[Bitcoin-development] BlockPow: A Practical Proposal to prevent mining pools AND reduce payoff variance:

Kevin kevinsisco61784 at gmail.com
Thu Jun 19 17:11:44 UTC 2014

On 6/19/2014 12:58 PM, Sergio Lerner wrote:
> I propose a setting that prevent mining pools AND reduce payoff 
> variance which requires two changes: increasing the block-rate and 
> changing the Bitcoin PoW (but still allowing current Bitcoin ASICs to 
> work (as far as I know)). The block rate must be increased at least 20 
> times and block must still be near full (e.g. there must be at least 
> 20 more transactions/second than there is today)
> BlockPow is kind of PoW that only practically prevents mining pools 
> for certain cryptocurrency settings based on concepts similar to 
> parmacoin, but in a much simple degree. The idea is that if miners try 
> to join a pool, then they incur in overhead of transmitting 
> information and earn less than working solo. Let b (the payload) 
> contain a full block. b must contain all the transactions and the 
> header, and not only the transaction hashes. b should not hide 
> anything. Let h be the block header (which contains the previous block 
> hash and the Merkle tree root of the transactions). Let d be the 
> difficulty. hash-block-length(b) returns the number of blocks 
> processed by the hash function when fed with the block b. The target 
> is divided by hash-block-length(b) so that the difficulty does not 
> depend on the length of the block. Some other function can be used to 
> encourage nodes to add more or less transactions.
> Def: Basic BlockPoW concept
> For each r in the nonce-range: if H ( H( r || b ) || h || r) ) < 2^-d/ 
> hash-block-length(b) then return r
> return null
> The header (h) is appended to the hashed message to allow SPV clients 
> to verify the PoW without requiring the full block to be downloaded. 
> Peers can send only (x,r,h) to SPV nodes, where x = H( r || b ), so 
> they can verify the PoW. The verification procedure is obvious, and is 
> skipped here. r is inserted at the beginning of the message to prevent 
> pool administrators from keeping a secret mid-state of the hash 
> function secret in order to prevent block stealing and also to force 
> the miner to know b in the inner mining loop.
> So now mining requires the knowledge of the block b to be mined, and b 
> must be received at each block-chain epoch. This could create an 
> incentive not to include any transaction and use an almost empty b, 
> because that way the bandwidth requirements is decreased. But this 
> incentive should not exists normally, since by including transactions 
> the solo miner gets an additional revenue from fees, which is lost if 
> the block is empty. Anyway, to prevent this possible incentive we can 
> append to b a subset of previous blocks (e.g 100 blocks). The block 
> subset to include could be derived from a peudo-random function seeded 
> by the previous block hash. Then a node would still need to download 
> part or all the block-chain in order to mine.
> Now if the miner wants to be a dumb node and take part of a pool, then 
> the current working unsolved block (the template) must be sent each 
> time from the pool admin to each miner. If the pool admin hosts 1000 
> miners, then to serve them with fresh block templates he needs 1000 
> times more bandwidth that the miners, making this much more expensive. 
> If miners create another network topology to distribute templates, 
> they are incurring in the same overhead as being actively part of the 
> cryptocurrency network, so they gain nothing.
> For example, in a block-chain with a 5 seconds block-rate, such as in 
> NimbleCoin <http://nimbleCoin.org>, each block can be as large as 200 
> Kbytes (100 tps are allowed). A miner will require the block template 
> to be ready as fast as possible, say before 3 seconds, so as not to 
> loose more than 60% of the times the transaction fees present in the 
> block template. This means that a pool admin serving 1000 clients must 
> have a upload bandwidth of at least 60 Mbytes/sec, and load balance 
> servers, because all miners will demand the block template at the same 
> time and will compete for it.
> The same miner, working solo, will not loose the 60% of block fees. If 
> block fees are 10% of block reward, then solo miners earn 6% more than 
> pool miners. Also, having a block rate of 5 seconds allows solo miners 
> to receive payments more often and so it reduces the payment variance.
> This method to discourage mining pools only work as long as time is 
> takes to transmit a block is comparable to the block interval time, 
> e.g. 20%. This seems not to be a problem since if the cryptocurrency 
> becomes popular, then we can expect blocks to be near full, while if 
> is is not, then nobody will care about mining pools.
> For this method to work for Bitcoin, Bitcoin should reduce the block 
> rate to at least 1 minute, and keep blocks of at least 10 Mbytes. Or 
> go the NimbleCoin way, and reduce the block interval to 5 seconds. The 
> sole reduction of the block rate from 10 minutes to 5 seconds would 
> reduce notably the mining reward variance, which is the main reason 
> miners don't mine solo.
> BitcoinBlockPow
> The basic BlockPoW is incompatible with Bitcoin ASICs as is but it can 
> be made partially compatible with some tweaks: The value b is replaced 
> by a a a subset or an integrity check of the block.
> Using a subset:
> First the hashMerkleRoot and hashPrevBlock fields are replaced by the 
> fields: ChildBlock (32 bytes) and ScatteredBlockBytes (32 bytes). 
> ChildBlock is the hash of a message with stores the old hashMerkleRoot 
> and hashPrevBlock. ScatteredBlockBytes is a pseudo-random subset of 
> bytes taken from the block template being mined. The seed for the 
> pseudo-random function that selects the subset is  the hashMerkleRoot 
> plus the block time. When a miner scans all the 32bit nonce space, 
> then a new hashMerkleRoot must be created to increase the extra-nonce 
> field or the time must be updated. When this happens, a new subset of 
> pseudo-random 32 block bytes must be collected. If the miner only 
> stores 10% of the block template (e.g. 100 Kbytes instead of 1 Mbyte), 
> then the probability he can build the ScatteredBlockBytes by 
> brute-forcing the seed is 10^-32. If the miner performs 100 GH/sec, 
> then the 32-bit nonce will overflow every 20 msec and the miner could 
> request the ScatteredBlockBytes from the pool admin using a bandwidth 
> of 1 Kbyte/s. A pool hosting 6 PH/sec (such as Eligious, which has 8%) 
> would need to stream more than 60 Mb/s of ScatteredBlockBytes fields. 
> A mining pool having 50% would need to stream 500 Mb/s, which is quite 
> challenging. So miners will download the block normally, and become 
> active part of the network.
> Using an integrity check:
> ScatteredBlockBytes  is replaced by a field BlockHash defined as H( 
> full-block-with-zero-nonce ). Obviously the header must be at the 
> beginning of the block to force the re-hash.
> Best regards,
>  Sergio.
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Why do you want to punish pools?


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