Would it be better for us to call Bitcoin 'pseudo-decentralised'?

[Este Nuno]

Do you think it would be more intellectually honest if we as a community stopped calling Bitcoin a decentralized digital currency?

When Bitcoin started out the majority of people called it an anonymous cryptocurrency. And it took a little while for people to correctly refer to it as pseudonymous.

With the way mining has evolved and continues to evolve outside of what Satoshi had envisioned I feel that we should be fair in our description of what Bitcoin actually is. At least at the moment. Hopefully changes are made at the protocol level. But for now this is the reality.

This should also apply to any altcoins that share a similar model. I don't know if there are altcoins out there that could call themselves truly decentralised, but the ones that are traditionally mined are probably even more centralised than Bitcoin.

[DannyHamilton]

With the way mining has evolved and continues to evolve outside of what Satoshi had envisioned

Actually it is evolving almost exactly the way Satoshi had envisioned.  Have you read the things Satoshi has written?

I feel that we should be fair in our description of what Bitcoin actually is. At least at the moment.

Decentralized is a fair description.

Hopefully changes are made at the protocol level.

This is unlikely.

This should also apply to any altcoins that share a similar model. I don't know if there are altcoins out there that could call themselves truly decentralised, but the ones that are traditionally mined are probably even more centralised than Bitcoin.

As far as I know, all altcoins use some sort of proof-of-"X" system of reaching consensus where weaknesses are introduced if any single entity controls a significant percentage of resource "X".

[Este Nuno]

With the way mining has evolved and continues to evolve outside of what Satoshi had envisioned

Actually it is evolving almost exactly the way Satoshi had envisioned.  Have you read the things Satoshi has written?

I feel that we should be fair in our description of what Bitcoin actually is. At least at the moment.

Decentralized is a fair description.

I've read a fair amount of Satoshi's posts and I remember that he didn't envision mining pools. He did consider botnets however and he didn't see them as a threat.

If decentralised is a fair description then surely 'trustless' can not be considered fair at this point. Since we're inherently trusting any mining pool with 33% or over not to attempt an attack.

I'd argue that relying on a central point of trust makes the word 'decentralised' a poor descriptor. But it is a distributed network.

And I also agree that it is unlikely that any changes will be made at the protocol level. However I continue to hope that enough people can work together to find solutions and that the dev team will actually implement those solutions.

[franky1]

if your going to use the word, spell it first

pseudo-decentralised

[DannyHamilton]

I've read a fair amount of Satoshi's posts and I remember that he didn't envision mining pools.

ribuck's description is spot on.

Pool operators can modify their getwork to take one additional parameter, the address to send your share to.

The easy way for the pool operator would be to wait until the next block is found and divy it up proportionally as:
user's near-hits/total near-hits from everyone

That would be easier and safer to start up.  It also has the advantage that multiple hits from the same user can be combined into one transaction.  A lot of your hits will usually be from the same people.

The instant gratification way would be to pay a fixed amount for each near-hit immediately, and the operator takes the risk from randomness of having more or less near-hits before a block is found.

Either way, the user who submits the hit that solves the block should get an extra amount off the top, like 10 BTC.

New users wouldn't really even need the Bitcoin software.  They could download a miner, create an account on mtgox or mybitcoin, enter their deposit address into the miner and point it at anyone's pool server.  When the miner says it found something, a while later a few coins show up in their account.

Miner writers better make sure they never false-positive near-hits.  Users will depend on that to check if the pool operator is cheating them.  If the miner wrongly says it found something, users will look in their account, not find anything, and get mad at the pool operator.

[Este Nuno]

if your going to use the word, spell it first

pseudo-decentralised

That was just a typo in the title. You can see that I spelled pseudonymous and centralised correctly in the post. I was worried about running out of characters in the title. I'm not sure exactly how many the forum allows.

Although if a hyphen is appropriate I'll note that for future reference.

[Este Nuno]

I've read a fair amount of Satoshi's posts and I remember that he didn't envision mining pools.

ribuck's description is spot on.

Pool operators can modify their getwork to take one additional parameter, the address to send your share to.

The easy way for the pool operator would be to wait until the next block is found and divy it up proportionally as:
user's near-hits/total near-hits from everyone

That would be easier and safer to start up.  It also has the advantage that multiple hits from the same user can be combined into one transaction.  A lot of your hits will usually be from the same people.

The instant gratification way would be to pay a fixed amount for each near-hit immediately, and the operator takes the risk from randomness of having more or less near-hits before a block is found.

Either way, the user who submits the hit that solves the block should get an extra amount off the top, like 10 BTC.

New users wouldn't really even need the Bitcoin software.  They could download a miner, create an account on mtgox or mybitcoin, enter their deposit address into the miner and point it at anyone's pool server.  When the miner says it found something, a while later a few coins show up in their account.

Miner writers better make sure they never false-positive near-hits.  Users will depend on that to check if the pool operator is cheating them.  If the miner wrongly says it found something, users will look in their account, not find anything, and get mad at the pool operator.

Right, that was just weeks before he disappeared. Prior to that mining pools were not something that was on his radar. He clearly didn't take into account the dangers of mining pools controlling large percentages of the network.

At that point mining pools were a novel addition to bitcoin and the full impact of their existence obviously wasn't considered.

[DannyHamilton]

I've read a fair amount of Satoshi's posts and I remember that he didn't envision mining pools.

ribuck's description is spot on.

Pool operators can modify their getwork to take one additional parameter, the address to send your share to.

The easy way for the pool operator would be to wait until the next block is found and divy it up proportionally as:
user's near-hits/total near-hits from everyone

That would be easier and safer to start up.  It also has the advantage that multiple hits from the same user can be combined into one transaction.  A lot of your hits will usually be from the same people.

The instant gratification way would be to pay a fixed amount for each near-hit immediately, and the operator takes the risk from randomness of having more or less near-hits before a block is found.

Either way, the user who submits the hit that solves the block should get an extra amount off the top, like 10 BTC.

New users wouldn't really even need the Bitcoin software.  They could download a miner, create an account on mtgox or mybitcoin, enter their deposit address into the miner and point it at anyone's pool server.  When the miner says it found something, a while later a few coins show up in their account.

Miner writers better make sure they never false-positive near-hits.  Users will depend on that to check if the pool operator is cheating them.  If the miner wrongly says it found something, users will look in their account, not find anything, and get mad at the pool operator.

Right, that was just weeks before he disappeared. Prior to that mining pools were not something that was on his radar. He clearly didn't take into account the dangers of mining pools controlling large percentages of the network.

At that point mining pools were a novel addition to bitcoin and the full impact of their existence obviously wasn't considered.

He was aware of the concept of pools, and he was aware of the possibility of someone gaining more than 50% of the hashing power:

The incentive may help encourage nodes to stay honest. If a greedy attacker is able to
assemble more CPU power than all the honest nodes, he would have to choose between using it
to defraud people by stealing back his payments, or using it to generate new coins. He ought to
find it more profitable to play by the rules, such rules that favour him with more new coins than
everyone else combined, than to undermine the system and the validity of his own wealth.

I suspect that the concept of a pool acquiring more than 50% of the hashing power didn't go over his head.  It's clear that he expected the financial incentives to protect the network regardless. At least with a pool, the people leasing their hash power to the pool can choose to leave.  That makes a pool with more than 50% far more secure than Satoshi assumed a lone individual with more than 50% would be.

[Bit_Happy]

Bitcoin is a decentralized digital currency. It is at the "human-levels" where you are seeing the march toward centralization.

[Este Nuno]

He was aware of the concept of pools, and he was aware of the possibility of someone gaining more than 50% of the hashing power:

The incentive may help encourage nodes to stay honest. If a greedy attacker is able to
assemble more CPU power than all the honest nodes, he would have to choose between using it
to defraud people by stealing back his payments, or using it to generate new coins. He ought to
find it more profitable to play by the rules, such rules that favour him with more new coins than
everyone else combined, than to undermine the system and the validity of his own wealth.

I suspect that the concept of a pool acquiring more than 50% of the hashing power didn't go over his head.  It's clear that he expected the financial incentives to protect the network regardless. At least with a pool, the people leasing their hash power to the pool can choose to leave.  That makes a pool with more than 50% far more secure than Satoshi assumed a lone individual with more than 50% would be.

He wasn't aware of pools when he designed bitcoin and laid the foundations of the protocol. It wasn't till much later when bitcoin was already well established that pools went from theory to reality. Pools were invented to solve the problem of variance in mining as I'm sure you're aware. But variance was never a major issue in 2009 and thus there was no problem to be solved.

The problem of centralisation and trust has existed for a long time now. I specifically remember the community having the same outrage over Deepbit having almost half the hashing power on the network despite Deepbit having fees of 10%.

Ever since the original Deepbit debacle bitcoin has relied on trust being placed in mining pools that hold significant hashing power.

How can bitcoin be described as trustless and decentralised if we rely on a centralised power not to attack the system? I understand that it's not likely that a mining pool will attempt such an attack, and that it's almost never in their economic interest. However that doesn't negate the fact that the system still trusts that single actor to act rationally.

Given the the fact that the value of bitcoin still thrives it would seem that the market has decided that this is an acceptable level of trust and centralisation.

But the market accepting a certain level of risk does not change the fact that the risk itself is the risk of trusting a centralised actor. Thus Bitcoin is not a trustless decentralised currency but a pseudo-decentralised one.

[beetcoin]

yeah it's not really decentralized, and it's also not really anonymous either. as for the part where it's not decentralized, i don't see how it can be any other way - someone needs to be able to dictate where bitcoins, since it's not self-sustaining. new issues arise and there has to be someone who deals with it.

[Este Nuno]

Bitcoin is a decentralized digital currency. It is at the "human-levels" where you are seeing the march toward centralization.

Sure, the human levels of things like the political situation with the dev team and the Bitcoin Foundation are somewhat a march towards centralisation. But that's not the same as being technically centralised like I outlined in my last post. Where the network itself relies on the trust of a single actor.

But I do agree with you that over all the bitcoin community and the bitcoin business establishment is slowly consolidating. That might not necessarily be the worst thing for the currency in terms of widespread adoption. But we'll have to wait it out and see how well these organizations and companies can perform. Gox at one point was another human level centralisation of Bitcoin, and look how that turned out.

[fr33d0miz3r]

Pseudo-anonymity + pseudo-decentralization = Bitcoin (pseudo-coin) 

[beetcoin]

Bitcoin is a decentralized digital currency. It is at the "human-levels" where you are seeing the march toward centralization.

i don't think that is quite accurate. you could say the same about everything else that is decentralized, like fiat currency. it doesn't matter who is controlling it, but rather that someone is and has to control it.. therefore it is decentralized.

[BittBurger]

if your going to use the word, spell it first

pseudo-decentralised

If you're going to correct his spelling, make sure you know the difference between your and you're first.  

Here's a quick lesson from 1st grade English class:

Your = Posessive.  Shows ownership.  (Can I have your car?)
You're = Contraction of You + Are.  (You're going to use that word?)

In fact your entire sentence was a disaster.  I think this is what you were going for:   "If you're going to use the word, learn how to spell it first".

-B-

[beetcoin]

if your going to use the word, spell it first

pseudo-decentralised

If you're going to correct his spelling, make sure you know the difference between your and you're first.  

Here's a quick lesson from 1st grade English class:

Your = Posessive.  Shows ownership.  (Can I have your car?)
You're = Contraction of You + Are.  (You're going to use that word?)

In fact your entire sentence was a disaster.  I think this is what you were going for:   "If you're going to use the word, learn how to spell it first".

-B-

lol, don't need to be so brutal.. but it is kinda funny that he's being pedantic yet doesn't know the difference between you're and your.

i once had a guy tell me "your redicules." 

[ShakyhandsBTCer]

Bitcoin is decentralized because there is no central authority that controlls/says who owns how many coins.

Absent a 51% attack bitcoin would not be considered a centralized payment method in any way. Even if one pool operator controlled 60% of the hashrate the other 40% of the miners would still control 40% of the blocks and would enforce the rules of the Bitcoin protocall.

Even in a 51% attack the attacker could not create bitcoin out of thin air, nor could they process a TX that the "owner" of the sending address did not sign/agree to. They would only be able to reverse a TX

[Este Nuno]

Bitcoin is decentralized because there is no central authority that controlls/says who owns how many coins.

Absent a 51% attack bitcoin would not be considered a centralized payment method in any way. Even if one pool operator controlled 60% of the hashrate the other 40% of the miners would still control 40% of the blocks and would enforce the rules of the Bitcoin protocall.

Even in a 51% attack the attacker could not create bitcoin out of thin air, nor could they process a TX that the "owner" of the sending address did not sign/agree to. They would only be able to reverse a TX

Actually, I beleive a miner with >50% is much more serious than you have written there:

>=50%

• Loss of decentralized trust narrative, inability to differentiate Bitcoin from competing technologies.
• Double-spends against 6-confirmed transactions are certain to succeed.
• Selected miner targeting: Pool can reject any selected block found by any competing miner.
• Selected transaction targeting: Pool can reject any selected transaction and keep it out of the blockchain.
• Selected address blocking: Pool can block Bitcoin flows in or out of selected addresses.
• Transaction Differentiation: Pool can deprioritize certain transactions and rely on other miners to mine them unless a (hefty) fee is attached.
• Fee Extortion: Pool can deny transactions from a particular address unless a (hefty) fee is attached to those transactions.
• Complete denial of service: Pool can ignore and orphan every single block found by competitors, thus stop all Bitcoin transactions.

Source: http://hackingdistributed.com/2014/06/16/how-a-mining-monopoly-can-attack-bitcoin/

[Este Nuno]

if your going to use the word, spell it first

pseudo-decentralised

If you're going to correct his spelling, make sure you know the difference between your and you're first. 

Here's a quick lesson from 1st grade English class:

Your = Posessive.  Shows ownership.  (Can I have your car?)
You're = Contraction of You + Are.  (You're going to use that word?)

In fact your entire sentence was a disaster.  I think this is what you were going for:   "If you're going to use the word, learn how to spell it first".

-B-

lol, don't need to be so brutal.. but it is kinda funny that he's being pedantic yet doesn't know the difference between you're and your.

i once had a guy tell me "your redicules." 

I think Franky enjoys telling people they're wrong on the forum here.

[herzmeister]

"decentralized" already sufficiently describes that BTC is currently not distributed.



http://www2.cffn.ca/usha/part-iii-article-by-pramod-dhakal/129-the-law-of-rule-centralized-decentralized-and-distributed-systems