Some major flaws about Bitcoin raised in this video clip- can anyone explain?

[SpontaneousDream]

This is from a Google Hangout with Daniel Larimer. He starts talking about the issues with Bitcoin mining and PoW at 1:01:20 and goes until 1:03:44. Only a few minutes long.

https://www.youtube.com/watch?v=tBcJ5rsAGaI

Seems to me like he's bringing up some pretty serious flaws here. He later goes on to say that PoW is dead and Bitcoin will have to change at some point. Any thoughts?

Thanks!

[hhanh00]

This is from a Google Hangout with Daniel Larimer. He starts talking about the issues with Bitcoin mining and PoW at 1:01:20 and goes until 1:03:44. Only a few minutes long.

https://www.youtube.com/watch?v=tBcJ5rsAGaI

Seems to me like he's bringing up some pretty serious flaws here. He later goes on to say that PoW is dead and Bitcoin will have to change at some point. Any thoughts?

The blockchain maintains the list of all the transactions in bitcoin. It must be the same to everyone and yet not created by a single person or entity. Proof of Work is what enforces both of these features. The original vision was that anybody could be a miner and participate in securing the blockchain. However, as bitcoin becomes more popular and valuable, the mining rewards lead to the creation of mining facilities. Similarly to the gold rush, at the beginning there were pioneers with pickaxes but soon after they were replaced by conglomerates with heavy machinery. Now that mining pools have mostly taken over, he questions the decentralization of bitcoin mining and therefore bitcoin security is in the hands of a few. Furthermore, what is too costly for an individual may be acceptable for governmental entity. In conclusion, he prefers to have a group of trusted organizations in charge of the blockchain. Mining would be rendered useless and the cost of maintaining the blockchain greatly reduced.

I agree to most of what he said except for his conclusion and solution. I think finding a group of trusted entities is very hard and is the reason why previous digital currencies failed. POW mining is quite wasteful in computational resources but if it is what it takes to have an independent currency then I accept it.
There are other suggestions out there (POS, POS + POW). They may work better or not. I'm not convinced that anyone knows. In a sense this reminds me of physics. There are many theories out there but we can't verify any of them because we are nowhere close to that energy level. Today, there are a ton of different options but no one has put enough effort into breaking BTC. At this point, you'd need 100 PHash/s to attempt it. But who knows, maybe someone will build the super bitcoin collider.

[cr1776]

I think the easy explanation is that he doesn't know as much about it as he thinks he does.

[EndlessStory]

I think these are not major flaws or blunders. Even administration would be aware of them. So not an issue to worry about.

[MangoJ]

Daniel Larimer is a nobody.
He does not know what he is talking about.
Big "conglomerates" doing the bitcoin mining does NOT effect the security of the block chain.
Lets pretend only ONE person in the world is mining bitcoins.
Big deal.
Who cares?
There is nothing that one person can do to hurt bitcoin.
Everyone else using bitcoin has the block chain.
Easily over 1000 people have the block chain downloaded.  No I didn't bother to look that up, it is a safe guess.
This one remaining miner cannot change the record, or the records of future transactions.

Perhaps I am missing something, but why does anyone care if everyone STOPS mining bitcoin?
The Bitcoin QT software will still behave as a wallet and peer to peer transaction data will still be shared among everyone elses wallet, correct?

Or are miners acting as a control node, in addition to mining?

[SpontaneousDream]

Daniel Larimer is a nobody.
He does not know what he is talking about.
Big "conglomerates" doing the bitcoin mining does NOT effect the security of the block chain.
Lets pretend only ONE person in the world is mining bitcoins.
Big deal.
Who cares?
There is nothing that one person can do to hurt bitcoin.
Everyone else using bitcoin has the block chain.
Easily over 1000 people have the block chain downloaded.  No I didn't bother to look that up, it is a safe guess.
This one remaining miner cannot change the record, or the records of future transactions.

Perhaps I am missing something, but why does anyone care if everyone STOPS mining bitcoin?
The Bitcoin QT software will still behave as a wallet and peer to peer transaction data will still be shared among everyone elses wallet, correct?

Or are miners acting as a control node, in addition to mining?

?? I was under the impression that mining confirms transactions and brings security to the network...unless I'm completely wrong lol?

And I wouldn't just say Daniel Larimer is a "nobody" he pretty much created one of the first DACs with Bitshares, and it's been doing pretty well lately. Wouldn't be surprised if it passed Litecoin at some point.

[Velkro]

i would listen more to bitcoin developers rather than this nobody
bitcoin developers raises couple concerns about bitcoin, in short it needs more developers thats all

[HELP.org]

Daniel Larimer is a nobody.
He does not know what he is talking about.
Big "conglomerates" doing the bitcoin mining does NOT effect the security of the block chain.
Lets pretend only ONE person in the world is mining bitcoins.
Big deal.
Who cares?
There is nothing that one person can do to hurt bitcoin.
Everyone else using bitcoin has the block chain.
Easily over 1000 people have the block chain downloaded.  No I didn't bother to look that up, it is a safe guess.
This one remaining miner cannot change the record, or the records of future transactions.

Perhaps I am missing something, but why does anyone care if everyone STOPS mining bitcoin?
The Bitcoin QT software will still behave as a wallet and peer to peer transaction data will still be shared among everyone elses wallet, correct?

Or are miners acting as a control node, in addition to mining?

No, Bitcoin completely depends on mining to operate.  A miner in control could completely destroy Bitcoin if they wanted to.  if they had a chain that took more work they could release it any time and wipe out all the transactions and miner rewards during the period they mining in secret.

[delulo]

Daniel Larimer is a nobody.
He does not know what he is talking about.
Big "conglomerates" doing the bitcoin mining does NOT effect the security of the block chain.
Lets pretend only ONE person in the world is mining bitcoins.
Big deal.
Who cares?
There is nothing that one person can do to hurt bitcoin.
Everyone else using bitcoin has the block chain.
Easily over 1000 people have the block chain downloaded.  No I didn't bother to look that up, it is a safe guess.
This one remaining miner cannot change the record, or the records of future transactions.

Perhaps I am missing something, but why does anyone care if everyone STOPS mining bitcoin?
The Bitcoin QT software will still behave as a wallet and peer to peer transaction data will still be shared among everyone elses wallet, correct?

Or are miners acting as a control node, in addition to mining?

No, Bitcoin completely depends on mining to operate.  A miner in control could completely destroy Bitcoin if they wanted to.  if they had a chain that took more work they could release it any time and wipe out all the transactions and miner rewards during the period they mining in secret.

Correct! A miner that constantly as more than 50% of the hasing power can reverse transactions at will reaching back to the moment when he got that 50% + hashing power.

I feel that many ppl in this thread express their believes without really knowing much about D. Larimer and POW. Doesn't seem like a productive discussion.

On the issue: POW is costly, slow, tends to centralize (because of ASICSs and Pools) and requires trust (in the few pool operators).   

Here is more info on the system Daniel L. proposed http://wiki.bitshares.org/index.php/DPOS http://bitshares.org/delegated-proof-of-stake/
It is operating already in BitSharesX.

[frankenmint]

Daniel Larimer is a nobody.
He does not know what he is talking about.
Big "conglomerates" doing the bitcoin mining does NOT effect the security of the block chain.
Lets pretend only ONE person in the world is mining bitcoins.
Big deal.
Who cares?
There is nothing that one person can do to hurt bitcoin.
Everyone else using bitcoin has the block chain.
Easily over 1000 people have the block chain downloaded.  No I didn't bother to look that up, it is a safe guess.
This one remaining miner cannot change the record, or the records of future transactions.

Perhaps I am missing something, but why does anyone care if everyone STOPS mining bitcoin?
The Bitcoin QT software will still behave as a wallet and peer to peer transaction data will still be shared among everyone elses wallet, correct?

Or are miners acting as a control node, in addition to mining?

No, Bitcoin completely depends on mining to operate.  A miner in control could completely destroy Bitcoin if they wanted to.  if they had a chain that took more work they could release it any time and wipe out all the transactions and miner rewards during the period they mining in secret.

Please consider that the only miners who could generate a longer chain than the rest of the network would themselves need to invest nearly 3 quarters of 1 billion dollars just to have enough hardware to 'overstep consensus' that is provided from the current pools (currently - this figure will grow larger as more entrants turn on their mining hardware for the first time in efforts to mine for bitcoin).  Saying that miners could destroy it if they had a longer chain is not true - they would simply have their own blocks confirmed and would receive a larger portion of block rewards (rightfully so I might add - for they too are contributing mining power to the network)  If an ill-willed miner with a half billion dollars and a chip on his shoulder thinks its better to hijack and effectively freeze Bitcoin transactions - he'll be noticed quick and blacklisted by the legitimate mining traffic even quicker. 

[BTCfaucetTIME]

Daniel Larimer is a nobody.
He does not know what he is talking about.
Big "conglomerates" doing the bitcoin mining does NOT effect the security of the block chain.
Lets pretend only ONE person in the world is mining bitcoins.
Big deal.
Who cares?
There is nothing that one person can do to hurt bitcoin.
Everyone else using bitcoin has the block chain.
Easily over 1000 people have the block chain downloaded.  No I didn't bother to look that up, it is a safe guess.
This one remaining miner cannot change the record, or the records of future transactions.

Perhaps I am missing something, but why does anyone care if everyone STOPS mining bitcoin?
The Bitcoin QT software will still behave as a wallet and peer to peer transaction data will still be shared among everyone elses wallet, correct?

Or are miners acting as a control node, in addition to mining?

No, Bitcoin completely depends on mining to operate.  A miner in control could completely destroy Bitcoin if they wanted to.  if they had a chain that took more work they could release it any time and wipe out all the transactions and miner rewards during the period they mining in secret.

Correct! A miner that constantly as more than 50% of the hasing power can reverse transactions at will reaching back to the moment when he got that 50% + hashing power.

I feel that many ppl in this thread express their believes without really knowing much about D. Larimer and POW. Doesn't seem like a productive discussion.

On the issue: POW is costly, slow, tends to centralize (because of ASICSs and Pools) and requires trust (in the few pool operators).   

Here is more info on the system Daniel L. proposed http://wiki.bitshares.org/index.php/DPOS http://bitshares.org/delegated-proof-of-stake/
It is operating already in BitSharesX.

I don't think this is true. If someone were to have 51% of the hashrate and somehow change the protocol then the rest of the network could just ignore that blockchain.

You only need to trust pool operators for a very short period of time because if the pool were to do something nefarious the miners could simply leave and join another pool.

[delulo]

Daniel Larimer is a nobody.
He does not know what he is talking about.
Big "conglomerates" doing the bitcoin mining does NOT effect the security of the block chain.
Lets pretend only ONE person in the world is mining bitcoins.
Big deal.
Who cares?
There is nothing that one person can do to hurt bitcoin.
Everyone else using bitcoin has the block chain.
Easily over 1000 people have the block chain downloaded.  No I didn't bother to look that up, it is a safe guess.
This one remaining miner cannot change the record, or the records of future transactions.

Perhaps I am missing something, but why does anyone care if everyone STOPS mining bitcoin?
The Bitcoin QT software will still behave as a wallet and peer to peer transaction data will still be shared among everyone elses wallet, correct?

Or are miners acting as a control node, in addition to mining?

No, Bitcoin completely depends on mining to operate.  A miner in control could completely destroy Bitcoin if they wanted to.  if they had a chain that took more work they could release it any time and wipe out all the transactions and miner rewards during the period they mining in secret.

Correct! A miner that constantly has more than 50% of the hasing power can reverse transactions at will reaching back to the moment when he got that 50% + hashing power.

I feel that many ppl in this thread express their believes without really knowing much about D. Larimer and POW. Doesn't seem like a productive discussion.

On the issue: POW is costly, slow, tends to centralize (because of ASICSs and Pools) and requires trust (in the few pool operators).    

Here is more info on the system Daniel L. proposed http://wiki.bitshares.org/index.php/DPOS http://bitshares.org/delegated-proof-of-stake/
It is operating already in BitSharesX.

I don't think this is true. If someone were to have 51% of the hashrate and somehow change the protocol then the rest of the network could just ignore that blockchain.

You only need to trust pool operators for a very short period of time because if the pool were to do something nefarious the miners could simply leave and join another pool.

In your first paragraph you mixed up a few things: The amount of hashing power a miner or a group of miners have has noting to do with changing the protocol. A 51% attack does not require changing the protocol. The other 49% can not ignore it if it is the longest chain unless they made a "social" agreement to ignore it -> Then is is not much different anymore from (D)POS, read about it (see the links above)!  

You are right with your second paragraph. But what I said was that someone who "constantly has more than 50% of the hashing power can reverse transactions at will" (corrected quite a few spelling mistakes form my original post ). If this is the case it doesnt matter what the other 49% of the network do. But this is basically the same with POW as with DPOS or any consensus network security model.

[HELP.org]

Daniel Larimer is a nobody.
He does not know what he is talking about.
Big "conglomerates" doing the bitcoin mining does NOT effect the security of the block chain.
Lets pretend only ONE person in the world is mining bitcoins.
Big deal.
Who cares?
There is nothing that one person can do to hurt bitcoin.
Everyone else using bitcoin has the block chain.
Easily over 1000 people have the block chain downloaded.  No I didn't bother to look that up, it is a safe guess.
This one remaining miner cannot change the record, or the records of future transactions.

Perhaps I am missing something, but why does anyone care if everyone STOPS mining bitcoin?
The Bitcoin QT software will still behave as a wallet and peer to peer transaction data will still be shared among everyone elses wallet, correct?

Or are miners acting as a control node, in addition to mining?

No, Bitcoin completely depends on mining to operate.  A miner in control could completely destroy Bitcoin if they wanted to.  if they had a chain that took more work they could release it any time and wipe out all the transactions and miner rewards during the period they mining in secret.

Please consider that the only miners who could generate a longer chain than the rest of the network would themselves need to invest nearly 3 quarters of 1 billion dollars just to have enough hardware to 'overstep consensus' that is provided from the current pools (currently - this figure will grow larger as more entrants turn on their mining hardware for the first time in efforts to mine for bitcoin).  Saying that miners could destroy it if they had a longer chain is not true - they would simply have their own blocks confirmed and would receive a larger portion of block rewards (rightfully so I might add - for they too are contributing mining power to the network)  If an ill-willed miner with a half billion dollars and a chip on his shoulder thinks its better to hijack and effectively freeze Bitcoin transactions - he'll be noticed quick and blacklisted by the legitimate mining traffic even quicker. 

I didn't say they would destroy Bitcoin, I said they could.  How much they would have to spend would depend on a number of circumstances.   Most of the calculations you see are bogus because they assume the entity would buy miners from vendors.  At this point a 51% attacker would develop their own chips and produce their own hardware.  They could mine in secret and release the chain after a long period of time with a bunch of empty blocks and wipe out all the transactions and block rewards over that period.   

[frankenmint]

mining in secret = orphaned blocks = NO longer chain, I'm just sayin 

[delulo]

mining in secret = orphaned blocks = NO longer chain, I'm just sayin 

Are you denying the possibility of a 51% attack?

That equation is not true. When someone mines a longer chain in secret and publishes it later the until then longest public chain including all its block will get orphaned because it is not the longest chain anymore.

But that all was not the point of the OP...

[Luckybit]

mining in secret = orphaned blocks = NO longer chain, I'm just sayin  

Are you denying the possibility of a 51% attack?

That equation is not true. When someone mines a longer chain in secret and publishes it later the until then longest public chain including all its block will get orphaned because it is not the longest chain anymore.

But that all was not the point of the OP...

Let's also not forget that ASICs can easily be taxed by governments which guarantees law enforcement gets their cut of the mining profits. Special purpose chips can only do one thing so taxing it doesn't disrupt the economy any more than taxing tobacco.
CPU mining was general purpose so politicians couldn't put a tax on Intel or AMD chips.

[Inotanewbie]

mining in secret = orphaned blocks = NO longer chain, I'm just sayin  

Are you denying the possibility of a 51% attack?

That equation is not true. When someone mines a longer chain in secret and publishes it later the until then longest public chain including all its block will get orphaned because it is not the longest chain anymore.

But that all was not the point of the OP...

Let's also not forget that ASICs can easily be taxed by governments which guarantees law enforcement gets their cut of the mining profits. Special purpose chips can only do one thing so taxing it doesn't disrupt the economy any more than taxing tobacco.
CPU mining was general purpose so politicians couldn't put a tax on Intel or AMD chips.

How can ASICs easily be taxed? I think it would actually be quite difficult without raising taxes on computer equipment. The only way that I can see ASICs being taxed is via sales tax, which is generally not outrageous.

[Luckybit]

mining in secret = orphaned blocks = NO longer chain, I'm just sayin  

Are you denying the possibility of a 51% attack?

That equation is not true. When someone mines a longer chain in secret and publishes it later the until then longest public chain including all its block will get orphaned because it is not the longest chain anymore.

But that all was not the point of the OP...

Let's also not forget that ASICs can easily be taxed by governments which guarantees law enforcement gets their cut of the mining profits. Special purpose chips can only do one thing so taxing it doesn't disrupt the economy any more than taxing tobacco.
CPU mining was general purpose so politicians couldn't put a tax on Intel or AMD chips.

How can ASICs easily be taxed? I think it would actually be quite difficult without raising taxes on computer equipment. The only way that I can see ASICs being taxed is via sales tax, which is generally not outrageous.

ASICs aren't general purpose computer equipment. It's highly specialized single purpose equipment. The only thing a Bitcoin ASIC can be used for is to mine Bitcoins. So who would complain if it were taxed? And how will you mine if your government puts a 10% tax?

You'll pay the sales tax.

[suryc]

Daniel Larimer is a nobody.
He does not know what he is talking about.
Big "conglomerates" doing the bitcoin mining does NOT effect the security of the block chain.
Lets pretend only ONE person in the world is mining bitcoins.
Big deal.
Who cares?
There is nothing that one person can do to hurt bitcoin.
Everyone else using bitcoin has the block chain.
Easily over 1000 people have the block chain downloaded.  No I didn't bother to look that up, it is a safe guess.
This one remaining miner cannot change the record, or the records of future transactions.

Perhaps I am missing something, but why does anyone care if everyone STOPS mining bitcoin?
The Bitcoin QT software will still behave as a wallet and peer to peer transaction data will still be shared among everyone elses wallet, correct?

Or are miners acting as a control node, in addition to mining?

Why would anyone want to go through all of that effort and spend all of that money to destroy bitcoin. Hypothetically the  reason to do a 51% attack is to steal some btc, but after such an attack btc would be worthless, so why would anyone bother?

No, Bitcoin completely depends on mining to operate.  A miner in control could completely destroy Bitcoin if they wanted to.  if they had a chain that took more work they could release it any time and wipe out all the transactions and miner rewards during the period they mining in secret.

Please consider that the only miners who could generate a longer chain than the rest of the network would themselves need to invest nearly 3 quarters of 1 billion dollars just to have enough hardware to 'overstep consensus' that is provided from the current pools (currently - this figure will grow larger as more entrants turn on their mining hardware for the first time in efforts to mine for bitcoin).  Saying that miners could destroy it if they had a longer chain is not true - they would simply have their own blocks confirmed and would receive a larger portion of block rewards (rightfully so I might add - for they too are contributing mining power to the network)  If an ill-willed miner with a half billion dollars and a chip on his shoulder thinks its better to hijack and effectively freeze Bitcoin transactions - he'll be noticed quick and blacklisted by the legitimate mining traffic even quicker. 

I didn't say they would destroy Bitcoin, I said they could.  How much they would have to spend would depend on a number of circumstances.   Most of the calculations you see are bogus because they assume the entity would buy miners from vendors.  At this point a 51% attacker would develop their own chips and produce their own hardware.  They could mine in secret and release the chain after a long period of time with a bunch of empty blocks and wipe out all the transactions and block rewards over that period.   

[SpontaneousDream]

Still haven't seen a decent response to this problem...