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From: Eric Voskuil <eric@voskuil.org>
In-Reply-To: <CADH-5r3YqvO4rbS5PEc86LB-CGsrMnARUj7Vbfi0opBB_EuMQA@mail.gmail.com>
Date: Thu, 9 Nov 2017 10:18:17 -0800
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References: <CAArA6tURLo0yiM+js=KJEo8i1FTwOKV7V+qjC8yGd8q2PgvewQ@mail.gmail.com>
	<CADH-5r3YqvO4rbS5PEc86LB-CGsrMnARUj7Vbfi0opBB_EuMQA@mail.gmail.com>
To: Marc Bevand <m.bevand@gmail.com>,
	Bitcoin Protocol Discussion <bitcoin-dev@lists.linuxfoundation.org>
Subject: Re: [bitcoin-dev] Centralizing mining by force
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It is not the case in practice that there exists no incentive to disrupt the=
 market for transaction confirmation. Statism is profitable, and a primary s=
ource of revenue is seigniorage. Given Bitcoin's threat to that privilege, i=
ts destruction presents a hefty incentive.

The security model of Bitcoin is not based on balancing power between miners=
 (those who confirm) and merchants (those who validate). It is based on thes=
e parties defending their mutually-beneficial market from the state.

Neither technology nor incentives resolve this conflict. People must be will=
ing to defend their mines and their economic nodes. This requires personal r=
isk. The risk to each individual is mitigated by broad decentralization, but=
 remains nonetheless.

Even in a highly-decentralized system, overpowering taxpayer-funded disrupti=
on of the confirmation market will require that merchants pay aggregate fees=
 exceeding the mining subsidy expended by the taxpayer to disrupt it. Who pr=
evails in that tug of war is unclear, but working on Bitcoin implies one bel=
ieves it is possible for individuals to do so.

e

> On Nov 7, 2017, at 21:04, Marc Bevand via bitcoin-dev <bitcoin-dev@lists.l=
inuxfoundation.org> wrote:
>=20
> What you describe is an example of a majority attack ("51% attack"). No te=
chnical mechanism in Bitcoin prevents this. However in practice, miners are n=
ot incentivized to perform this attack as it would destroy confidence in Bit=
coin, and would ultimately impact their revenues.
>=20
> -Marc
>=20
>=20
>> On Mon, Nov 6, 2017, 22:32 Robert Taylor via bitcoin-dev <bitcoin-dev@lis=
ts.linuxfoundation.org> wrote:
>> Forgive me if this has been asked elsewhere before, but I am trying to un=
derstand a potential failure mode of Bitcoin mining.
>>=20
>> A majority of miners can decide which valid blocks extend the chain. But w=
hat would happen if a majority of miners, in the form of a cartel decided to=
 validly orphan any blocks made by miners outside of their group? For exampl=
e, they could soft fork a new rule where the block number is signed by set o=
f keys known only to the cartel, and that signature placed in the coinbase. M=
iners outside of the cartel would not be able to extend the chain.
>>=20
>> It would be immediately obvious but still valid under the consensus rules=
. What are the disincentives for such behavior and what countermeasures coul=
d be done to stop it and ensure mining remained permissionless? I think this=
 is a valid concern because while it may not be feasible for one actor to ga=
in a majority of hash alone, it is certainly possible with collusion.
>>=20
>> Robert
>> _______________________________________________
>> bitcoin-dev mailing list
>> bitcoin-dev@lists.linuxfoundation.org
>> https://lists.linuxfoundation.org/mailman/listinfo/bitcoin-dev
> _______________________________________________
> bitcoin-dev mailing list
> bitcoin-dev@lists.linuxfoundation.org
> https://lists.linuxfoundation.org/mailman/listinfo/bitcoin-dev

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<html><head><meta http-equiv=3D"content-type" content=3D"text/html; charset=3D=
utf-8"></head><body dir=3D"auto"><div><span></span></div><div><meta http-equ=
iv=3D"content-type" content=3D"text/html; charset=3Dutf-8"><div></div><div>I=
t is not the case <span style=3D"background-color: rgba(255, 255, 255, 0);">=
in practice</span>&nbsp;that there exists no incentive to disrupt the market=
 for transaction confirmation. Statism is profitable, and a primary source o=
f revenue is seigniorage. Given Bitcoin's threat to that privilege, its dest=
ruction presents a hefty incentive.</div><div><br></div><div>The security mo=
del of Bitcoin is not based on balancing power between miners (those who con=
firm) and merchants (those who validate). It is based on these parties defen=
ding their mutually-beneficial market from the state.</div><div><br></div><d=
iv>Neither technology nor incentives resolve this conflict. People must be w=
illing to defend their mines and their economic nodes. This requires persona=
l risk. The risk to each individual is mitigated by broad decentralization, b=
ut remains nonetheless.</div><div><br></div><div>Even in a highly-decentrali=
zed system, overpowering taxpayer-funded disruption of the confirmation mark=
et will require that merchants pay aggregate fees exceeding the mining subsi=
dy expended by the taxpayer to disrupt it. Who prevails in that tug of war i=
s unclear, but working on Bitcoin implies one believes it is possible for in=
dividuals to do so.</div><div><br></div><div>e</div><div><br>On Nov 7, 2017,=
 at 21:04, Marc Bevand via bitcoin-dev &lt;<a href=3D"mailto:bitcoin-dev@lis=
ts.linuxfoundation.org">bitcoin-dev@lists.linuxfoundation.org</a>&gt; wrote:=
<br><br></div><blockquote type=3D"cite"><div><p dir=3D"ltr">What you describ=
e is an example of a majority attack ("51% attack"). No technical mechanism i=
n Bitcoin prevents this. However in practice, miners are not incentivized to=
 perform this attack as it would destroy confidence in Bitcoin, and would ul=
timately impact their revenues.</p>
<p dir=3D"ltr">-Marc</p>
<br><div class=3D"gmail_quote"><div dir=3D"ltr">On Mon, Nov 6, 2017, 22:32 R=
obert Taylor via bitcoin-dev &lt;<a href=3D"mailto:bitcoin-dev@lists.linuxfo=
undation.org">bitcoin-dev@lists.linuxfoundation.org</a>&gt; wrote:<br></div>=
<blockquote class=3D"gmail_quote" style=3D"margin:0 0 0 .8ex;border-left:1px=
 #ccc solid;padding-left:1ex"><div dir=3D"ltr">Forgive me if this has been a=
sked elsewhere before, but I am trying to understand a potential failure mod=
e of Bitcoin mining.<div><br>A majority of miners can decide which valid blo=
cks extend the chain. But what would happen if a majority of miners, in the f=
orm of a cartel decided to validly orphan any blocks made by miners outside o=
f their group? For example, they could soft fork a new rule where the block n=
umber is signed by set of keys known only to the cartel, and that signature p=
laced in the coinbase. Miners outside of the cartel would not be able to ext=
end the chain.<br><br>It would be immediately obvious but still valid under t=
he consensus rules. What are the disincentives for such behavior and what co=
untermeasures could be done to stop it and ensure mining remained permission=
less? I think this is a valid concern because while it may not be feasible f=
or one actor to gain a majority of hash alone, it is certainly possible with=
 collusion.</div><div><br></div><div>Robert</div></div>
_______________________________________________<br>
bitcoin-dev mailing list<br>
<a href=3D"mailto:bitcoin-dev@lists.linuxfoundation.org" target=3D"_blank">b=
itcoin-dev@lists.linuxfoundation.org</a><br>
<a href=3D"https://lists.linuxfoundation.org/mailman/listinfo/bitcoin-dev" r=
el=3D"noreferrer" target=3D"_blank">https://lists.linuxfoundation.org/mailma=
n/listinfo/bitcoin-dev</a><br>
</blockquote></div>
</div></blockquote><blockquote type=3D"cite"><div><span>____________________=
___________________________</span><br><span>bitcoin-dev mailing list</span><=
br><span><a href=3D"mailto:bitcoin-dev@lists.linuxfoundation.org">bitcoin-de=
v@lists.linuxfoundation.org</a></span><br><span><a href=3D"https://lists.lin=
uxfoundation.org/mailman/listinfo/bitcoin-dev">https://lists.linuxfoundation=
.org/mailman/listinfo/bitcoin-dev</a></span><br></div></blockquote></div></b=
ody></html>=

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