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Author Topic: Freezing BitCoin addresses by regulating miners  (Read 14821 times)
Peter Todd
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January 15, 2014, 12:17:13 PM
 #41

genjix: This thread, particularly the first post, is very valuable to have in the public eye right now with GHash.IO at strong as they are. It's a short-term fix, but keeping attention on P2Pool and similar things will help. In the medium term the blocksize thing will probably start heating up again before long, and we'll see the same old set of naive arguments to just raise or get rid of those limits without doing the hard work to address the fundamental design flaws in Bitcoin.(*) Either way the OP has a lovely case study of why we have to keep pushing to make Bitcoin more, not less, decentralized.

Cluttering up the thread with off-topic arguments doesn't help that cause, and perversely the way human psych works is such that engaging in arguments like the above with your opponents just validates their social status. Best to ignore them on a personal level, engage them on a technical level, and keep making awesome software. I didn't pull off this by worrying about who was working for what police forces you know.

Is there a reason you suddenly dug up this thread from 2011, genjix?
How much money would you take from the dutch police to help them arrest a buyer of DMT from Silk Road, and so help clear up Bitcoin's image?

e.g. "Because it's relevant." would have sufficed and kept discussion on track. Make a separate post for the above instead if you want to bring it up.


tvbcof: People dislike Mike in for being so prolific, precisely because he creates so much code and writing that's often kinda good, but misses the mark; somehow usually landing towards centralization and away from privacy; often only when examined closely. Some find it just annoying, others in this community see it as a deliberate and malicious attempt to shift the overton window of political acceptability. Either way, there are more interesting things to discuss.


mike: If the above sample of my PR consulting services has interested either you or a colleague, please be in touch and I'm sure we can negotiate an acceptable hourly rate. Referrals by request.


*) Back on topic: an interesting question to ask might be to what extent does the current division between "miners" and "users" make this freezing crap possible from a social point of view. I and others keep on kicking around crypto-currency designs that make per-transaction PoW possible, even to the point where everyone has an incentive to "do their fair share" of PoW mining through demurrage balanced exactly with mining reward. In short, if you do your fair share of the mining effort that is required to keep the system secure, the demurrage and mining rewards balance out with a net gain of zero. If you do more than your fair share, your coins grow, and if you do less, they shrink.

You can pair systems like that with other schemes that make pooled mining much less attractive, and I think you can make PoW algorithms that are designed such that even a high-budget ASIC effort wouldn't have more than a single digit multiplier advantage over a standard computer in terms of electricity/return.

Socially, are people open to such systems if the result is a much more decentralized coin where it's totally infeasible for transactions to even be significantly slowed by miner regulation? Obviously you can just ignore the whole mining business and not do your fair share, but you'd essentially be paying, say, 1% of the value of your coins to the participants in the system who do that important work for you.

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Mike Hearn
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January 15, 2014, 01:02:23 PM
 #42

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mike: If the above sample of my PR consulting services has interested either you or a colleague, please be in touch and I'm sure we can negotiate an acceptable hourly rate. Referrals by request.

lol, tempting offer :-)

Although the scenario I wrote about in 2011 is still theoretically plausible, I don't think it will actually ever happen and that's why I haven't wrote about it much since. Even though pools are highly centralised, it's a very fragile sort of power and the top dog changes all the time. Once it was slush, then it was deepbit, then it was btc guild, now it's ghash.io ..... if ghash.io started refusing to include transactions for political purposes then undoubtably most miners would abandon them.

The problem is not so much how to fix this if it starts - it's detecting it in the first place. Also, defining what an acceptable miner policy is. I think everyone would agree "ignore transactions to wikileaks" would be an unacceptable policy, but for instance Eligius has in the past refused to process dice transactions on the grounds that they are spam. So where do you draw the line and figure out what you, as a miner, are personally comfortable with or not. Also did the no-dice policy hurt or help Eligius as a pool? I think these questions are still interesting to explore.
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January 15, 2014, 02:44:42 PM
 #43

Even though pools are highly centralised, it's a very fragile sort of power and the top dog changes all the time. Once it was slush, then it was deepbit, then it was btc guild, now it's ghash.io ..... if ghash.io started refusing to include transactions for political purposes then undoubtably most miners would abandon them.

 Also did the no-dice policy hurt or help Eligius as a pool? I think these questions are still interesting to explore.

I think this Satoshi-esque new poster explained it best last week - https://bitcointalk.org/index.php?topic=411099.0

Concerns about pools and how they erode bitcoin security were first raised more than two years ago when Deepbit acquired significant share of bitcoin hash power, but most people agreed that in case a pool would be used for nefarious actions hashers would just point to another more honest pool. The reality didn't match those expectations, Ghash.io was used for double spending. And yet two months after the incident their hashing power share was 15% bigger, and it's only dropped after they stopped accepting new hashers. This is happening because hashers do not care about Bitcoin network security and from that point of view they are evil.


So personally I'm not so sure how 'fragile' their fragile power is. We also don't know who may already control that power.
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January 15, 2014, 04:13:55 PM
 #44

I think we still have safe spot against such events, because Bitcoin is open to change. It was changing, it is changing and it will change in future. Blockchain & Bitcoin protocol will be safe till we will lose ability to adapt.

We (community) just need to grow and promote Bitcoin ideals.

With growth we will be safe against any government or institutional efforts to break Bitcoin.
With promotion we will spread goals that crypto currencies wan't to achieve. Its a bit philosophic, but tell me that I'm wrong.

I'm totally ok with creating some kind of soft rules that will somehow mitigate problem of black market activity across cypto currencies. We all know that such security will not be too effective, but it will somehow remove mark that Bitcoin is safe bay for any Criminal Actions, at this point I would even work closely with governments to make it more efficient.

I think its up to any user to decide whether they wan't to be part of crime flavoured transaction.

genjix your attitude here is bad, don't make such personal accusations - its just odd. I don't care if thats true or not, you don't have any evidence of malicious and/or harming actions that Mike took against Bitcoin community. If you have any concerns please leave it in less public place. We are here to discuss not to point fingers at someone.

Mike Hearn
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January 15, 2014, 05:09:50 PM
 #45

So personally I'm not so sure how 'fragile' their fragile power is. We also don't know who may already control that power.

Yeah, ghash.io is a concern. One problem is that we lack any kind of organised form of communication for miners. There's the miner subforum here but I bet a lot of people don't check it, and the p2p alert message but a lot of miners don't run a full node. We need a carefully controlled (so it's not noisy) miner announcement system.
FandangledGizmo
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January 15, 2014, 05:30:16 PM
 #46

I think we still have safe spot against such events, because Bitcoin is open to change. It was changing, it is changing and it will change in future. Blockchain & Bitcoin protocol will be safe till we will lose ability to adapt.

No the ability to adapt is not enough, Bitcoin needs the ability to 'pre-emptively adapt.' There are Make/Break moments in history. If you have a vulnerability, a good adversary will wait patiently and only exploit it at that Make/Break moment.
_____________________________________________________________________

Banks are completely insolvent on a global scale. Both the IMF and BIS have released reports in the last year for dealing with Bank Bail-ins.
Every major country has passed new laws in the last two years for dealing with them.

Just last week, 7th January - http://bambooinnovator.com/2014/01/08/hong-kong-banking-watchdog-seeks-bail-in-powers/

Quote
Hong Kong’s banking regulator has demanded far-reaching powers to prop up or shut down failing banks, such as the ability to suspend normal creditor rights, as it plays catch-up with western regulators...
“Even though Hong Kong regulators are waiting for greater global consensus on bail-in and some other issues, it is clear that they won’t wait much longer..
_________________________________________________________________________

Bitcoin has the potential to be free from this confiscation and to offer a functioning global payments system that can operate even in the event that the current financial system completely seizes up.

If Bitcoin can address the mining centralization vulnerability before then, Bitcoin can literally help save the world and BTC will be worth 50x+ more virtually overnight. (I'm being conservative.)  Otherwise just prior/post the bail-in announcement, that vulnerability will be exploited and and a nefarious entity will use it to decimate the price and trust in Bitcoin at that critical moment.  (It won't destroy but it will crush Bitcoin and make whatever other alternative TPTB have lined up the winner.)

So the question IMO, is whether Bitcoin can muster the resolve, urgency and focus to address this NOW.

Not a huge Eminem fan but...

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January 15, 2014, 05:38:04 PM
 #47

So personally I'm not so sure how 'fragile' their fragile power is. We also don't know who may already control that power.

Yeah, ghash.io is a concern. One problem is that we lack any kind of organised form of communication for miners. There's the miner subforum here but I bet a lot of people don't check it, and the p2p alert message but a lot of miners don't run a full node. We need a carefully controlled (so it's not noisy) miner announcement system.

Yeah that would be a good idea. I know you guys are doing your best to solve this.  Sorry that I keep bringing it up, but the 'centralisation of mining' is the only thing I've come across that really concerns me about Bitcoin. I wish I was smarter/more technical and that I could help more. 
Mike Hearn
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January 15, 2014, 06:25:35 PM
 #48

It's not just mining. The general trend over time is centralisation of everything. That's because professionalism is important but takes a lot of work, and the most obvious way to fund it is through offering services and charging a fee. Right now for a lot of Bitcoin users, their experience is like:

- Buy some coins on coinbase (essentially a bitcoin bank)
- Send them to a friend who uses blockchain.info
- Mine on a big pool like BTC Guild or GHash.io
- From time to time, buy things from a merchant who is using BitPay

It varies by region of course. Here in Europe I see a lot of people using the Android SPV wallet, so that's at least fairly decentralised. But it takes huge and constant effort to keep the decentralised solutions competitive with the more centralised forms. Cracking that problem is something I've spent a lot of time thinking about.
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January 15, 2014, 06:32:07 PM
 #49

Cracking that problem is something I've spent a lot of time thinking about.

I have also spent a long time thinking about this very problem - the conclusion that I have come to is "the home server".

The idea being to have a server at everyone's home that acts as their own "social network" hub as well as acting as a P2P participant in a system that provides both social and financial services.

With CIYAM anyone can create 100% generated C++ web applications in literally minutes.

GPG Public Key | 1ciyam3htJit1feGa26p2wQ4aw6KFTejU
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January 15, 2014, 06:33:37 PM
 #50

But in reality, by the time BitCoin is large enough for this to be a real issue it will be quite possible to freeze bitcoins by requiring miners to exclude transactions from blacklisted addresses. As miners will likely be spread throughout the world, this would require the co-operation of many different governments and a total freeze is impossible (as anyone can mine), but if enough hash power can be made to co-operate the difference between "your tx might confirm in 20 years" vs "your coins are frozen" is pretty small. Because mining will be concentrated in the hands of a small number of legitimate, regulated companies, once an international framework is put in place the actual freeze orders would be enforceable very quickly or even instantly (eg by requiring miners to poll a signed list of addresses from some web site).

blacklisted addresses
co-operation of many different governments
Because mining will be concentrated in the hands of a small number of legitimate, regulated companies
international framework


you have got to be kidding me.  Let me sum this up for you:

lets turn Bitcoin into Paypal, ok? except it burns electricity like crazy and uses incredible amounts of computing resources.

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January 15, 2014, 06:38:06 PM
 #51

has anyone even discussed the threat of mining centralization to ALT COINS?

while we may or may not see a block chain fork event take place on the main block chain, these consolidated mining pools could easily fork one of the minor ALT COINS.  also the way checkpoints work with the altcoins is never made clear.  The question of who is setting the checkpoints for BTC is a serious concern, what about the checkpoint for the Altcoins?

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January 15, 2014, 07:30:01 PM
 #52

Cracking that problem is something I've spent a lot of time thinking about.

I have also spent a long time thinking about this very problem - the conclusion that I have come to is "the home server".

The idea being to have a server at everyone's home that acts as their own "social network" hub as well as acting as a P2P participant in a system that provides both social and financial services.



Perhaps combine it with D-Central that John McAfee is supposedly going to provide to protect against surveillance from the NSA and other governments.

Hopefully he or someone is successful from the anti-surveillance standpoint and if it is open source, tweaking it to include bit coin services would be cool.

http://www.futuretensecentral.com
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January 15, 2014, 07:40:12 PM
 #53

It's not just mining. The general trend over time is centralisation of everything. That's because professionalism is important but takes a lot of work, and the most obvious way to fund it is through offering services and charging a fee. Right now for a lot of Bitcoin users, their experience is like:

- Buy some coins on coinbase (essentially a bitcoin bank)
- Send them to a friend who uses blockchain.info
- Mine on a big pool like BTC Guild or GHash.io
- From time to time, buy things from a merchant who is using BitPay

It varies by region of course. Here in Europe I see a lot of people using the Android SPV wallet, so that's at least fairly decentralised. But it takes huge and constant effort to keep the decentralised solutions competitive with the more centralised forms. Cracking that problem is something I've spent a lot of time thinking about.

- Buy some coins on coinbase (essentially a bitcoin bank)

Personally, I feel the exchanges are becoming more decentralised over time, - last year MTGox was all powerful, now there are 4/5 with a big market share.  - I think cheap and mobile Bitcoin vending machines will also explode this year.  - I also think China & India are also inadvertently helping Bitcoin to become more decentralised by encouraging P2P exchange methods.  


- Send them to a friend using blockchain.info

I guess a wallet/address can be moved anywhere if blockchain.info is compromised? As long as some smart guys are being vigilant of blockchain.info code changes. Maybe a document that explains clearly to non tech people (like me) how to move their wallet and gain control and security of their coins after a blockchain.info attack as quickly and simply as possible could be good though.

- From time to time, buy things from a merchant who is using BitPay

Yes this is centralised for the moment. But it is attracting thousands of new merchants to Bitcoin and thereby decentralising Bitcoin even more.
So whenever Bitpay is shut down, they will leave a legacy of hundreds of thousands of merchants who now have Bitcoin experience & the ability to transact in Bitcoin without them.  

So IMO, though there are 'targets' for the nefarious in each of those areas you mentioned, only the ability to control large amounts of hashing power for an extended period has the ability to destroy the security & trust in Bitcoin itself.  



 
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January 15, 2014, 08:37:27 PM
 #54

I first discovered Bitcoin about the time this thread was made (as CornedBeefHash). It was exciting to ponder the possibility of taking the control of money away from governments. Since the Roman Empire, governments have used money to control the minds of the people and secure power. Bitcoin users were excited about the potential of Bitcoin and the libertarian ideal was strong here. In three short years that ideal has been crushed by business involvement, the formation of trade organizations like TBF, self serving power players lining their own pockets and a growing collection of new users that could care less about the political ramifications of Bitcoin. I don't live in a cave. I'm well aware that individuals act in their personal self interest. I believed, at that time, I had found something that could be used to balance out oppressive governmental restrictions and swing control back to the people. Clearly I was wrong. Bitcoin can and will be the foremost tool of worldwide governments to monitor the transfer of wealth between individuals. While not as convenient, paper fiat remains the anonymous transfer system that I wanted Bitcoin to be. Hopefully, some day, someone will devise a system to take the production and control of wealth away from governments and return it to the people.

I created this thread to see how many new users are actually here for Bitcoin. The results might surprise you. People are no longer mainly here for Bitcoin.

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January 15, 2014, 10:38:33 PM
 #55

has anyone even discussed the threat of mining centralization to ALT COINS?

Interestingly right now GHash.IO has over 50% of the namecoin hashing power: http://www.reddit.com/r/Namecoin/comments/1v7ypd/namecoin_is_51_vulnerable_right_now_wont_this/

Easily possible since Namecoin is merge-mined.

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January 15, 2014, 11:32:14 PM
 #56

has anyone even discussed the threat of mining centralization to ALT COINS?

Interestingly right now GHash.IO has over 50% of the namecoin hashing power: http://www.reddit.com/r/Namecoin/comments/1v7ypd/namecoin_is_51_vulnerable_right_now_wont_this/

Easily possible since Namecoin is merge-mined.


I believe the ones that aren't merged mined are even more susceptible.  You could take any one of the coins here: https://www.cryptsy.com/

as long as it's not Scrypt, you can use the same mining power to fork the block chain.  If you could set up some kind of short sell, you could make good money just shorting these coins then forking the block chain. 

Just a thought Smiley


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January 15, 2014, 11:50:06 PM
 #57

has anyone even discussed the threat of mining centralization to ALT COINS?

Interestingly right now GHash.IO has over 50% of the namecoin hashing power: http://www.reddit.com/r/Namecoin/comments/1v7ypd/namecoin_is_51_vulnerable_right_now_wont_this/

Easily possible since Namecoin is merge-mined.



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January 16, 2014, 05:33:19 AM
 #58

It's not just mining. The general trend over time is centralisation of everything. That's because professionalism is important but takes a lot of work, and the most obvious way to fund it is through offering services and charging a fee. Right now for a lot of Bitcoin users, their experience is like:

- Buy some coins on coinbase (essentially a bitcoin bank)
- Send them to a friend who uses blockchain.info
- Mine on a big pool like BTC Guild or GHash.io
- From time to time, buy things from a merchant who is using BitPay


What I see happening is that Bitcoin is scaling by organically supporting a multi-tiered or 'off-chain' series of solution while remaining within the grasp of small and independent entities to operate the infrastructure and thus they remain difficult to manipulate.  We are already at pretty impressive 'market cap' and I still use native global/persistent transactions to buy trinkets, and we are not yet really pushing into the supposedly absurdly low transaction rate.  I see this as a really good thing, and there is a lot of room to grow in this direction.

The mining centralization is starting to bother me, but only slightly.  It is clear to me that the current primitive form of mining is really the Achilles heal of the solution.  But how to correct the deficiency given that the miners are likely to be highly uncooperative?  I'll posit that the only way to do so would be a when a pool takes advantage of this weakness.  At that point the value store could/would be rolled back and locked and an entirely new method of mining implanted.  It would be all kinds of scary and disruptive, but in the end Bitcoin will come out stronger since none will be lost and this design deficiency will be addresses.  I just hope that some good options are ready to go.


It varies by region of course. Here in Europe I see a lot of people using the Android SPV wallet, so that's at least fairly decentralised. But it takes huge and constant effort to keep the decentralized solutions competitive with the more centralised forms. Cracking that problem is something I've spent a lot of time thinking about.


Not to be to glib, but I would expect you to be putting some thought into that problem.  Just in such a way that banishes the small fry as quickly and completely as possible since they are not inclined to freeze the assets of the Butcher of [insert capital of country with coverted energy corridors here.]  And similarly disturbing (to me) reasons.

I'm still waiting for an explanation of how SPV clients do anything of any significance toward strengthening the network.  I guess you mean that simply the body-count of end-users is somehow to be taken as 'decentralization'?

---

retep:  Whether one is bored by Mike or not, I don't think that it is a stretch to consider him THE most critical individual in the Bitcoin universe at this point.  My arguments:

From back when I was following commits I considered sipa to be effectively the principle architect of Bitcoin.  Mike at least is familiar with his priorities enough to comment authoritatively on them though it is, of course, not clear if what influence he has on them.

In the interview with Mike from a few months ago (when the Yifu Guo, Mellon ID+blacklisting authority effort was in the news) it sounded pretty much like Mike has a pretty close relationship with Gavin and is exerting influence to really opening up the transaction rate when that occurs.

A high position in the Bitcoin Foundation focused regulatory efforts which seemed to be associated with an exploration of blacklisting.  To be fair, that's his job, but one cannot help but conclude that he's flirted with the concept from an early time.  It's hard (but not impossible) to conclude anything but that he favors some form of them.

---

I would again like to point out that there is nothing illogical about the various theoretical methods of controlling Bitcoin.  It would solve a lot of problems that a lot of people (including myself) see.

It is highly critical, however, to note that a very large number of grandmothers and Joe Sixpacks are going to agree vigorously with the need to dispense with a lot of the freedoms that Bitcoin users currently enjoy, and I'll bet that ideas like blacklisting are going to be pretty popular.  I might remind everyone that these folks are exactly the people that nearly everyone here wants to suck into the ecosystem as quickly as possible.



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January 16, 2014, 10:06:45 AM
 #59

Bitcoin Foundation isn't my job actually. It's just something I volunteer with.

It's easy to assume that if someone explores an idea, they must ipso-facto believe in it. I guess in our society it's rare for people to talk about ideas they understand but haven't got a strong opinion on. But, I do it a lot.

Remember the context here. I wrote this post in April 2011. Slush formed the first mining pool just a few months before, in I think December 2010. So at the time pooled mining was a brand new thing and ASICs were theoretical.

It was in this world that I pondered the future of mining centralisation, and how governments might exploit that to achieve their goals. I also wrote about how effective that would be, and to what extent it would have to rely on coercion vs democratic agreement.

So that was the start of me thinking about how group consensus algorithms could interact with existing social policies. Bitcoin is the granddaddy of this idea, with its 21 million coin limit. Obviously governments have their own ideas about monetary inflation. In theory the cap could be changed of course and in future perhaps it will (i.e. if a satoshi becomes too valuable), but it relies on the consent of the economic majority. So these ideas then went on to evolve into the notion of decentralised crime fighting using private set interaction algorithms, but at that point I was still talking about blacklisting of coins. Later on I decided that this notion didn't really fit what I wanted, and so most recently I've been talking about "marking" of coins with the idea that there'd be a kind of group Sherlock Holmes system in which people independently decide what they believe constitutes morally good or bad, and co-operate with each other to investigate things they agree are bad. But the flow of coins would be unimpeded.

Basically, I'm interested in how group consensus algorithms, democracy and social problems can interact. And I'm not going to stop thinking about these topics, sorry ....
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January 16, 2014, 12:52:32 PM
 #60

It's not just mining. The general trend over time is centralisation of everything. That's because professionalism is important but takes a lot of work, and the most obvious way to fund it is through offering services and charging a fee. Right now for a lot of Bitcoin users, their experience is like:

- Buy some coins on coinbase (essentially a bitcoin bank)
- Send them to a friend who uses blockchain.info
- Mine on a big pool like BTC Guild or GHash.io
- From time to time, buy things from a merchant who is using BitPay

It varies by region of course. Here in Europe I see a lot of people using the Android SPV wallet, so that's at least fairly decentralised. But it takes huge and constant effort to keep the decentralised solutions competitive with the more centralised forms. Cracking that problem is something I've spent a lot of time thinking about.

Agreed.

Some people just fail to observe the universe and verify that centralization of forces is a natural phenomenon.

The idea was to have solo "mining" (decentralized), but it became pooled "mining" (centralized).

The idea was to every end user have a client (decentralized), but in reality it is more feasible use blockchain.info (centralized).

The idea was to each user trade directly with another user (decentralized), but it turn out that exchange platforms are more reliable (centralized).

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