Tensions over bitcoin's long-term security have eased following a hastily-arranged roundtable of mining participants on 9th July in London.
With representatives from all areas of bitcoin mining and ASIC hardware manufacturing in attendance, the most significant thing about the meeting was that it even occurred at all.
A forum for discussing these issues is critical to maintaining the integrity of the bitcoin network, as its overall health depends on smooth mining operations with a minimum amount of orphaned blocks, hard forks and dominant players capable of executing a 51% attack.
Last month, Jeffrey Smith (CIO of bitcoin's biggest mining pool, GHash.io) announced a new focus on openness, reiterating the company's willingness to "address the decentralization of mining as an industry". Thus, it was natural for Smith and GHash to convene the first forum on bitcoin mining.
According to Ittay Eyal and Emin Gün Sirer from Hacking, Distributed:
"[GHash] got brazen at 55% from 2014-06-12 11:53:05 until 2014-06-13 09:45:24 GMT, for almost 24 hours. And prior to that, it seems to have tested the waters over a period of 10 days or so, perhaps gauging the public's reaction."
With GHash, the pool operators are known and they willingly initiated this important step. Conversely, stealth mining operators such as Discus Fish do not take steps to make themselves known, although it is claimed that they operate as China-based f2pool.
The consolidated hash rate from GHash has backed off significantly, with its network statistics from 13th July displaying approximately 34.6% of bitcoin's total.
As the foundation's representative present at the meeting, I agree with BitGo's Will O'Brien, who said "we cannot and should not rely on one or more trade organizations to set the rules. Bitcoin is decentralized, and we must build solutions that support that original framework of decision-making."
The technical solution, if there is to be one, will ultimately come from the open-source developer community ratified by the miners and users.
In the meantime, we have temporary ways to mitigate the risk of a 51% attack, such as GHash's agreement to "do all it can to limit its share of the total bitcoin network to 39.99%."
Generally, participants understood this pledge to be a very unenforceable solution fraught with potential pitfalls, namely GHash's concern that they are being punished for their own success and how meaningful the pledge will be when other mining operators approach the same self-imposed threshold.
In the last month or so, there have been a wealth of proposed technical solutions to minimize the likelihood of a successful 51% attack.
Mike Hearn expanded on that thinking with a detailed description of 'freemining' – regaining miners' ability to select their own block content.
These are immediate solutions available today. Hearn states:
"Freeminers mine in such a way that they both reduce their payout variance but also create their own blocks, a process that always requires running a fully validating p2p node like Bitcoin Core. If you aren't running one, you aren't decentralising the mining process."
Newer technical solutions are most likely nine to 12 months away, given the development and testing cycles.
One of those solutions includes the Two Phase Proof of Work (2P-PoW) to disincentivize large mining pools yet enables existing miners to continue using there current mining hardware, as outlined by Cornell's Ittay Eyal and Emin Gün Sirer in "How to Disincentivize Large Mining Pools." This proposal is based on the research work of Andrew Miller and others at University of Maryland, College Park.
“Would an attack be disruptive? Sure. Would it be fatal? No.”
Another solution, proposed by mathematician Meni Rosenfeld, involves the creation of Multi-PPS, a platform that allows miners to mine in multiple pools simultaneously.
Since a small pool could find either 10 blocks in a day or 0 in a week, many miners elect to use larger pools that offer a more consistent payout. Once the payout instability of small mining pools is reduced, it makes them a viable alternative.
According to Rosenfeld, the basic premise of Multi-PPS is "that miners should mine in multiple pools simultaneously, in proportion to each pool's strength, which has two important features," these are:
(1) The miner enjoys performance that is equivalent to that of a pool with a combined size of all pools he uses together
(2) The stable equilibrium is not consolidation in one pool, but rather, maintaining a distribution between many pools according to the merits of each.
Crypto arms race
The reality of bitcoin mining today is that we are in a crypto arms race and this ASIC-driven computational power massively strengthens the network from outside attack by malicious actors or disgruntled states.
Would an attack be disruptive? Sure. Would it be fatal? No.
In many ways, it is the price we pay for a distributed, resilient cryptocurrency, for if we wanted to abolish all uncertainty on mining, we would simply centralize the block chain and anoint a trusted party like the Fed.
The 9th July roundtable meeting was a great start. It is my sincere hope that the participants of the bitcoin mining community continue to hold a regular forum to maintain an open dialogue on the decentralization of mining.
Disclaimer: The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, CoinDesk.
Meeting image via Shutterstock
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