[bitcoin-dev] New difficulty algorithm needed for SegWit2x fork? (reformatted text)

Wed Oct 11 15:28:08 UTC 2017

>Instead of there being one altcoin fighting to take hashpower from
bitcoin, there’d now be 2

Yes, there would be 2. One of which would (in the scenario we are
discussing) be producing blocks excruciatingly slowly but be the same in
all other aspects.

>changing the difficulty adjustment algorithm doesn’t solve the underlying
issue—hashpower not being aligned with users’ (or even its owners’)
interests

I disagree. Changing the difficulty adjustment algorithm could improve the
functionality of a chain, which could be an important prerequisite to using
and trading the tokens on the chain. This property could help keep the
price of the token high, which is what pressures hashpower to align with
user interests.

>And so yes, *if* this incentive problem can’t be solved, and the unaltered
bitcoin chain dies from disuse after suffering a hashpower attack,
especially a centrally and/or purposefully instigated one, then bitcoin
would be failed a failed project.

IF the incentive problem could not be resolved then Bitcoin would be a
failed project.

But here is a bit of good news.

Bitcoin has developers!

And those developers can publish a contingency plan!

And that contingency plan can be an emergency hard fork to a different
retarget algorithm.

And that emergency hard fork can gain consensus if it is broadly preferred
over the status quo.

If 90% of the hash power follows NYA, blocks are going to take 100 minutes
until difficulty adjusts after 4.5 months.

That is quite a handicap, even for a honey badger. Emergency hard fork
carries a risk, but depending on the scenario in November, it could be a
risk worth taking.

One more thing. If miners think they are going to succeed in starving the
legacy chain to death, they might be more likely to try. If they get a
credible signal that the legacy chain will react by changing the retarget
function and thereby be more likely to survive, they might feel less
committed to a strategy of starving the legacy chain. This could be
especially true if they are giving up profit for what they fervently hope
will be a short period of time.

On Wed, Oct 11, 2017 at 12:08 AM, Mark Friedenbach via bitcoin-dev <
bitcoin-dev at lists.linuxfoundation.org> wrote:

> You phrase the question as if “deploying a hard fork to bitcoin” would
> protect the bitcoin chain from the attack. But that’s not what happens. If
> you are hard forking from the perspective of deployed nodes, you are an
> different ledger, regardless of circumstance or who did it. Instead of
> there being one altcoin fighting to take hashpower from bitcoin, there’d
> now be 2. It is not at all obvious to me that this would be a better
> outcome.
>
> If that isn’t reason enough, changing the difficulty adjustment algorithm
> doesn’t solve the underlying issue—hashpower not being aligned with users’
> (or even its owners’) interests. Propose a fix to the underlying cause and
> that might be worth considering, if it passes peer review. But without that
> you’d just be making the state of affairs arguably worse.
>
> And so yes, *if* this incentive problem can’t be solved, and the unaltered
> bitcoin chain dies from disuse after suffering a hashpower attack,
> especially a centrally and/or purposefully instigated one, then bitcoin
> would be failed a failed project.
>
> The thesis (and value proposition) of bitcoin is that a particular
> category of economic incentives can be used to solve the problem of
> creating a secure trustess ledger. If those incentives failed, then he
> thesis of bitcoin would have been experimentally falsified, yes. Maybe the
> incentives can be made better to save the project, but we’d have to fix the
> source of the problem not the symptoms.
>
> On Oct 10, 2017, at 6:44 PM, Ben Kloester <benkloester at gmail.com> wrote:
>
> Mark, this seems an awful lot like an answer of "no", to my question "Is
> there a contingency plan in the case that the incumbent chain following the
> Bitcoin Core consensus rules comes under 51% attack?" - is this a correct
> interpretation?
>
> In fact, beyond a no, it seems like a "no, and I disagree with the idea of
> creating one".
>
> So if Bitcoin comes under successful 51%, the project, in your vision, has
> simply failed?
>
> *Ben Kloester*
>
> On 10 October 2017 at 13:19, Mark Friedenbach via bitcoin-dev <
> bitcoin-dev at lists.linuxfoundation.org> wrote:
>
>> The problem of fast acting but non vulnerable difficulty adjustment
>> algorithms is interesting. I would certainly like to see this space further
>> explored, and even have some ideas myself.
>>
>> However without commenting on the technical merits of this specific
>> proposal, I think it must be said upfront that the stated goal is not good.
>> The largest technical concern (ignoring governance) over B2X is that it is
>> a rushed, poorly reviewed hard fork. Hard forks should not be rushed, and
>> they should receive more than the usual level of expert and community
>> review.
>>
>> I’m that light, doing an even more rushed hard fork on an even newer idea
>> with even less review would be hypocritical at best. I would suggest
>> reframing as a hardfork wishlist research problem for the next properly
>> planned hard fork, if one occurs. You might also find the hardfork research
>> group a more accommodating venue for this discussion:
>>
>> https://bitcoinhardforkresearch.github.io/
>>
>> On Oct 9, 2017, at 3:57 PM, Scott Roberts via bitcoin-dev <
>> bitcoin-dev at lists.linuxfoundation.org> wrote:
>>
>> Sorry, my previous email did not have the plain text I intended.
>>
>> Background:
>>
>> The bitcoin difficulty algorithm does not seem to be a good one. If there
>> is a fork due to miners seeking maximum profit without due regard to
>> security, users, and nodes, the "better" coin could end up being the
>> minority chain. If 90% of hashrate is really going to at least initially
>> go
>> towards using SegWit2x, BTC would face 10x delays in confirmations
>> until the next difficulty adjustment, negatively affecting its price
>> relative
>> to BTC1, causing further delays from even more miner abandonment
>> (until the next adjustment). The 10% miners remaining on BTC do not
>> inevitably lose by staying to endure 10x delays because they have 10x
>> less competition, and the same situation applies to BTC1 miners. If the
>> prices are the same and stable, all seems well for everyone, other things
>> aside. But if the BTC price does not fall to reflect the decreased
>> hashrate,
>> he situation seems to be a big problem for both coins: BTC1 miners will
>> jump back to BTC when the difficulty adjustment occurs, initiating a
>> potentially never-ending oscillation between the two coins, potentially
>> worse than what BCH is experiencing.  They will not issue coins too fast
>> like BCH because that is a side effect of the asymmetry in BCH's rise and
>> fall algorithm.
>>
>> Solution:
>>
>> Hard fork to implement a new difficulty algorithm that uses a simple
>> rolling
>> average with a much smaller window.  Many small coins have done this as
>> a way to stop big miners from coming on and then suddenly leaving,
>> leaving
>> constant miners stuck with a high difficulty for the rest of a (long)
>> averaging
>> window.  Even better, adjust the reward based on recent solvetimes to
>> motivate more mining (or less) if the solvetimes are too slow (or too
>> fast).
>> This will keep keep coin issuance rate perfectly on schedule with real
>> time.
>>
>> I recommend the following for Bitcoin, as fast, simple, and better than
>> any
>> other difficulty algorithm I'm aware of.  This is the result of a lot of
>> work the
>> past year.
>>
>> === Begin difficulty algorithm ===
>> # Zawy v6 difficulty algorithm (modified for bitcoin)
>> # Unmodified Zawy v6 for alt coins:
>> # http://zawy1.blogspot.com/2017/07/best-difficulty-algorithm-
>> zawy-v1b.html
>> # All my failed attempts at something better:
>> # https://github.com/seredat/karbowanec/commit/231db5270acb2e6
>> 73a641a1800be910ce345668a
>> #
>> # Keep negative solvetimes to correct bad timestamps.
>> # Do not be tempted to use:
>> # next_D = sum(last N Ds) * T / [max(last N TSs) - min(last N TSs];
>> # ST= Solvetime, TS = timestamp
>>
>> # set constants until next hard fork:
>>
>> T=600; # coin's TargetSolvetime
>> N=30; # Averaging window. Smoother than N=15, faster response than N=60.
>> X=5;
>> limit = X^(2/N); # limit rise and fall in case of timestamp manipulation
>> adjust = 1/(1+0.67/N);  # keeps avg solvetime on track
>>
>> # begin difficulty algorithm
>>
>> avg_ST=0; avg_D=0;
>> for ( i=height;  i > height-N;  i--) {  # go through N most recent blocks
>> avg_ST += (TS[i] - TS[i-1]) / N;
>> avg_D += D[i]/N;
>> }
>> avg_ST = T*limit if avg_ST > T*limit;
>> avg_ST = T/limit if avg_ST < T/limit;
>>
>> next_D = avg_D * T / avg_ST * adjust;
>>
>> # Tim Olsen suggested changing reward to protect against hash attacks.
>> # Karbowanek coin suggested something similar.
>> # I could not find anything better than the simplest idea below.
>> # It was a great surprise that coin issuance rate came out perfect.
>> # BaseReward = coins per block
>>
>> next_reward = BaseReward * avg_ST / T;
>>
>> ======= end algo ====
>>
>> Due to the limit and keeping negative solvetimes in a true average,
>> timestamp errors resulting in negative solvetimes are corrected in the
>> next
>> block. Otherwise, one would need to do like Zcash and cause a 5-block
>> delay in the response by resorting to the median of past 11 blocks (MPT)
>> as the most recent timestamp, offsetting the timestamps from their
>> corresponding difficulties by 5 blocks. (it does not cause an averaging
>> problem, but it does cause a 5-block delay in the response.)
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>
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