Less then 24 hours after Peter Todd's resignation, the bitcoin community unleashes a devasting counter attack against Ghash.io in the form of a DDOS. Total Ghash.io power declines by an astonishing 45%. Well done bitcoin users.
https://preview.redd.it/jcgmn1wf4o251.png?width=1400&format=png&auto=webp&s=55aa66f3a02fb3aefbbd2cc0fec1468645ab24cd What is double-spending? To understand what double-spending means, we must first understand how a blockchain network works. All cryptocurrencies use what is known as a blockchain. It is essentially a chain of blocks where each block is made up of digital information about transactions. Bitcoin and other cryptocurrencies cannot be forged because the blockchain is public and immutable. Because of a consensus algorithm each chain has, it is almost impossible for someone to form a transaction or block. Picture this, James sends Kate 4 Bitcoin. This transaction is made public, and everyone receives information about it. Also, the transaction has to be verified. If James doesn’t have 4 Bitcoin, the verification will fail, and Kate will not receive any Bitcoin. The verification process happens through the consensus algorithm.
Can Double-Spending Really Happen?
Double-spending happens when an attacker spends the same funds twice. For example, if James sends 4 Bitcoin to Kate and also to Alex at the same time, only one of the transactions will be confirmed. This problem is easier to solve on centralized systems; if there is a central institute like a bank, it can take charge of the problem. However, since blockchain is decentralized, there is no specific one responsible for the double-spending attack. Even though the consensus algorithm partly prevents double-spending, unfortunately, this cannot be the final solution as the problem can still occur. Theoretically, if someone were able to hold more than 50% of the mining power available, he or she would have the ability to overturn network transactions and may make double-spending valid. Although this might seem unlikely, it can happen for real. In 2014, the mining pool Ghash.io obtained 51% of Bitcoin’s hashing power but capped their power at 39.99% to increase the trust in the network. However, this event raised significant concerns about the safety of the network, as most mining power seems to be in control of a few parties only. Other cryptocurrencies have suffered 51% attacks, Bitcoin Gold, for example, was hit by a 51% attack in 2018 and just recently in 2020.
The Final Solution for Double-Spending, FLETA
FLETA is a blockchain-based platform for the creation of decentralized applications. FLETA employes an innovative sharding model where each shard operates individually and independently. Each DApp on the FLETA network operates independently and doesn’t rely on other DApps as it has its own sub-chain. Because each chain operates independently in a parallel structure, data is not shared between the chains, and chains are not affected by each other. For this reason, double spending is not feasible and provides a high transaction speed. Also, FLETA’s consensus algorithm, PoF(Proof-of-Formulation), prevents the double-spending problem. Its mining node, Observer Node, confirms a generated block real-time, and confirmation of 3 out of 5 observer nodes is necessary. This system eliminates the possibility of double-spending.
Although the initial consensus mechanism works, it is not entirely secure against double-spending attacks. A 51% attack has been shown to be achievable even in cryptocurrencies. FLETA has been able to create an innovative sharding model that allows each chain to operate independently. Moreover, its PoF consensus algorithm confirms a block systematically in real-time. Thanks to them, FLETA is free from the double-spending issue.
Rapid growth of GHash.IO mining pool, seen over the past few months, has been driven by our determination to offer innovative solutions within the Bitcoin ecosystem combined with significant investment in resource. Our investment, participation and highly motivated staff confirm it is our intention to help protect and grow the broad acceptance of Bitcoin and categorically in no way harm or damage it. We never have and never will participate in any 51% attack or double spend against Bitcoin. Still, we are against temporary solutions, which could repel a 51% threat. In any market, competition and innovation drives growth and that is particularly true in an emerging and disruptive environment such as Bitcoin. Successful and innovative companies cannot be expected to limit their growth or competitiveness as a direct result of their success. However, this is the situation we find ourselves in when faced with the community perception of the threat of a 51% attack on Bitcoin. Asking our users to not use our services or to use competing solutions is not conducive to fostering innovation. Implementing a pool fee to our pool contradicts principles of our operation from the very launch of GHash.IO. It also does not address the core issue only pushing the problem a few weeks or months down the road when another pool or perhaps GHash.IO again grows towards 51%. We do fully recognise the concerns and possible threat posed by an entity with malicious intent taking control of enough mining power to exploit the 51% scenario, but we also have confidence and agree with the views expressed by the Bitcoin Foundation that any such exploitation or attack ”would be obvious it was happening, and pretty easy to defend against. The transparent nature of the blockchain provides unprecedented insight for all to investigate and report such behaviours. We also recognise however that a long term preventative solution to the threat of a 51% attack does have to be found, the current situation we find ourselves in (essentially being punished for our success) is damaging not only to us, but to the growth and acceptance of Bitcoin long term, which is something we are all striving for. To that effect we are in the process of arranging contact to the leading mining pools and Bitcoin Foundation to propose a ‘round table’ meeting of the key players with the aim of discussing and negotiating collectively ways to address the decentralisation of mining as an industry. Our aim is to do this quickly with a possible date coinciding with the CoinSummit Conference in London.
Looking at the graphs on blockchain.info, ghash.io has an estimated 37% of the hashing power for the past 24 hours. They have been growing rapidly, and were at less than 25% a month ago. If they continue to grow at this rate, it's highly possible they could control 51% of the network. They show no signs of stopping, and they've been known to use their power maliciously to double spend. I know pessimistic posts are usually frowned upon in this subreddit, but I"m just wondering what can be done about this. Ghash.io poses a threat to bitcoin, and they can potentially destroy the whole decentralization of the currency, which is exactly what Bitcoin is about. Considering their bad history of double spends and other things, I'm a bit worried. Is there any way to stop them, besides people attempting to mine for other small pools? Mining is out of the control for most people since decent ASICs are extremely expensive and mostly unprofitable. The proof of work algorithm used for Bitcoin is unlikely to change due to how difficult it would be to get everyone to adapt and for it to go smoothly. How can this be dealt with? I'm highly afraid for the future of Bitcoin.
I'm a Bitcoin maximalist but we need to talk about 51%.
Recession happened, the USD failed and all major fiat followed. Bitcoin has finally been considered a global payment system and was adapted by the general population. Anyone who owns a complete Bitcoin is featured in a wealthy people's list. Now government does not have the power they used to have over people and it drove them crazy to the point where they decided to construct a plan of attack against the Network. All they need is 51% ownership of the network, Bitmain has 40% and governments can easily accuse this company of running a scheme to facilitate money laundering operations through BTC production. Therefore taking the company down and using their hash power and do the same with other mining company till they reach 51%. Creating a documented flaw in the Bitcoin network and potentially causing the double spending that blockchain was developed to avoid. People start to lose faith in this form of money and get back to government's newly established and regulated digital payment system or whatever. I once read that 15 billion USD is enough to produce the power needed to overcome the network, that's nothing to governments if they decided to "regain control" I think we can all agree that if a government does not have control over people's money, they don't have any kind of control. "Give me control of a nation's money and I care not who makes its laws." To say that 51% is impossible is naive, imagine what would have happened if Ghash.io decided not to reduce its share of the network back in 2014. Bitcoin might not be what it is today. drop your thoughts please.
Some of this data is from bitcointalk, I'll attribute the authors as I go
A possible explanation for the high "luck" factor from GHash.IO is that the operators control miners in other pools; Their software sends solved blocks back to their pool hops pools back to ghash.io as needed. (They make their own luck ... More on luck here)
There are many implications: GHash.IO could secretly have >51% of all processing power and target certain transactions for double spends without causing apparent/widespread negative effects.
There is evidence (see below) that operators or miners using GHash.IO tested this on a small scale last September
"getblocktemplate moves block creation to the miner, while giving pools a way to set down the rules for participation. While pools can do just as much as they could before by expressing it in these rules, miners can not be kept in the dark and are enabled to freely choose what they participate in mining. This improves the security of the Bitcoin network by making blocks decentralized again."
A risk that is difficult to assess is whether the large mining pools validate coinbase tx content included by miners in their pool. (To test, you "just" need to be the member of a pool who successfully solves a block; and also write a custom miner to include a specific coinbase tx that the pool did not ask you to provide. (Credit to bee7 here for this idea). It's possible that the GHash.IO operators control (or are colluding with) a significant portion of the mining capacity of Elgius and Slush (I picked those two pools because of their abysmal orphan (luck) rate); This hypothesis is supported by the data in this post. There are, of course, other very reasonable explanations for the "luck variance" observation:
Inefficient pool software choosing which coinbase txns to include in the next block
Mining optimization that is not yet common knowledge (to Elgius and Slush anyway)
...but there is also additional circumstantial evidence that GHash.IO have bad actors:
Not closing registration as their pool is approaching a (visible) 51%
Not charging fees to incentivize more pool diversity
In September I witnessed a lot of double-spending against BetCoin Dice. It happened between 25th and 27th Sept. The mechanism was simple: send betcoin a tx with 0 fee, then wait for a result tx, if your bet is a win, then confirm your tx, otherwise double-spend it.
Ok smarties: Any other thoughts/theories/criticisms to these hypotheses? Post below if you're considering changing pools now. 2014-Jun-03 11:18PM PDT edit: Fixed formatting issues 2014-Jun-03 11:25PM PDT edit: Clarified negative effect in TL;DR 2014-Jun-04 01:40PM PDT edit: Clarified point about pool hopping
Ghash.io insists that it does not have any intentions of executing a 51% attack, as it would do serious damage to the Bitcoin community, and the company itself. “GHash.IO does not have any intentions to execute a 51% attack, as it will do serious damage to the Bitcoin community, of which we are part of. On the contrary, our plans are to expand the bitcoin community as well as utilise the hashing power to develop a greater bitcoin economic structure. The popular Bitcoin mining pool GHash.IO – famous for raising concern about a possible ‘51% attack’ on the Bitcoin ecosystem twice in the last year – has promised that in the future it will “not exceed more than 39.99% of the overall Bitcoin hashrate”.. The news was revealed during a recent summit organized by GHash.IO. GHash.IO is a bitcoin mining pool having operated from 2013 and allowed bitcoins to mine using personal hardware or cloud-based mining power. In October, 2016, GHash.IO pool has been closed.At the moment, the team behind former GHash.IO pool offer enterprise mining solutions upon request. The collective value of the bitcoin mined in this pool was over $200 million in its first year. GHash.IO is one of the largest Bitcoin mining pools, which entered the mining market in July 2013 and contributes to over 30% of the overall hashing power making it the #1 pool in the Bitcoin network. GHash.IO charges 0% pool fee and provides 24/7 technical support for its users. October 2016, GHash.IO pool officially closed. The team behind GHash.IO offers development of custom-built pools ...
7/16/14 - Google adds Bitcoin calculator, GHash commits to 40%, & Coin Congress is next week
Who are the true enemies of Bitcoin & Is 2020 the year they launch an attack? Governments, Regulators & the old financial system are beginning to crumble. Thus centralized government digital ... Bakkt is the poison to any future Bitcoin bull run! Their hidden agenda has kicked into HIGH GEAR! Kelly Loeffler (co-founder, former CEO) was sworn into the... Minerando pelo ghash.io bitcoin miner. The incredible ibex defies gravity and climbs a dam Forces of Nature with Brian Cox - BBC - Duration: 3:53. BBC Recommended for you In particular, summit organizer GHash.io, who recently came close to that threshold, made a commitment to "not exceed more than 39.99% of the overall Bitcoin hashrate." January 9, 2014 -- Gaborone, Botswana -- MadBitcoins: The best friend thirst ever had. The MadBitcoins Subscriber Index is at 1787. Here are Today's MadBits: The Correction may be over. With ...