Bitcoin Mining Centralization Counteracted by Malicious Pools, Says Study
Bitcoin mining centralization - the concentration of mining power in the hands of a small number of corporate entities - is considered by many people to be the single biggest problem facing the cryptocurrency today. One of the biggest selling points of Bitcoin is, after all, the fact that it is a decentralized network that does not need to rely on users trusting large corporations, such as the 'too big to fail' banks which many would like to see replaced by cryptocurrency. Bitcoin's mining centralization not only contradicts this decentralized ethos, but also potentially puts the network....
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Bitcoin mining centralization has been a point of concern in the community for a while now. People are worried that the growing size of mining firms will continue until one of them attains 51% or more of the network’s hashing power. Although a firm holding the majority of the hashing power would notinherently compromise the network, it would certainly centralize the creation of bitcoin and the confirmation of transactions. Such centralization opens the door for a 51% attack, in which a nefarious actor initiates a double spend. This particular attack is highly feared in the Bitcoin....
Bitcoin mining pools rely on centralization, but P2Pool and other protocols have sought to reduce the need for trust in third parties.
A new research paper argues that bitcoin mining pools can only co-exist peacefully if individual miners regularly switch pools and if pools erect sufficient defenses against attacks. If pools don't exhibit either of those properties, then they are liable to attack each other, the report finds. The paper's authors, Aron Laszka, Benjamin Johnson and Jens Grossklags, investigated the long-term effects of competition between bitcoin mining pools in a draft version of a study titled, 'When Bitcoin Mining Pools Run Dry'. The final version of the paper will be presented at the Workshop on Bitcoin....
The majority of hashing power on Bitcoin network is concentrated among a handful of mining pools. The Bitcoin community has seldom expressed concerns about the gradual centralization of the Bitcoin network. Ever since ASICs became the norm for Bitcoin mining, it has become impractical for individuals and small groups to involve themselves in profitable mining. A recent article in one of the leading business magazine offers a brief insight into the current distribution of hashing power across large mining pools who have dominated the digital currency network. The publication lists 18....
For many, the level of centralization found in the Bitcoin mining ecosystem is the biggest issue for the peer-to-peer digital cash system today. As a technology that relies on decentralization in order to provide a censorship-resistant bearer ecash, any trend towards centralization should be viewed as problematic. In 2014, economist Kevin Dowd claimed the incentives of pooled mining are “totally destructive of the Bitcoin system.” The amount of mining that takes place in China led former Bitcoin developer Mike Hearn to state, “Bitcoin is controlled by the Chinese Government.” Those who....