[Bitcoin-development] we can all relax now

Thu Nov 7 18:28:52 UTC 2013

Hey Peter, something seems wrong with your above analysis: I think a miner
would withhold his block not because it leads to a greater probability of
winning the next one, but because it increases his expected revenue.

Suppose a cabal with fraction q of the total hashing power is n blocks
ahead on a secret branch of that has mined r_tot coins, and let r_next be
its next block's reward.  If the cabal chooses not to broadcast its secret
chain until at least the next block, its expected revenue after the next
block is found is

(1 - (1-q)^(n+1))*(r_tot + r_next)

If it does broadcast, its expected revenue after the next block is found is

r_tot + q * r_next

If the cabal seeks only to maximize immediate revenue, then after a bit of
algebra we find that it will withhold its chain if

q > 1 - ( 1 + r_tot / r_next )^(-1/n)

So if the cabal has just mined his first block off of the public chain,
i.e. n = 1, and if the block reward is relatively stable, i.e. r_next =
r_tot, then it needs q > 50% to profitably withhold, not the 29.2% you
calculated.

>From this formula we can also see that if the miner wins the race and
withholds again, then he must grow q to compensate for the increase in
r_tot, and any decrease in n.  So generally publication becomes
increasingly in the cabal's interest, and secret chains will tend not to
grow too large (intuition tells me that simulations using the above formula
should bear this out).

This seem correct to you?

On Thu, Nov 7, 2013 at 9:14 AM, Mike Hearn <mike at plan99.net> wrote:

> Once the ASIC race calms down because everyone has one, has more or less
> optimal power supplies, process improvements aren't easily reachable
> anymore etc then I'd expect people to dissipate from the large pools
> because eliminating their fees will become the next lowest hanging fruit to
> squeeze out extra profit. There's no particular reason we need only a
> handful of pools that control a major fraction of the hashpower.
>
> If we end up with a few hundred pools or lots of miners on p2pool, then a
> lot of these theoretical attacks become not very relevant (I don't think ID
> sacrifices will be so common or large as to justify a pile of custom mining
> code+strategies at any point ...)
>
>
> On Thu, Nov 7, 2013 at 2:24 PM, Peter Todd <pete at petertodd.org> wrote:
>
>> On Thu, Nov 07, 2013 at 02:56:56PM +1000, Gavin Andresen wrote:
>> > > P.S: If any large pools want to try this stuff out, give me a shout.
>> You
>> > > have my PGP key - confidentiality assured.
>> > >
>> >
>> > If I find out one of the large pools decides to run this 'experiment' on
>> > the main network, I will make it my mission to tell people to switch to
>> a
>> > more responsible pool.
>>
>> I hope they listen.
>>
>> A few months ago ASICMiner could have made use of that attack if my
>> memories of their peak hashing power were correct. They certainely could
>> have used the selfish miner version, (we need better name for that)
>> although development costs would eat into profits.
>>
>> GHash.IO, 22%, says they're a "private Bitfury ASIC mining pool" - dunno
>> what they mean by that, but they're involved with CEX.IO who has
>> physical control of a bunch of hashing power so I guess that means their
>> model is like ASICMiners. They're a bit short of 30%, but maybe some
>> behind-the-scenes deals would fix that, and/or lowering the barrier with
>> reactive block publishing. (a better name)
>>
>> > And if you think you can get away with driving up EVERYBODY's orphan
>> rate
>> > without anybody noticing, you should think again.
>>
>> ...and remember, if you only do the attack a little bit, you still can
>> earn more profit, and only drive up the orphan rate a little bit. So who
>> knows, maybe the orphans are real, or maybe they're an attack? ASICMiner
>> was involved with a bunch of orphans a while back...
>>
>> You know what this calls for? A witchhunt!
>>
>> BURN THE LARGE POOLS!
>>
>> > > P.P.S: If you're mining on a pool with more than, like, 1% hashing
>> > > power, do the math on varience... Seriously, stop it and go mine on a
>> > > smaller pool, or better yet, p2pool.
>> > >
>> >
>> > That I agree with.
>>
>> Glad to hear.
>>
>> --
>> 'peter'[:-1]@petertodd.org
>> 0000000000000007bd936f19e33bc8b8f9bb1f4c013b863ef60a7f5a6a5d2112
>>
>>
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