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Tensions over bitcoin's long-term security have eased following a
hastily-arranged roundtable of mining participants on 9th July in
London.
With representatives from all areas of bitcoin mining and ASIC hardware manufacturing in attendance, the most significant thing about the meeting was that it even occurred at all.
A forum for discussing these issues is critical to maintaining the
integrity of the bitcoin network, as its overall health depends on
smooth mining operations with a minimum amount of orphaned blocks, hard
forks and dominant players capable of executing a 51% attack.
Last month, Jeffrey Smith (CIO of bitcoin's biggest mining pool, GHash.io) announced a
new focus on openness, reiterating the company's willingness to
"address the decentralization of mining as an industry". Thus, it was
natural for Smith and GHash to convene the first forum on bitcoin
mining.
According to Ittay Eyal and Emin Gün Sirer from Hacking, Distributed:
"[GHash] got brazen at 55% from 2014-06-12 11:53:05 until
2014-06-13 09:45:24 GMT, for almost 24 hours. And prior to that, it
seems to have tested the waters over a period of 10 days or so, perhaps
gauging the public's reaction."
With GHash, the pool operators are known and they willingly initiated
this important step. Conversely, stealth mining operators such as
Discus Fish do not take steps to make themselves known, although it is
claimed that they operate as China-based f2pool.
Then
they got brazen at 55% from 2014-06-12 11:53:05 until 2014-06-13
09:45:24 GMT, for almost 24 hours. - See more at:
http://hackingdistributed.com/2014/06/18/how-to-disincentivize-large-bitcoin-mining-pools/#id1
The consolidated hash rate from GHash has backed off significantly, with its network statistics from 13th July displaying approximately 34.6% of bitcoin's total.
As the foundation's representative present at the meeting, I agree with BitGo’s
Will O'Brien, who said "we cannot and should not rely on one or more
trade organizations to set the rules. Bitcoin is decentralized, and we
must build solutions that support that original framework of
decision-making."
The technical solution, if there is to be one, will ultimately come
from the open-source developer community ratified by the miners and
users.
In the meantime, we have temporary ways to mitigate the risk of a 51% attack, such as GHash's agreement to "do all it can to limit its share of the total bitcoin network to 39.99%."
Generally, participants understood this pledge to be a very
unenforceable solution fraught with potential pitfalls, namely GHash's
concern that they are being punished for their own success and how
meaningful the pledge will be when other mining operators approach the
same self-imposed threshold.
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." This proposal is based on the research work of Andrew Miller and others at University of Maryland, College Park.
“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.
Crypto arms race
called
Two Phase Proof of Work (2P-PoW), to disincentivize large mining pools.
We - See more at:
http://hackingdistributed.com/2014/06/18/how-to-disincentivize-large-bitcoin-mining-pools/#sthash.i9Eo2RQV.dpuf
called Two Phase Proof of Work (2P-PoW), to disincentivize large mining
pools.
The reality of bitcoin mining today is that we are in a crypto arms
race and this ASIC-driven computational power massively strengthens the
network from outside attack by malicious actors or disgruntled states.
Would an attack be disruptive? Sure. Would it be fatal? No.
In many ways, it is the price we pay for a distributed, resilient
cryptocurrency, for if we wanted to abolish all uncertainty on mining,
we would simply centralize the block chain and anoint a trusted party like the Fed.
The 9th July roundtable meeting was a great start. It is my sincere
hope that the participants of the bitcoin mining community continue to
hold a regular forum to maintain an open dialogue on the
decentralization of mining.
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