Stop. Equating. Hashrate. With. Network. Control. Hashrate barely matters. The influence these Chinese miners have is next to nil. Them having hashrate doens't mean they get to decide on anything meaningful, it just means they get to reap the economics benefits of transaction minting.
If they tried to exploit their 'power' in any way, people would just fork the chain and move on. They have no ability to actually take advantage of their position in any meaningful way.
1) As other posters have already noted, these miners have economies of scale already set up to dominate any fork that still utilizes the SHA hash. Changing the hashing algorithm would be akin to creating a whole new coin.
2) All sufficiently de-centralized crypto mining eventually devolves into an electricity arbitrage game. ASICs are way too easy and cheap to build to give anyone a lasting advantage via computing efficiency, and once you normalize for capital costs whoever has the cheapest energy wins. For scale you also need access to lots of bandwidth and proximity to fabrication of the hardware begins to matter since mining is a zero sum game. Given those needs China will probably end up dominating most sufficiently de-centralized crypto mining.
3) You drastically underestimate the political, economic, and social cache of the Chinese miners in both the Bitcoin and general cryptocurrency world. Not only do these guys underpin a niche industry (that's worth lots of $$$), but they have their own network effects at this point.
I think the main takeaway, which forking can never solve, is that the second any kind of decentralized currency shows any kind of value the powers that be will seek to centralize it. This is a problem with TOR just as much as it is a problem with Bitcoin, and one that I'm not sure we can solve today. Maybe one day we'll get another paper from Satoshi solving it for us.
It's not quite that simple - the chain will need to be forked with a protocol whose algorithm doesn't allow these miners to continue to dominate. And achieving consensus on that in the heat of the moment will be non-trivial.
Any fork that continues to use SHA-256 will be a trivial target for attack by these miners; they won't blindly continue to mine the "defunct" chain.
> If they tried to exploit their 'power' in any way, people would just fork the chain and move on.
So screw over all the people that made transactions with the hacked bitcoins before the hack was found.
Holy fucking shit! Now that I think about this, it is a massive timebomb waiting to happen! Once you have hacked the bitcoins, you can tumble them with other bitcoins, exchange them to other cryptocurrencies (which are also 1 way transactions so the person exchanging with the hacked coins is completely SOL), or exchange to fiat currencies (although that would probably be the most traceable so probably not). As you tumble and exchange the cryptocurrencies more and more, it becomes more and more difficult to hard fork the currencies to undo the hack.
My wild prediction. At some point:
1: Some black hat will gain a controlling compute share of a cryptocurrency (either the chinese ASIC companies or a massive AWS/google cloud/azure... cloud mining to override the majority share and convince the network that some illegal transactions occurred).
2: They will then proceed to massively tumble the hacked coin through different exchanges through multiple different cryptocurrencies so that hard forking is nigh impossible to undo the hack.
3: Cryptocurrencies all crash because they are susceptible to mining takeovers which cannot be detected quickly enough to hardfork to undo the hack which render their whole design impractical.
> If they tried to exploit their 'power' in any way, people would just fork the chain and move on.
You can't prevent someone from trying to mine, though. Bitcoin would have to develop some sort of defense or constantly be correcting whatever fork was the accepted truth.
It is control over however, of the tangible embodiment of an idea. Like in movies where people fight over the last Bible in a post-apocalyptic world. The secular representation has a high degree of influence because true embodiment is too fragmented. The idea of the elephant only occurs with multiple people in multiple areas being able to observe their immediate environment (trunk, legs, etc..). If you take away the tools that allow for idea harmonization then the idea is crippled. Instead of a moving living elephant you have a chimera, or only static snapshots of what was.
Hashrate is more important than anything else. They can mine empty blocks forever. Or be made to do it by China to protect yuan. I'm 100% sure it will happen if they see it as a threat.
They can block transactions they don't like by refusing to put them into blocks.
They can mine any competing fork with all empty blocks so transactions never confirm.
Huh, was expecting the article to be about different meanings of centralization and how Bitcoin doesn't meet all of them -- to use Vitalik Buterin's terminology[1], it's not logically decentralized (being ultimately based around a single consensus ledger). Instead it's claiming that Bitcoin isn't politically decentralized like it claims to be.
Yeah bitcoin is distributed, it functions as if it has a ~10m global semaphore. The actual details are much more complicated, but with the current design you are not getting around that, current efforts are to build systems that only settle to the chain when trust is broken.
> being ultimately based around a single consensus ledger
You managed to got two things wrong in one short sentence: it's not single
ledger (everybody at each point have their own version, only to some degree
compatible with anybody else), and it's not consensus ledger, as in
consensus problem a.k.a. Byzantine generals.
Bitcoin never aimed at consensus, it was always about timestamping the
documents (transactions).
This article is so silly. How can it get front page on HN?
The important point that he's missing is that, even though the pools are centralized, the individual miners are not! And this is really the main difference.
As ASIC chips get faster and faster we'll reach a physical point that it won't be beneficial to keep large rigs running in a central location - because of the economy of energy distribution.
I'd love it if there was a greener solution for decentralization than energy, but there isn't, otherwise we'd be using it! It's as simple as that.
The article seems to focus on China's share of the miners, so I'll address that: I'm not that concerned about the Chinese miners. If they wanted to disrupt the network they have had plenty of chances to.
The author assumes that all Chinese miners are controlled by the same entity. Which, while I do believe that the Chinese govt. can shutdown any miner they want to, I don't believe that 100% of the miners are operated by the Chinese govt. If you break down the pie chart into the different Chinese entities that actually operate the miners it begins to look more decentralized.
After reading the paper that was posted here the other week about forking the network using BGP to effectively create two sepereate Internets, I think that if a country did go rouge, we could all just set our firewalls to drop all connections from Chinese nodes and that would be that.
Let them run their own chain where they can manipulate their coins price like the do the yuan.
> we could all just set our firewalls to drop all connections from Chinese nodes and that would be that
That's not how it works. All it takes is a single connection bridging the partition for a chain with more work to replace your chain. That connection could be through a VPN, Tor, a satellite (https://blockstream.com/satellite/), or someone physically carrying a USB drive containing a better chain across the border and starting up a node.
This is such a tired argument. It says more about the author than it does about Bitcoin. The point isn't to have perfect decentralization. The point is to have good enough decentralization that the system works. In the case of Bitcoin "good enough to work" means at least three separate entities mining with none having greater than 50% share.
I disagree with the premise of this article. Just because miners are based in China is not proof of collusion. I agree there is some fishy stuff going on with Bitmain and Antpool and others, but isn't it in their best interest not to break faith?
Wouldn't exchanges (who are holding all the money and are not (explicitly NOT) based in China still have the cash to fund withdrawals? Wouldn't the rest of the world STILL be free to fork the chain to a good faith ecosystem? Isn't Bitcoin Core largely made up of non-Chinese?
> no hard-fork to different PoW alg can save you from that, because you will start with a much weaker hashrate
Security derives not from hashrate but from energy consumption. E.g. Ethereum has a many orders of magnitude lower hashrate but its energy consumption is a significant fraction of bitcoin's.
If the Chinese act bad and there is a fork, even if the Chinese fork has more hash power doesn't mean the market will favor their coin, out contrary, no one will trust their chain, since they acted malicious, who will buy their coins.. it will also be an opportunity for new miners.
So the main point of the article is that China controls > 50% of the mining pool. Is there any reason what-so-ever that multiple companies would ever want to collude and fork it, and thus crashing the value to 0?
Not as long as they own a lot of the coin itself, no. If any of these miners sells their stake, freak out immediately since their next step would be to short bitcoin through some means before causing a value crash. And you’ve also got to consider market reactions; if any of the miners sells a decent amount of their stake, freak out immediately- because they’re liable to sell more soon, causing everyone to freak out and crashing the market. And so on. This doesn’t sound stable- perhaps the whole thing could be taken down by a miner deciding he needs a bit of cash to buy a house.
I don't think the issue is a hard fork which would be bad for Chinese miners. It's more about Chinese miners being able to insert transactions. For example, the Chinese government getting all miners to commit to transferring some of the big 'unknown' blocks in the Bitcoin chain into Chinese government control for 'protection'.
That would cause minimal disruption while giving the Chinese government a massive payout. There's a lot of value for China to push that.
EDIT: This would actually cause a hard fork. Any non-Chinese node doing verification would pick up the illegal block and discard it, creating a fork between Chinese and non-Chinese -- with the Chinese fork having the majority of processing power behind it. At that point, you'd just need a Bitcoin client change to exclude the Chinese fork, I'd guess?
That does not matter if there will be a reason. Is there a reason for paypal to ban your account today? Most likely no. But it can. And maybe will. Maybe not. Decentralization prevents that even if they wanted to.
I have to wonder if comments like these might be better directed at the article on medium rather than hackernews, just in case the author isn't the poster.
Sigh...I disagree. ~17M Bitcoins. ~17M BCH coins. How many splits coming up soon from the BTC chain? 10k Nodes. Multi-million dollars invested into 'mining'. 0.0001 is at parity/value with the USD Dollar. How many people trade these cryptocurrency tokens? How many program and develop to aid the security and value of the entire crypto network? How many businesses/services opt to accepting these tokens instead of fiat? I don't think people realize the gravity of what has happened in plain sight.
There is no single one point of failure. None. Why? because this isn't about 'one ring to rule them all' nor 'one token to use'. Look at this entire ecosystem of crytpocurrencies, as a whole.
Sure the code has had some issues but...those were ironed out many years ago. Even if multiple people own 1M tokens...guess what? It's distributed....many....many more times than our current oligarchy system from central banking and fiat currency. Where the USA prints money and accounts to no one but themselves.
Anyone could look up how systems create points of failure. The crypto network, as a whole, has more computational power than numerous supercomputers. They aren't just 'solving puzzles', as Bitcoin 101 people are saying. These are built on-chain and off. Online and off. This thing, should be seen as a biological wonder. This is like a virus, trying to consume us all. I strongly doubt our, current and imperfect, society can stop this new paradigm shift. We are entering a phase of our history that will change how we value and interact with one another.
It's here, it's incentives are ingenious. No war, bombs nor law can stop it. It is has no weakpoints. Those weakpoints that exist, are mitigated by other areas of the network being able to offload that risk.
Or after skimming this guys article. It DOES NOT MATTER that 3-4 companies try to game the 'mining hashpower'. Why? because ~17M tokens already exist. Many of those earlier adopter CAN and DO shift the entire market, as they should. This isn't about 'hashpower'. This isn't about thinking about Bitcoin in a very traditional sense. Think of every aspect as a weakpoint and stakeholder. With all aspects being attributed a value. Sure, an exploit can be found, but over time, those exploits decrease exponentially because more brain, computational, and social dynamics have been 'attacking' the system. This system grows and evolves and it's adaptable based on the behavior of humanity. People choose the value and the system adjusts.
P.S. I know I sound weird and maybe esoteric but...I've been watching this space almost since the beginning. I wish I entered sooner but I just didn't believe anyone would ever adopt it. The early days of bitcoin, these tokens were given away, proud and free. Now, 50 of them (one early block) could pay for most, if not all, 1st world college tuition. Or a home. The cost? Being socially crazy and weird. Well...things are a bit different now. Why? What is the math about? What are the social dynamics about? Why are 'splits' so contentious? What are those social dynamics about? There is SO much going on here that 90% of people don't know, let alone don't get. 20 years from now, we'll wonder why we/humanity didn't think of this sooner.
P.P.S. I'm not resting on my own opinion but instead have been challenging my own throughout this 'bitcoin experiment' and I am open to changing my mind but...the math is decent, the software is decent...I look forward to when someone can articulate 'major' flaws that can 0 day the system. Or even 30 day the system. It's too ironclad but feel free to 'enlighten me'.
From what I understand, the attacks miners can perform can be easily detected by the actually decentralised full nodes. Once detected, these miners can be removed. So yeah, this part of bitcoin still requires some human politics, but it is fairly minimal.
People are trying to figure out how to make mining less centralised. None of these growing pains are some kind of fundamental flaw that cannot be overcome.
[+] [-] darawk|8 years ago|reply
If they tried to exploit their 'power' in any way, people would just fork the chain and move on. They have no ability to actually take advantage of their position in any meaningful way.
[+] [-] pdeuchler|8 years ago|reply
1) As other posters have already noted, these miners have economies of scale already set up to dominate any fork that still utilizes the SHA hash. Changing the hashing algorithm would be akin to creating a whole new coin.
2) All sufficiently de-centralized crypto mining eventually devolves into an electricity arbitrage game. ASICs are way too easy and cheap to build to give anyone a lasting advantage via computing efficiency, and once you normalize for capital costs whoever has the cheapest energy wins. For scale you also need access to lots of bandwidth and proximity to fabrication of the hardware begins to matter since mining is a zero sum game. Given those needs China will probably end up dominating most sufficiently de-centralized crypto mining.
3) You drastically underestimate the political, economic, and social cache of the Chinese miners in both the Bitcoin and general cryptocurrency world. Not only do these guys underpin a niche industry (that's worth lots of $$$), but they have their own network effects at this point.
I think the main takeaway, which forking can never solve, is that the second any kind of decentralized currency shows any kind of value the powers that be will seek to centralize it. This is a problem with TOR just as much as it is a problem with Bitcoin, and one that I'm not sure we can solve today. Maybe one day we'll get another paper from Satoshi solving it for us.
[+] [-] jMyles|8 years ago|reply
It's not quite that simple - the chain will need to be forked with a protocol whose algorithm doesn't allow these miners to continue to dominate. And achieving consensus on that in the heat of the moment will be non-trivial.
Any fork that continues to use SHA-256 will be a trivial target for attack by these miners; they won't blindly continue to mine the "defunct" chain.
[+] [-] mrep|8 years ago|reply
So screw over all the people that made transactions with the hacked bitcoins before the hack was found.
Holy fucking shit! Now that I think about this, it is a massive timebomb waiting to happen! Once you have hacked the bitcoins, you can tumble them with other bitcoins, exchange them to other cryptocurrencies (which are also 1 way transactions so the person exchanging with the hacked coins is completely SOL), or exchange to fiat currencies (although that would probably be the most traceable so probably not). As you tumble and exchange the cryptocurrencies more and more, it becomes more and more difficult to hard fork the currencies to undo the hack.
My wild prediction. At some point:
1: Some black hat will gain a controlling compute share of a cryptocurrency (either the chinese ASIC companies or a massive AWS/google cloud/azure... cloud mining to override the majority share and convince the network that some illegal transactions occurred).
2: They will then proceed to massively tumble the hacked coin through different exchanges through multiple different cryptocurrencies so that hard forking is nigh impossible to undo the hack.
3: Cryptocurrencies all crash because they are susceptible to mining takeovers which cannot be detected quickly enough to hardfork to undo the hack which render their whole design impractical.
[+] [-] debacle|8 years ago|reply
You can't prevent someone from trying to mine, though. Bitcoin would have to develop some sort of defense or constantly be correcting whatever fork was the accepted truth.
[+] [-] dlwdlw|8 years ago|reply
[+] [-] homakov|8 years ago|reply
[+] [-] freeloop3|8 years ago|reply
[+] [-] EGreg|8 years ago|reply
What you see is higher transaction fees. It's no 0% or 100% denial of service.
[+] [-] Sniffnoy|8 years ago|reply
[1] https://medium.com/@VitalikButerin/the-meaning-of-decentrali...
[+] [-] placeybordeaux|8 years ago|reply
[+] [-] dozzie|8 years ago|reply
You managed to got two things wrong in one short sentence: it's not single ledger (everybody at each point have their own version, only to some degree compatible with anybody else), and it's not consensus ledger, as in consensus problem a.k.a. Byzantine generals.
Bitcoin never aimed at consensus, it was always about timestamping the documents (transactions).
[+] [-] sktrdie|8 years ago|reply
The important point that he's missing is that, even though the pools are centralized, the individual miners are not! And this is really the main difference.
As ASIC chips get faster and faster we'll reach a physical point that it won't be beneficial to keep large rigs running in a central location - because of the economy of energy distribution.
I'd love it if there was a greener solution for decentralization than energy, but there isn't, otherwise we'd be using it! It's as simple as that.
[+] [-] Frogolocalypse|8 years ago|reply
[+] [-] EGreg|8 years ago|reply
Look at everything out there:
Git
Email
The Web
IRC
Usenet
IPFS
[+] [-] colemannugent|8 years ago|reply
The author assumes that all Chinese miners are controlled by the same entity. Which, while I do believe that the Chinese govt. can shutdown any miner they want to, I don't believe that 100% of the miners are operated by the Chinese govt. If you break down the pie chart into the different Chinese entities that actually operate the miners it begins to look more decentralized.
After reading the paper that was posted here the other week about forking the network using BGP to effectively create two sepereate Internets, I think that if a country did go rouge, we could all just set our firewalls to drop all connections from Chinese nodes and that would be that.
Let them run their own chain where they can manipulate their coins price like the do the yuan.
[+] [-] tlrobinson|8 years ago|reply
That's not how it works. All it takes is a single connection bridging the partition for a chain with more work to replace your chain. That connection could be through a VPN, Tor, a satellite (https://blockstream.com/satellite/), or someone physically carrying a USB drive containing a better chain across the border and starting up a node.
Honeybadger chain don't give a shit.
[+] [-] homakov|8 years ago|reply
"If paypal wanted to ban my account they would do it already. Must be secure to store all my money there then".
>If you break down the pie chart into the different Chinese entities that actually operate the miners it begins to look more decentralized.
The 4th chart is actually the official hashrate distribution from https://blockchain.info/pools
I never said they are operated by the gov, __they are under its authority__. Because that's how govs worked for ages.
>I think that if a country did go rouge, we could all just set our firewalls to drop all connections from Chinese nodes and that would be that.
"We would just change PoW". "We would just cut off China from Internet". Just do a thought experiment - those are not solutions
[+] [-] unknown|8 years ago|reply
[deleted]
[+] [-] rapsey|8 years ago|reply
[+] [-] pmorici|8 years ago|reply
[+] [-] homakov|8 years ago|reply
p2p cash! => ok, store of value
decentralized => ok, let's just hope China will be good to us
I hold quite a few BTC, but I prefer to remain realist.
[+] [-] polock|8 years ago|reply
"Decentralized credit rating on the Blockchain" https://us.teamblind.com/article/decentralized-credit-rating...
[+] [-] JonasJSchreiber|8 years ago|reply
Wouldn't exchanges (who are holding all the money and are not (explicitly NOT) based in China still have the cash to fund withdrawals? Wouldn't the rest of the world STILL be free to fork the chain to a good faith ecosystem? Isn't Bitcoin Core largely made up of non-Chinese?
[+] [-] knocte|8 years ago|reply
[+] [-] tromp|8 years ago|reply
Security derives not from hashrate but from energy consumption. E.g. Ethereum has a many orders of magnitude lower hashrate but its energy consumption is a significant fraction of bitcoin's.
[+] [-] down|8 years ago|reply
[+] [-] H99189|8 years ago|reply
[+] [-] maxander|8 years ago|reply
[+] [-] RyanZAG|8 years ago|reply
That would cause minimal disruption while giving the Chinese government a massive payout. There's a lot of value for China to push that.
EDIT: This would actually cause a hard fork. Any non-Chinese node doing verification would pick up the illegal block and discard it, creating a fork between Chinese and non-Chinese -- with the Chinese fork having the majority of processing power behind it. At that point, you'd just need a Bitcoin client change to exclude the Chinese fork, I'd guess?
[+] [-] homakov|8 years ago|reply
[+] [-] spraak|8 years ago|reply
[+] [-] iamthirsty|8 years ago|reply
[+] [-] johnhenry|8 years ago|reply
[+] [-] heimatau|8 years ago|reply
There is no single one point of failure. None. Why? because this isn't about 'one ring to rule them all' nor 'one token to use'. Look at this entire ecosystem of crytpocurrencies, as a whole.
Sure the code has had some issues but...those were ironed out many years ago. Even if multiple people own 1M tokens...guess what? It's distributed....many....many more times than our current oligarchy system from central banking and fiat currency. Where the USA prints money and accounts to no one but themselves.
Anyone could look up how systems create points of failure. The crypto network, as a whole, has more computational power than numerous supercomputers. They aren't just 'solving puzzles', as Bitcoin 101 people are saying. These are built on-chain and off. Online and off. This thing, should be seen as a biological wonder. This is like a virus, trying to consume us all. I strongly doubt our, current and imperfect, society can stop this new paradigm shift. We are entering a phase of our history that will change how we value and interact with one another.
It's here, it's incentives are ingenious. No war, bombs nor law can stop it. It is has no weakpoints. Those weakpoints that exist, are mitigated by other areas of the network being able to offload that risk.
Or after skimming this guys article. It DOES NOT MATTER that 3-4 companies try to game the 'mining hashpower'. Why? because ~17M tokens already exist. Many of those earlier adopter CAN and DO shift the entire market, as they should. This isn't about 'hashpower'. This isn't about thinking about Bitcoin in a very traditional sense. Think of every aspect as a weakpoint and stakeholder. With all aspects being attributed a value. Sure, an exploit can be found, but over time, those exploits decrease exponentially because more brain, computational, and social dynamics have been 'attacking' the system. This system grows and evolves and it's adaptable based on the behavior of humanity. People choose the value and the system adjusts.
P.S. I know I sound weird and maybe esoteric but...I've been watching this space almost since the beginning. I wish I entered sooner but I just didn't believe anyone would ever adopt it. The early days of bitcoin, these tokens were given away, proud and free. Now, 50 of them (one early block) could pay for most, if not all, 1st world college tuition. Or a home. The cost? Being socially crazy and weird. Well...things are a bit different now. Why? What is the math about? What are the social dynamics about? Why are 'splits' so contentious? What are those social dynamics about? There is SO much going on here that 90% of people don't know, let alone don't get. 20 years from now, we'll wonder why we/humanity didn't think of this sooner.
P.P.S. I'm not resting on my own opinion but instead have been challenging my own throughout this 'bitcoin experiment' and I am open to changing my mind but...the math is decent, the software is decent...I look forward to when someone can articulate 'major' flaws that can 0 day the system. Or even 30 day the system. It's too ironclad but feel free to 'enlighten me'.
[+] [-] johnhenry|8 years ago|reply
[+] [-] redetedt|8 years ago|reply
People are trying to figure out how to make mining less centralised. None of these growing pains are some kind of fundamental flaw that cannot be overcome.
[+] [-] ironjunkie|8 years ago|reply
Without consensus, the best-case scenario would be that it results in a fork.
[+] [-] juicyfroot|8 years ago|reply
It will show likely 99% male.
[+] [-] zxcmx|8 years ago|reply
Red hashes no! Pink hashes yes!