The Organizers of Bitcoin in the Beltway created the conference to confront government threats to cryptocurrency head-on, so most of the presentations have reflected this mission. However, Bitcoin and other cryptocurrencies face just as many internal threats as internal threats, many of which are related…
Vitalik Buterin took time from his presentation on Ethereum, the revolutionary decentralized applications platform, to discuss the state of Bitcoin mining, specifically in reference to the centralization of mining power in the Ghash.io multipool. As you are probably aware, Ghash is by far the largest Bitcoin multipool. Their portion of the network hashing power ranges from 35% to more than 50%, and Buterin believes there is a strong indication that Ghash controls another undisclosed segment of the mining power that would bring their total share of the network to more than 75%.
The problem with Ghash controlling this much of the network is that it facilitates the possibility of a 51% attack. When a person or group has control of 51% or more of the network, he or they have a strong probability of being able to manipulate the blockchain for nefarious purposes. A 51% attack can accomplish 3 things. It can reverse transactions, which would let an attacker spend coins and then erase the transaction from the blockchain so that he never loses the coins he spends. Attackers can also exclude anyone it wants from making Bitcoin transactions. Finally, a person can use a 51% attack to censor any transaction that it wants.
At face value, it is alarming to realize that a Ghash 51% attack could potentially cause serious harm to Bitcoin. However, some prominent Bitcoin figures, such as Andreas Antonopoulos, do not believe Ghash will attempt a 51% attack because there is no long-term economic incentive. According to this theory, Ghash will not compromise their business interests by conducting 51%attack. However, Vitalik Buterin argues that centralized financial institutions act contrary to their business interests regularly. For example, PayPal censors transactions for products or services that it does not believe are in line with its philosophy.
Buterin also countered the argument that Ghash users will leave the pool if they become concerned about the looming threat of a Ghash 51% attack. He conceded that though there is historical precedent for this, there is no certainty that they will continue this trend in the future, especially considering most users eventually do go back to Ghash, which causes the network’s centralization to increase back to near-51% levels and recreating the threat of a Ghash 51% attack.
Vitalik Buterin gave two potential solutions to the threat of a centralized Ghash 51% attack. The first solution involves forcing miners to store the full blockchain on their client instead of referring to a multipool’s centralized blockchain. Forcing full blockchain stoage would make P2Pools economically viable, since they already require miners to store the full blockchain on their system.
Buterin’s second suggestion is to create a Multi-PPS. Essentially, a Multi-PPS is a platform that allows miners to mine in multiple pools simultaneously. Mining in multiple pools simultaneously reduces the profit instability that small mining
pools face. Because a small pool could find either 10 blocks in a day or 0 for a week, many miners choose to use larger pools that offer a more consistent profit. By enabling miners to operate in several small pools simultaneously, Multi-PPS would make smaller pools a viable alternative to large pools such as Ghash.
While Vitalik Buterin believes workable solutions to the Ghash 51% attack problem exist, he does not believe Bitcoin developers will implement them into the core Bitcoin code. Buterin stated that “the Bitcoin Foundation is recklessly conservative” about the threat of a Ghash 51% attack.
When asked by audience members about whether Bitcoin could ever adopt a hybrid distribution model such as PoW/PoS, he echoed his previous statements by saying that he is “bearish” about the prospect of the Bitcoin Foundation making any fundamental changes to the code. He elaborated that their resistance to making major changes to the Bitcoin code is partly because the developmental side of Bitcoin is horribly underfunded, which is why he chose to implement a pre-mine into Ethereum to fund future development.
Last modified: January 10, 2020 2:07 PM UTC