How (this guy thinks he is) dodging bitcoin's flaw

[Bitcopia]

Hey guys,

This is an article my friend sent me. It seems littered with incorrect information, such as this:

Mining attacks occur when the computers used to solve the complex mathematical problems are faster than the software. Miners can hoard coins before the software has a chance to make the equation more difficult.

However, my mining aptitude is low, so if you guys can help me dissect this, I'd appreciate it!

http://www.cnbc.com/id/101633191

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[PilotofBTC]

Why not ask him in his ANN thread about this coin.

https://bitcointalk.org/index.php?topic=591114

[DeathAndTaxes]

There is nothing to dissect it is completely nonsense. Yes difficulty lags actual hashing power, this isn't some secret revelation.  The decision to adjust difficulty every 2016 blocks keeps the system simple and reduces the ability for miners to suppress mining difficulty.  Validating timestamps in a decentralized system is very difficult (I would say probably impossible).  Bitcoin sidesteps that very hard to solve problem by making timestamps (almost) irrelevant.  The one place timestamps are used is to compute changes in difficulty.  This is necessary because difficulty, at an abstract level is computer power divided by time.  Time needs to be recorded in some fashion but it is also easy to fake and hard to prove.  By only relying on timestamps in the one place where they are necessary, it limits the material effect of false timestamps to just difficulty computations.

The magnitude of any manipulation is limited by two factors.  The first is that miners can only fake timestamps by so much (~2 hours) because blocks which deviate from the network average time will be considered invalid.  Since the expected time for 2016 blocks is 336 hours (2016*10/60) at most a miner could suppress difficulty by ~0.5% (1% if both the first and last block are manipulated).  This small reward is problematic to obtain as no miner can be assured they will mine the critical blocks.  The manipulation must also be maintained forever just to keep (not increase) the reduction in difficulty.

Simply put:
* Verifying timestamps is nearly impossible in a decentralized network
* Bitcoin wisely bypasses the need to trust timestamps by only using them where they are needed (computing difficulty).
* The 2016 block period ensures that while miners can manipulate timestamps to suppress difficulty it is both difficulty and limited in scope.

[Bitcopia]

There is nothing to dissect it is completely nonsense. Yes difficulty lags actual hashing power, this isn't some secret revelation.  The decision to adjust difficulty every 2016 blocks was done for simplicity and to reduce the ability to influence difficulty by manipulating timestamps.  Validating timestamps in a decentralized system is very difficult, Bitcoin sidesteps that problem by making timestamps almost irrelevant.  The one place they are still relevant is for computing difficulty.  However miners can only fake timestamps by so much (~2 hours) so that means at most a miner could supress difficulty by ~0.5%.  This is made more difficult by the fact that the timestamps only matter on 2 of the 2016 blocks and no miners can be assured they will mine that block.

Simply put:
* Verifying timestamps is nearly impossible in a decentralized network
* Bitcoin wisely decided to not use timestamps for anything other than difficulty
* The 2016 block period means that while miners can manipulate timestamps the effect of that manipulation is negligible.

Thanks for the detailed and logical explanation. D&T... one of the few voices of reason on this forum.

[odolvlobo]

I agree that the author doesn't seem to understand how mining works, but the "flaw" that he is talking about is a real and well-known problem that plagues alt coins.

The problem he is addressing is the potentially devastating effect of very large swings in network hash rate. This is unlikely to ever be a problem for Bitcoin due to Bitcoin's wide adoption with respect to other SHA-256 coins.

DeathAndTaxes's post is accurate, but it doesn't apply here. The problem is not due to the difficulty readjustment frequency.

[DeathAndTaxes]

I agree that the author doesn't seem to understand how mining works, but the "flaw" that he is talking about is a real and well-known problem that plagues alt coins.

The problem he is addressing is the potentially devastating effect of very large swings in network hash rate. This is unlikely to ever be a problem for Bitcoin due to Bitcoin's wide adoption with respect to other SHA-256 coins.

DeathAndTaxes's post is accurate, but it doesn't apply here. The problem is not due to the difficulty readjustment frequency.

But for every "solution" there is another problem.  The alternate DOES change the difficulty adjustment frequency to every block.  This now means miners have more direct access to manipulating timestamps and suppressing difficulty for financial gain.