Satoshi planned for this 51% mining attack problem, and so far we're ok.<p>His premise was that if a miner ever grew so large as to be capable of performing a 51% attack, that they would have so much wealth invested in the Bitcoin network that they would never dare try anything.<p>The Bitcoin network is GHash's golden egg laying goose.<p>The Bitcoin network is entirely safe in GHash's hands imho.<p>The only real worry comes in when the 51% miner is a bad actor.<p>>at 35% hashpower and 3 confirmations, this means that GHash can currently steal altcoins from an altcoin exchange with 15.6% success probability – once in every six tries.<p>Yes, but come on. They never would. Would Bill Gates jump into an active volcano to pick up a penny? Even if he had a 15.6% of picking up that penny without dying a fiery death?<p>>So what if, for the sake of example, GHash gets over 51% again and starts launching 51% attacks (or, perhaps, even starts launching attacks against altcoin exchanges at 40%)? What happens then?<p>I'll bite. The ~75% of GHash's mining power that is being pointed at GHash by regular Bitcoin ASIC miners who are enjoying their 0% fees and merged mining drops off overnight. Their domain names are DDOSd at a record breaking level for weeks on end, and every other pool adopts a modified bitcoind that hard-forks (erases) any damange GHash might have caused.<p>GHash is left with a few thousand nearly worthless Bitcoin (because the USD/BTC value would tank on their 51% attack news) and they are also left without the possibility to basically print themselves free money until the end of time.
> Decentralization, n. The security assumption that a nineteen year old in Hangzhou and someone who is maybe in the UK and maybe not have not yet decided to collude with each other.<p>With parentheses:<p>> Decentralization, n. The security assumption that (a nineteen year old in Hangzhou and (someone who is maybe in the UK and maybe not)) have not yet decided to collude with each other.
That was a great write-up. I've avoided BTC from the start because I always figured someone would commit the algos to silicon and crush everyone else. That said I'm doubtful there is such thing as a ASIC resistance system in anything that has a direct economic value to highly-repeated calculation ratio. Many years ago people would say of graphics systems "You'll never get X poly's/second" etc. But then gaming came along and all those hungry 3d gamers kept buying more and more powerful GPU's. Then data sciences came along and said "wow we can use these GPU's" and onward marches the power of the GPU. I have lived to see so many things over the years go from "impossible" to "common place" in technology.<p>Another thought that came to mind several times over the years is that China or USA could spool up enough hardware to swamp the BTC networks and crash them. If you think about advancements in these ASIC's and how cheap power can be to large governmental organizations all that is missing is the incentive to attack BTC. I take the recent slow but steady recognition of BTC by various governments with a certain cynical grain of salt. I think others see these things as proof that BTC is getting more generally accepted, but I see them as very large and powerful entities thinking, "If you can't beat them join 'em". It's entirely possible that these steps are more about staying closer to the enemy then being friends with BTC.<p>When I read this article making claims about heat and electricity being major blockers to centralization I started to think about how google and facebook have been solving these problems with amazing success in the last couple of years. Imagine an "BTC Factory" in a nice cold climate where power is cheap and labor to maintain the facility is cheap. If BTC continues to grow and become predictably tradable for other currencies then these farms could be built with great ease. All we're lacking here is a VC who sees 15% as a reasonable return and a handful of nerds who don't mind building the worlds most powerful mining environment in a 505,000 sq ft facility in North Carolina. Of course this would be a massive investment and could signal an amazing time for BTC or it could signify the centralization of a decentralized process that destroys the original dreams of BTC and yet again puts the people with the most power (literally) in control.<p>The only thing that stands between today and that potential future are forward thinking people trying to keep the BTC concept alive and continuing to improve what is today's state of art to stay ahead of tomorrow's state of art. I'm still on the sidelines watching but am enjoying the show!
One thing people keep forgetting: GHash.io is not a single entity. GHash is made up of miners who choose to be there. It is very easy for a miner to switch to another pool.
The thing I don't understand about the "50% attacks" is that they should be detectable. There's legitimately going to be a transaction on the bitcoin network, and then a ghash.io block is going to show up that invalidates it by spending the input. For the lower percentage ones, there's going to be an orphaned chain with a different set of transactions.
One missing factor in the article is the source of energy. Free energy can be easily obtained from renewable sources like wind farms since as a result of wind variance only some fraction of generated power can be practically utilized. Variance is very different around the world making it difficult to centralize.<p>Though miners would then work only for 20% of their time making it feasible once electricity will be about 5 times more expensive than equipment.<p>Therefore the sooner we will reach state of the art equipment, the better. And for simple SHA it is much easier to reach the limits imposed by physics than for CPU.