Why 51% hashrate is a good thing

[jjc326]

Yes 51% is a problem, more because if someone gets 51% they COULD mess with the system so it hurts the respectability/credibility of Bitcoin.  The fact that the system could be destroyed, basically, by a 51% attack is a vulnerability that is worrisome.

[joshraban76]

May I understand, why there is a panic of 51% hash rate reached, I still can't get the point.

Suppose u & me has made a deal that I'll give u 1 BTC and u'll sell me a website. Now, if I have understanding with the 51% hash power holder GHash.IO, I can send u 1 BTC, take your website's credentials, again send 1 BTC to GHash.IO. GHash.IO will accept the 1 BTC I sent to them and not u. Now they can send me back 0.5 BTC. So, in effect I get my job done with 0.5 BTC, whereas I am supposed to pay 1 BTC.

I didn't get that to the end. I just want to understand the 0.5 and 1 BTC.

Again please, if you don't mind.

In simple term, the 51% network hashrate provides monopoly (51% probability) to the miner to mine blocks. So they decide which Tx to include in their blocks and which not. Now, they can write code in their system to completely filter out your Bitcoin address so that any incoming Tx to your address will never get confirmed. So the person sending U bitcoin can re-use their coins. This is called double spending, where your coins never get confirmed because of the bad miner with 51% power.

Thanks for elaboration, but isn't it difficult for this to be done from the trustworthy of GHash point of view ?

[Rannasha]

May I understand, why there is a panic of 51% hash rate reached, I still can't get the point.

Suppose u & me has made a deal that I'll give u 1 BTC and u'll sell me a website. Now, if I have understanding with the 51% hash power holder GHash.IO, I can send u 1 BTC, take your website's credentials, again send 1 BTC to GHash.IO. GHash.IO will accept the 1 BTC I sent to them and not u. Now they can send me back 0.5 BTC. So, in effect I get my job done with 0.5 BTC, whereas I am supposed to pay 1 BTC.

I didn't get that to the end. I just want to understand the 0.5 and 1 BTC.

Again please, if you don't mind.

In simple term, the 51% network hashrate provides monopoly (51% probability) to the miner to mine blocks. So they decide which Tx to include in their blocks and which not. Now, they can write code in their system to completely filter out your Bitcoin address so that any incoming Tx to your address will never get confirmed. So the person sending U bitcoin can re-use their coins. This is called double spending, where your coins never get confirmed because of the bad miner with 51% power.

While this paragraph vaguely hints at what a 51% attacker could do, it's far from correct.

It's true that someone can update their software to not include certain transactions. However, unless that person control 100% of the network hashrate, eventually another miner will find a block which does include a transaction that is being ignored by the attacker. This may cause some confirmation delays for the target, but that's it.

Now, a miner/pool with >50% of the hashrate can go further than that and ignore all blocks mined by others and only work on a blockchain that consists entirely of blocks mined by the pool itself. Only such an action would allow the attacker to completely prevent certain transactions from confirming. But such behaviour would be noticed by others almost immediately as other miners start seeing all of their blocks orphaned.

Another possible attack is for the attacker to spend some of its coins in exchange for something else (fiat, altcoins, cookies, whatever), wait for the transaction to be confirmed and then attempt to replace the blockchain from the point of the first confirmation of this transaction up until the current point with a new version that instead spends the transaction to another address. This can be done either by the attacker starting to mine a secret fork that it doesn't release to the public until the transaction has received enough confirmations and the purchase is complete or by the attacker only starting to work on his alternative blockchain after the purchase is complete.

The first option means that all of the attackers hashpower suddenly becomes "dark" and the speed with which blocks are mined is cut in half. Finally, when the secret blockchain is broadcast, this will orphan a chain of 3-6 (or even more) blocks, which will immediately raise eyebrows. The second option takes a long time to do, since catching up with a network that is 6 blocks ahead and is hashing with almost as much power as you can potentially take quite a while. When the new chain is broadcast, this'll cause an even longer orphan-chain than in scenario 1 and this'll definitely be noticed directly.

A 51% attack is not a subtle instrument. If used, it will get noticed almost immediately and consequently there will probably be a strong drop in the Bitcoin price.

[TopherB]

May I understand, why there is a panic of 51% hash rate reached, I still can't get the point.

Theoretically someone controlling a majority of the hashrate could manipulate the blockchain. This assumes of course that he/she/it was willing to crash the value of the bitcoin they own, and destroy both the investment in mining equipment and the earnings potential of them.

[chennan]

I have to sell some bitcoin for peercoin now for avoiding some risk. Hopefully we can get through.

Nothing to worry about! We will get through it. When the price bounce back to up trending, you will regret your decision today.

[Yakamoto]

Wasn't the 51% fixed? Blockchain.info says they're back down to 45%.

I think this is behind us now, but I could be wrong.

So... Anyone else seeing anything different from me?

Pro tip: Make another pool with a 0% fee. That way it could contest with GHash.io...

[haploid23]

This won't be the last time that it reaches 51%. If you think about it, most miners couldn't give a shit if a 51% is reached, as long as bitcoin/money goes into their pockets. This means that they couldn't care less to switch to another pool, and this event is evident.

[defaced]

I know everyone is freaking out and alarm bells should be ringing, but correct me if im wrong there has never been a 51 hash rate reached before? If so its perfect timing that this is happening now, we get to see with our own eyes what happens with the protocol once a 51% hashrate is reached before Bitcoin goes mainstream. Its all part of the experiment. Im sure this issues will be revolved and we may never reach 51% again. In the mean time the price is dropping as people are panic selling. I say now is the time to buy At the bare minimum HODL!

lol happens on a damn hear hourly basis for alot of smaller altcoins and the chain keeps on going. We havnt came across an attack that cant be fixed. The network, by design, is very resilient. Funny to see bitcoin experience it though.

[moriartybitcoin]

Ghash needs to be dismantled, period

[tvbcof]

Under the current implementation of Bitcoin entities need to take steps NOT to obtain 50%.  If/when the block reward/value relationship falls to make mining with non-state-of-the-art gear unprofitable it won't be a legitimate argument that miners could switch pools since most will simply shut down (this happened at around $5 IIRC.)  Basically as ASICs get better there will likely be times when only those who have access to the latest chips will be competitive.  When this happened in relationship to the first ASICs (the 130nm ones who's name I forgot even though I own a few) it was pretty clear that they had to bend over backwards to NOT obtain 50%.  Started selling the chips in USB devices and arrays instead though they probably didn't even wish to undertake the hassle.

From a speculator's point of view, and I'm almost a 100% speculator now though that was not always the case, the demonstration of 51% is a good thing.  At least in the near term to mid term.  What it means is that Mike Hearn's 2010 projections about mining centralization and blacklisting are panning out nicely.  What that means is that Bitcoin will be easy enough to control.  What that means is that it will be allowed to the plebs.  This spells an infusion of capital as mainstream entities get into the game.

I actually planned to sell 50% (as supposedly via another thread did Peter Todd) some time ago, and my pessimism about the long term trajectory of Bitcoin was certainly a factor.  I actually slowed my offloading in part to capitalize on an event just like this one.  Also I hoped to avoid the trough which formed after the last spike.

[beetcoin]

i've never been hit by a meteor, and i don't care to have it done to me to see "what happens when it does." likewise, i don't want to put my penis on a mousetrap.

[TopherB]

i've never been hit by a meteor, and i don't care to have it done to me to see "what happens when it does." likewise, i don't want to put my penis on a mousetrap.

after all the second penis gets the cheese...

[tvbcof]

i've never been hit by a meteor, and i don't care to have it done to me to see "what happens when it does." likewise, i don't want to put my penis on a mousetrap.

after all the second penis gets the cheese...

You mean like this?



That might be a good meme of a Bitcoin early adopter and some future newbie.  If only my crystal ball could tell me the ideal inflection point.  Trying to estimate these things is what makes life interesting I suppose.

[YipYip]

This won't be the last time that it reaches 51%. If you think about it, most miners couldn't give a shit if a 51% is reached, as long as bitcoin/money goes into their pockets. This means that they couldn't care less to switch to another pool, and this event is evident.

They will give a shit when we get a fork and btc drops by 80%-90% in value

Also the amount of credability lost with the mainstream may never be able to be re-captured and crypto will be regulated to a cute nerd experiment that did not work

Do u think mainstream will care or understand the details that it was just because of 51% + operater that went bad all they will hear is that it does not work

In finance it would be certain death to any instrument let alone bitcoin

[defaced]

This won't be the last time that it reaches 51%. If you think about it, most miners couldn't give a shit if a 51% is reached, as long as bitcoin/money goes into their pockets. This means that they couldn't care less to switch to another pool, and this event is evident.

They will give a shit when we get a fork and btc drops by 80%-90% in value

Also the amount of credability lost with the mainstream may never be able to be re-captured and crypto will be regulated to a cute nerd experiment that did not work

Do u think mainstream will care or understand the details that it was just because of 51% + operater that went bad all they will hear is that it does not work

In finance it would be certain death to any instrument let alone bitcoin

ive got my buys set real low.