Bitcoin Protocol Vulnerability Could Lead To a Collapse 256
First time accepted submitter stanga writes "Cornell researchers unveiled an attack on the Bitcoin mining protocol
that enables selfish mining pools to earn more than their fair
share. In a technical
report the authors explain this
attack can be performed by a pool of any size. Rational miners
will join this pool to increase their benefits, creating a snowball
effect that may end up with a pool commanding a majority of the
system's mining power. Such a pool would be able to single-handedly
control the blockchain, violating the decentralized nature of the increasingly
successful Bitcoin.
The authors propose a patch to the protocol that would protect the
system from selfish mining pools smaller than 25% of the system. They
also show that Bitcoin can never be safe from selfish mining pools larger
than 33% of the network, whereas it was previously believed that only
groups larger than 50% of the network were a threat to the system.
The question is — can the miners operating today adopt the suggested fix and
dismantle too-large pools before a selfish mining pool arises?"
NBD (Score:5, Interesting)
Tinfoil hat (Score:5, Interesting)
So that's what the NSA datacenter is for...
Is there a way to generate value besides mining? (Score:5, Interesting)
I fairly understand that for there to be value in bitcoin there must be scarcity and that this scarcity is created via the mining mechanisms. But what I wonder is if there be any other way to create value for a virtual currency?
I ask because to me the most interesting thing about virtual currencies and specifically bitcoin is NOT the mining aspect, but rather the distributed database. The fact the hosting or provision of the database is fundamentally bound to the value-creation process seems to be the problem here. The problem seems not to necessarily be virtual currency or distributed databases themselves. The problem seems to be that value creation is based on artificial scarcity which can be manipulated through collusion.
There has to be another way to establish value for a virtual currency.
Re:Is there a way to generate value besides mining (Score:2, Interesting)
Re:The Wild West (Score:5, Interesting)
Re:Is there a way to generate value besides mining (Score:3, Interesting)
Bitcoin is, for lack of better terms, pseudo-proof of work. The work is to guess a random number + some other bits of info and make a hash. Then keep trying random numbers until you find a hash with enough zeros in the front to meet the target. Two identical computers guessing numbers will end up with a different proof of work. One computer might guess the answer before the other. So how to do you gauge which machine really did the work? Well, the machine that won claims to be the winner and has a way for the other machine to check quickly. If the other machine had continued working, it might find a different answer that is also correct, but took longer. Why is its proof work any less valid than the machine that by luck found an answer first?
So again, bitcoin is not proof of work in the true sense. It is proof of luck. The paper basically shows that proof of luck is really no good when you get people involved because it is just like the lottery. You can play the billion dollar powerball all by yourself and never win. But what if you could gather everyone in the country together into one large lotto pool, the winner would share the winnings with everyone. So even if everyone only got $1 from the lotto, you still got something right? No one would play the lottery if the "mega-pool" of people are always going to win. Bitcoin by contrast suffers from the exact same human produced issue. Case closed.
Comment removed (Score:5, Interesting)
Re:The Wild West (Score:5, Interesting)
Computer sales use currency, but they are not themselves currency. A market segment can grow or shrink and supply and demand balance. People still need computers, and so there will still be a market.
A currency with built-in deflation has perverse incentives. Your money will be worth more if you don't spend it; investment is discouraged. By not engaging in commerce with your money, you enrich yourself.
Compare that to all the real currencies, which have inflation; it will be worth less in the future. If you want to save it, you need to put it to some sort of use; for example an interest-bearing savings account where your money is actually be loaned out to other parties. And if you want better gain than that, you invest in something with either a higher risk level, or a more specific purpose.
If there was widespread adoption of a guaranteed-deflation currency, an early adopter who was heavily invested could set up trust accounts where their ancestors would have growing spending power, without the money in the trust even being invested in anything. A future where the world is controlled by the grandchildren of the current rich, a class of aristocrats who don't have to work, but rule the world. And the more new economic activity happens, the higher percentage the old money controls! New wealth will always be worth less than the old wealth for the same activity.