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Bitcoin Math The Almighty Buck

Bitcoin Security Endangered By Powerful Mining Pool 281

An anonymous reader writes Ars Technica reports that for the first time in Bitcoin's five-year history, a single entity has repeatedly provided more than half of the total computational power required to mine new digital coins, in some cases for sustained periods of time. It's an event that, if it persists, signals the end of crypto currency's decentralized structure."
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Bitcoin Security Endangered By Powerful Mining Pool

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  • by billstewart ( 78916 ) on Monday June 16, 2014 @12:57AM (#47243731) Journal

    Mining pools and custom hardware do make it possible for a large enough group to get over 50%, especially as the need for mining hardware crowds CPU and GPU miners out of the game. We'll see whether they decide it's more useful to stay over 50% and cheat, stay over 50% and not cheat, or split the pool into two or more pieces to keep the value of their Bitcoins higher than they would be if the market abandons Bitcoin because of perceptions of cheating.

  • by mpthompson ( 457482 ) on Monday June 16, 2014 @01:02AM (#47243759)

    But having a single entity in GHash's position, of holding 51 percent of the mining power, of being in a monopoly position, of being able to launch any of these attacks at will, completely violates the spirit and intent of Bitcoin as a currency.

    Given enough of an incentive, has there ever been in history a man-made system, technical, political or otherwise, that hasn't been undermined and exploited by those with the capability and power to do so?

    Probably best this happens to Bitcoin sooner rather than later. As fine as Bitcoin is, believing that technology alone can defeat human nature is a fools errand. We are betting off investing in creating more moral men and woman and a society that sustains them than technology that is supposed to be infallible against basic human nature.

  • by Animats ( 122034 ) on Monday June 16, 2014 @01:09AM (#47243785) Homepage

    Bitcoin stopped being a distributed system a long time ago. All the serious miners now have data-center sized installations of custom boards with custom ASICs. Some are liquid-cooled. The original idea was millions of end users running Bitcoin mining as a background job on their CPU. That's totally dead.

  • by Beck_Neard ( 3612467 ) on Monday June 16, 2014 @01:14AM (#47243811)

    Not to mention that every time a bug or vulnerability has been found in some part of the bitcoin ecosystem (like in Mt.Gox's non-standard trading software), the vulnerability HAS been exploited. Every single time. If you really think that someone isn't going to use this power (or hasn't already), you're dead wrong. Even worse, they can double-trade coins in a way that no one would ever find out, even if they dropped back below 51%. A few smaller cryptocurrencies got completely destroyed by 51% attacks. I think the bitcoin community will be watching this development very closely.

  • What happens if (Score:5, Interesting)

    by goombah99 ( 560566 ) on Monday June 16, 2014 @01:16AM (#47243817)

    I wonder what happens if someone with more than enough CPU power to get 99% of the mining jumps in one night. What kind of Damage could they do in a short interval before people notice? What if their goals were not to steal bitcoins but rather to snatch all the coins from, say, Kim Jong Un, or Al Queda. E.g. for example the NSA or Samsung or Saudi arabia. They would not care about the loss of value in their stolen coins, the point is to deprive an adversaries use of them.

    Does the Amazon or Azure networks have enough rentable time to pull this off?

  • Re:What happens if (Score:4, Interesting)

    by goombah99 ( 560566 ) on Monday June 16, 2014 @01:20AM (#47243827)

    Also if the bit coin miners get concentrated into just a few, what happens if these 3 were to get DDOSed? if the big miners are off line then would the next largest miner have a window of time where they controlled more than 50% of the mine? Would they be able to pull off some shenanigans in that time?

  • by GrandCow ( 229565 ) on Monday June 16, 2014 @01:38AM (#47243867)

    Bitcoin stopped being a distributed system a long time ago. All the serious miners now have data-center sized installations of custom boards with custom ASICs. Some are liquid-cooled. The original idea was millions of end users running Bitcoin mining as a background job on their CPU. That's totally dead.

    This is absolutely hilarious. Not because it's a fake post (I honestly don't know if it is or not), but just the fact that someone would even think that this is a good enough idea to post that 'serious' miners are actually doing this. This is the California gold rush all over again... the only people making a profit off of the mining are the people selling the ASIC's/shovels. Mining isn't profitable and hasn't been for quite some time. While it might be if you ignore the hardware cost and only think of the electricity cost, you're still BARELY making a SLIGHT profit. That's only in places that you have very cheap electricity (or can find a way to make someone else pay for the electricity). And once again, that doesn't even count the cost of hardware in the first place. Lets not forget that there are other idiots funneling money into even faster hardware which makes your very expensive highly specialized and unable to be repurposed board basically worthless in a few months time, once the electricity cost passes what you'll make back from mining.

    HINT: this is before you get your initial cost of hardware back out of the system. You will never make a net profit. Ever.

    The only money in bitcoin right now is in speculating, and even then it's a suckers game. Your profits are based entirely on someone else guessing wrong and losing money into the system that you might be lucky enough to cash out at the right time. You can do that easier and without a datacenters worth of hardware with penny stocks. Also penny stocks are LEGAL! You don't have to worry about some new law negating all of your money like you have to do every day with bitcoin.

    I'll just stop here because anyone that legit cares about bitcoin already had their opinion made before they even read a word of this comment.

  • by houstonbofh ( 602064 ) on Monday June 16, 2014 @01:38AM (#47243871)

    Oh they promised! Well, color me convinced.

    And if they break it (like they did) a simple DDOS attack knocks them off the top spot, (like it did) and sets a scary precedent...

  • by Anonymous Coward on Monday June 16, 2014 @02:16AM (#47243973)

    Ignorant, misinformed, and outspokenly opinionated? What an unusual combination!

    Some asshole on claims that you can't make money mining bitcoin so it must be true.

    That's why the network difficulty continues to get exponentially more difficult right? Cause there's just THAT MANY suckers burning up electricity at no profit?

    Here's what ACTUALLY happened: you tried to compete in an industry with high barriers to entry, while GROSSLY under-capitalized, with limited-zero competitive advantage. You failed to turn a profit therefore all the people investing in 20nm fab & data-centers are just fools with too much money.

    Learn something about how the world works before spewing nonsense on the interblags please. I come here for serious business.

  • by Scot Seese ( 137975 ) on Monday June 16, 2014 @02:37AM (#47244031)

    .. It's just the guys on the 3rd shift at Fort Meade, retasking server farm cycles.

  • by perpenso ( 1613749 ) on Monday June 16, 2014 @02:41AM (#47244049)

    And scrypt is ASIC resistant.

    It was erroneously thought to be so. ASICs have taken over scrypt mining. Two $90 ASIC scrypt miners (720 kh/s) using 7-8 watts each can beat a Radeon R9 290 (850 kh/s). Their combined hash rate is slightly less but when you factor in power costs they win. Note the ASIC miners are usually controlled by a Raspberry Pi to reduce power costs.

  • by Anonymous Coward on Monday June 16, 2014 @03:14AM (#47244109)

    No. That's actually not what happened.

    What happened is exactly what people who understand cryptography said would happen. Bitcoin's cryptographic cost has gone up, number of miners has gone down, specialized pools have reached critical mass, and the TRUST IN THE CURRENCY (which is the only asset it ever had) is gone.

    So you can call everyone else losers for not investing enough capital. (Gotta spend money to make money, right? But with Bitcoin that's only true if you're an idiot.)

    Bitcoin is dead. The only people still "investing" in it are speculators and miners who are either playing with someone else's money or worriedly working it hoping to recoup their "investment" and the majority are not going to make it.

    Time for the sociopaths to shut up while the cryptographers work around them.

  • Stupidity (Score:2, Interesting)

    by Anonymous Coward on Monday June 16, 2014 @04:11AM (#47244219)

    It appears that people who provide half of the mining power are so stupid to choose the most popular pool among the alternatives.

  • by Rich0 ( 548339 ) on Monday June 16, 2014 @07:35AM (#47244633) Homepage

    One would assume that the thousands of other miners, if it was really that important to them, could easily step up their collective games and provide more hashing power than ghash can...

    I wouldn't assume this at all. Back when everybody was mining with CPUs then a popular appeal might get people to donate a ton of unused CPU capacity to beating a big miner.

    However, today mining is done with ASICs which are many orders of magnitude faster than any CPU you can buy. An Intel CPU might mine 10-20 Mhash/s, and and ASIC stats are measured in high GH/s to the low TH/s. So, you'd need 100,000 CPUs dedicated to mining to equal a single ASIC unit.

    The current hash rate is 100 PH/s having doubled in the last two months, or the equivalent of 10 billion Intel CPUs. Are there even 10 billion modern Intel CPUs in existence? You'd probably need $100M to just buy that many ASICs (if I didn't miscount my zeros), which gives you a sense of the scale of Bitcoin mining today. That mining collective operates about $50M worth of hardware, though I guess controlling an entire currency for a $50M investment isn't bad.

    It is a bit like saying that if it was really important people could team up in neighborhoods and produce cars, and the collective might of the entire US population could outproduce the big 3 car manufacturers. The problem is that an optimized robot-assisted assembly line can churn out a LOT of cars, and building one by hand in a garage takes a very long time even setting aside the logistics nightmare which isn't much better when you're making one car vs a million of them. 10k workers in a factory could very well produce more cars than the entire rest of the population working at home combined.

God help those who do not help themselves. -- Wilson Mizner