[2014-07-17] CD: The Bitcoin Mining Arms Race: GHash.io and the 51% Issue

The Bitcoin Mining Arms Race: GHash.io and the 51% Issue

Potential solutions

In the last month or so, there have been a wealth of proposed technical solutions to minimize the likelihood of a successful 51% attack.

Gavin Andresen first made a recommendation for utilizing P2Pool, a decentralized bitcoin mining pool that works by creating a peer-to-peer network of miner nodes.

Mike Hearn expanded on that thinking with a detailed description of ‘freemining’ – regaining miners’ ability to select their own block content.

These are immediate solutions available today. Hearn states:

“Freeminers mine in such a way that they both reduce their payout variance but also create their own blocks, a process that always requires running a fully validating p2p node like Bitcoin Core. If you aren’t running one, you aren’t decentralising the mining process.”

Newer technical solutions are most likely nine to 12 months away, given the development and testing cycles.

One of those solutions includes the Two Phase Proof of Work (2P-PoW) to disincentivize large mining pools yet enables existing miners to continue using there current mining hardware, as outlined by Cornell’s Ittay Eyal and Emin Gün Sirer in “How to Disincentivize Large Mining Pools.”

“Would an attack be disruptive? Sure. Would it be fatal? No.”

Another solution, proposed by mathematician Meni Rosenfeld, involves the creation of Multi-PPS, a platform that allows miners to mine in multiple pools simultaneously.

Since a small pool could find either 10 blocks in a day or 0 in a week, many miners elect to use larger pools that offer a more consistent payout. Once the payout instability of small mining pools is reduced, it makes them a viable alternative.

According to Rosenfeld, the basic premise of Multi-PPS is “that miners should mine in multiple pools simultaneously, in proportion to each pool’s strength, which has two important features,” these are:

(1) The miner enjoys performance that is equivalent to that of a pool with a combined size of all pools he uses together

(2) The stable equilibrium is not consolidation in one pool, but rather, maintaining a distribution between many pools according to the merits of each.

http://www.coindesk.com/bitcoin-mining-detente-ghash-io-51-issue/