcy:

Meni rosenfeld has a perfect formula for this, all you need to know is :

-Your pool fee
-Block Reward
-Bankruptcy tolerance.

The average pool fee is 2.5% as of today, the block reward is 6.25, Bankruptcy tolerance is optional, and how likely to bankrupt do you want to be? in the quoted topic the caclatuion accounts for 0.1% chance of going bankrupt, it can be increased or decreased however you like.

The formula is:

(Blockrewards  *ln bankruptcy) / (2*pool fees)

Applying the above figures we get:

(6.25  *ln 1000) / (2*0.025) = 863 BTC in reserve to be subject to only 0.1% chance of going bankrupt

Could be a higher risk of 1% and that changes the numbers to

(6.25  *ln 100) / (2*0.025)  = 575 BTC

Could increase the pool fee to 3% and that gives us

(6.25  *ln 100) / (2*0.03) = 479 BTC

going back to 2.5% fee and 0.1% bankruptcy chance after the halving

(3.125  *ln 1000) / (2*0.025)  = 431BTC

2-Have enough hashrate

This is very important, in order to be effective in the ecosystem, you need to actually find blocks, it doesn't help to have a dozen small community pools that don't find a large percentage of blocks, also, since block finding follows CDF, all pools are subject to variance, the variance is greater for smaller pools, prolonged variance can easily end up destroying the pool.

Imagine a scenario where we as a community collect 431BTC the next halving, and launch a community-owned pool only to end up with say 20 ph worth of hashrate, we would hit 3.11 blocks a year on average


The chances that we find only 50% of those blocks is 10.9%, the chance of finding only 75% of blocks is 24.9%, the chance of finding only 95% of those blocks is 38.8%, so the chances that we finish a whole year with it realized profit is pretty high.

Now say we manage to get 10EH worth of hashrate, everything changes, we should hit 1,460 blocks a year, the chances of finding only 50% of blocks is now (7.672567270428342e-100) pretty much 0% , finding only 75% of blocks is (6.983521049841958e-24) pretty much zero, finding only 95% of blocks is only 2.9% percent chance, so we will be almost guaranteed to start making profit in the first year.

So operating with a low hashrate is somewhat a high risk and higher chance for a project to fail, besides, it has little to no effect on "protecting the network" because unlike what most people think, just pointing your hashrate somewhere doesn't do anything, it's like all those folks who mine to their own node thinking they are securing the network, no you are not, you are just wasting power.

So now how would get 10EH worth of hashrate? going out telling miners "Hey come join the community pool" isn't going to cut it, we need one of two things

A- Run at lower pool fees: will require more reserves, longer ROI, not guaranteed to work.
B- Wait until there is real incentives for miners to actually use a community-owned pool.

Now B is only going to happen when one or some of the large pools try to do something stupid, miners will HAVE to move to a more honest pool, not for the sake of BTC, but for the sake of protecting their own investments since keeping BTC attack-free give it value, the opposite takes away from it, so they will be forced to use an honest pool.

What are we betting on right now is the fact that none of that large pools that make millions in profit will attempt anything stupid, we also assume that they take the right security measures so that nobody can have access to that hashrate and use it to do something stupid with it, hopefully, this remains the case forever.

[tbterryboy]

Mining pools are businesses relying in bitcoin mining rewards. Attacking the network means suicide for the business and they will do harm than good, i mean they will gain more loss than profit — we are talking of millions of dollars here, so no one on their right mind will do that.

Greed ruins businesses and we have seen that happening on a lot of occasions in the cryptocurrency world. Remember Do Kwon? He owned an amazing project, which was becoming one of the most popular cryptocurrencies in the market, but he became greedy and wanted to earn more money and create more coins and tokens, and that made him lose everything, and the project collapsed badly. We also have Sam Bankman of FTX as an example as well, and many more.

So even if a mining pool has been built investing millions of dollars and they are earning pretty well, they can always think of getting more if they see an opportunity for it. If that happens, it's just the individual miners that can actually back off and save the network from being misused by the pool.