Gold collapsing. Bitcoin UP.

[Aquent]

In regards to his hashrate point it seems to be agnostic to the blocksize. That is the premise that a bigger pool should have a lower orphaning rate due to the reasons he expanded should apply currently at 1mb. As such, if he was correct, then we should expect such pool centralisation to occur regardless.

I am not sure he is correct though and it would have helped if he provided some facts and evidence to support his hypothesis rather than state it as truth. Some brief numbers I found show the current largest or one of the largest pool to have substantially higher orphaning than many other smaller pools:

http://1.bp.blogspot.com/-g15g_g9osoQ/VkMOzAdN5aI/AAAAAAAAEbg/rzU6XVb_1Tc/s1600/0_table_1_weeks.09112015.png

 

[VeritasSapere]

What is wrong with this argument?

There is a huge mistake in his reasoning here, this is a common mistake and I see it repeated many times, it would be great if we could finally dispel this fundamental misunderstanding. Increasing the blocksize does not effect mining centralization whatsoever. This is because miners do not run full nodes, the pools do instead.

So all of this talk of block propagation times and orphan rates does not actually effect the decentralization of mining. It has an effect on the centralization of pools, however this effect is rather minimal considering that it is the people that control the hashing power that have all of the power in this relationship.

Pool centralization is dependent on the centralization of mining, and the miners are disincentivized to allow any one pool to grow to big. This is how Bitcoin works today, and it is working well in my opinion, even if Core and many other people consider this to be broken. We should accept that having 10-20 pools is how Bitcoin functions today and that this is how it will continue to function into the future, unless we change the protocol and the incentive mechanisms radically in order to change this, which I do not think we should do. This is not a problem, it only becomes a problem if you think that the pools are synonymous with the miners which they are not. Once more people understand this hopefully we can start having more discussions about the real threats to mining centralization which do exist. These threats to mining centralization have nothing to do with increasing the blocksize however and more to to do with economies of scale and the centralization of manufacturing.

Pools in effect behave like a type of representative democracy for the miners, this is why these centralization pressures on the pools do not actually matter that much. Only the pools and extremely large solo miners need to run full nodes for the purpose of mining. For these people running a full node is not a significant cost compared to the rest of their operation. Therefore it is also wrong to say that increasing the cost of running a full node would significantly impact the barrier to entry to mining. I even did a calculation recently where I figured out that it would cost me more then five million dollars to set up a mining operation where I could feasibly solo mine, even though it would still make more sense to mine with a pool with such an operation at this scale. The point is that once a mining operation becomes that big, the cost of running a full node is so insignificant that it becomes irrelevant.

The miners that arguably contribute the most towards decentralization are the small independent home miners like myself. I know for a fact that increasing the blocksize will have zero effect on the profitability of my mining operation. I will still be free to support any pool that I want and I would still never mine with a pool that has more then 30% of the hashpower. In regards to the blocksize I believe the opposite is actually true, one of the best thing that could happen for mining decentralization today is an increased price. Not increasing the blocksize will lead to transactions becoming unreliable and much more expensive, this would negatively impact adoption and therefore also the price. An increased blocksize allows for increased adoption which in turn allows for an increased price, which will over the long run help to further decentralize mining.

 

[Zangelbert Bingledack]

@Aquent

They can still say, "The effect now is negligible, but since the effect with bigger blocks is amplified it would eventually be significant, tending toward runaway monopoly." This is NOT a valid argument for 1MB since that's an arbitrary magic number, but /u/Taek42 is only making the case here that this effect does eventually appear if the blocksize gets beyond a certain size (though he only appeals to others in saying that size seems to be around 4MB). He is arguing against uncapped blocksize specifically.

@VeritasSapere

That makes sense for pools, but I assume /u/Taek42 is talking about a single mining farm having a lot of hashing power.

 

[cypherdoc]

What is wrong with this argument?

i agree fully with @VeritasSapere .

the above discussion also completely ignores the relay network, which any miner large or small, may connect to. i drew attention over the summer to the contradiction of Maxwell et al to when @Peter R's first paper came out. first, miniblockists gave the Taek's argument. then his paper comes out and they then scream "relay network". well, which is it? are large blocks being subjected to latency or are they not? the answer is probably in btwn but with tradeoffs. are there tradeoffs from non validation with the relay network? what about SPV mining as another strategy to circumvent large block validation and obtaining getblocktemplate? what about the effects on Chinese miners from the GFW? which side of the wall is effected most? what about the ability of small miners to obtain the very best internet connections, just like the big guys, to offset connection advantages? how can one possibly know or predict the financial condition of a small miner vs large miner? someone like slush i'd bet, has a very very strong financial condition from his ancillary businesses like Trezor and his early adopter status along with his superior understanding of the stratum protocol he wrote for everyone. i'd bet it would be impossible for a large miner to drive him out of business.

these are just a few of the complex calculations that an attacking large miner would have to make to pull off a long term idiotic strategy like this. it's be easier and faster just to perform a 51% attack. bottom line: it's probably easier just to play along with the rules and incentives of proper mining so as to scoop up as many coin as possible in preparation for the next price rise.

 

[VeritasSapere]

@Zangelbert Bingledack In the case of a single mining farm having a lot of hashower, examples of this would be, Bitfury, KNC, 21inc etc. These types of operations can afford to run a full node within a favorable location in terms of propagation, not to mention we now also have a relay network. So if the argument is that companies like Bitfury and KNC can not afford to run a full node inside of a datacentre then obviously this argument fails completely. As if these large miners need our consideration in the design of Bitcoin and in the name of decentralization even, when it is actually large industrial operations like these that contribute the most towards the centralization of mining. This argument is completely backwards and flawed when you really think about it.

@cypherdoc It might be good to replace the word miner with the word pool in the way that you are describing this. Since the true small miners just mine with the pool of their choice and these other considerations like latency and bandwidth become almost completely irrelevant for the true small miner, miners do not even require good internet connections.

Slush pool is a great example of the type of small pool that we should try and protect, if they can no longer operate because of the design choices we make then that would be a sign that these are the wrong design choices. However I do not believe this is the case with the blocksize, since we can increase the blocksize and Slush will do just fine, and so will I mind you as a true small miner mining with Slush.

This language related to pools and miners I think is very important, it might even be at the Core of the misunderstandings that small blockists hold. I have even had conversations with small blockists who have maintained that I am not a miner, and that only the pools and the large industrial solo miners are the miners because only they run the full nodes. Of course then the next flawed conclusion is that mining is dangerously centralized today and that we need to radically change the protocol and the original vision of Satoshi in order to fix this and preserve decentralization. This is obviously all flawed but it begins with using these invalid definitions of miners and mining centralization.

This change in how mining works is only a relatively recent development, which also might be why many people are still operating under these false presumptions of how mining used to work a few years ago. We did move from a form of direct democracy to a form of representative democracy in terms of mining in the last few years, this is however necessary since the alternative would have been even worse, pools actually help to increase decentralization. Otherwise we would have been limited to a hundred super mines maximum, because of varience, with pools however we can have millions of miners distributed across these 10-20 pools, this is obviously far more decentralized then the alternative especially considering how easy it is for the miners to switch pools.

 

[Peter R]

The large-miner "self-propagation" advantage is likely very small [1] and negligible compared to things like the cost of electricity in different localities.

Furthermore:

1. The advantage applies equally to pools as it does to solo miners. Miners that join a h=10% pool enjoy the same self-propagation advantage as a single miner with h=10%.

2. The advantage does not increase with larger blocks. The advantage increases with higher orphaning rates (but IMO is still small compared to other factors in the miner's profitability equation). This is why techniques like "subchains" are important, as they permit larger blocks without an increase in orphaning risk:

[1] AFAIK, no one has yet properly quantified how big this advantage is, with anything more rigorous than hand waving.
[doublepost=1451149540][/doublepost]@cypherdoc

Yes, they say my transaction fee market paper is "wrong" because it assumes that bigger blocks take longer to propagate than smaller blocks. However, they use the argument that bigger blocks take longer to propagate as a reason to retain the block size limit!

@theZerg's recent paper is now the third study that I know of that empirically finds that large blocks indeed do propagate more slowly.

 

[Zangelbert Bingledack]

@cypherdoc

first, miniblockists gave the Taek's argument. then his paper comes out and they then scream "relay network"

Is it possible these aren't the same people? I've noticed they play this trick. It would seem contradictory for someone to point to the "well-connected miners drive out poorly-connected miners" attack but then say the Relay Network prevents the blocksize-limiting orphan cost curve Peter R describes, but it may be that many of those who talk about the big block attack say the Relay Network is unreliable (I'm guessing /u/Taek42 thinks so), and vice versa.

@VeritasSapere

I think /u/Taek42 is saying the opposite, that powerful hashers could buy better network connectivity so that they can monopolize both. Point taken about the Relay Network.

@Peter R

1. The advantage applies equally to pools as it does to solo miners.

But pools are a lesser concern since they have users who can shift away; I assume his worry is with single mining farms.

2. The advantage does not increase with larger blocks. The advantage increases with higher orphaning rates

Right, but I think /u/Taek42 means "larger blocks without mitigating things [like subchains]."

The large-miner "self-propagation" advantage is likely very small [1] and negligible compared to things like the cost of electricity in different localities.

Yeah, I argued similarly in my response:
[doublepost=1451150209][/doublepost]@Peter R

Isn't it self-evident that big blocks take longer to propagate (at least above a certain size)? I don't know if I've seen this argument.

 

[Peter R]

@Zangelbert Bingledack

"But pools are a lesser concern since they have users who can shift away; I believe the worry is with single mining farms."

Agreed, but what I mean is that the big miner (h=10%) doesn't even have a theoretical advantage against a small miner that is part of a pool with h=10%.

"Right, but I think /u/Taek42 means "larger blocks without mitigating things [like subchains]."

Interestingly, a large miner with a huge amount of hash rate could just continually add 1 GB blocks to the chain, growing it faster than anyone else can keep up. But if the economy can't keep up, then is that large miner even mining Bitcoin any longer?

Furthermore, subchains help everyone, large and small miner alike. The Nash equilibrium is for miners to build them (when they are needed) thereby further reducing any self-propagation advantage that may exists.

 

[solex]

Set reconciliation (IBLT) goes a long way to equalising the propagation time of small vs large blocks.

 

[Zangelbert Bingledack]

@Peter R

Yeah subchains (and IBLT, etc.) would be a way to scale "safely" in small blockist eyes once they are a reality.

But if the economy can't keep up, then is that large miner even mining Bitcoin any longer?

This was always my thought, from the very first time I heard about big block fears. I'm somewhat embarrassed that I've never been able to get a firm handle on what that would mean. Do others fork them away? How? Can't be checkpoints, etc.

 

[lunar]

What is wrong with this argument?

North Korea shamelessly strikes again, post removed.

200th GCBU page already. Amazing.

@Bloomie It might be useful to have some thread filter options. So many great and varied topics here, yet very difficult to parse. (filter by keyword, number of likes, or liked by Xposter?)

 

[theZerg]

What is wrong with this argument?

My research debunks this. www.bitcoinunlimited.info/1txn. The existence of 1-txn blocks allows miners to start mining after just the block header has be received. So the miner advantage is constant -- the time to propagate the constant-size block header -- and times for doing so in the Bitcoin Relay Network are < 1 second. So as I state in my paper, the advantage is limited to the size of the txn fees.

 

[cypherdoc]

[URL='https://news.ycombinator.com/user?id=mike_hearn']mike_hearn 2 hours ago | parent

Go read Satoshi's first announcement of Bitcoin on the crypography list. The very first question ever is about scalability and he states quite clearly that he thought about it extensively and it would never be an issue in practice. He uses Visa as an example to illustrate his point.
Now go read the Lightning white paper. They also use Visa as an example and state that Bitcoin cannot scale. They directly contradict Satoshi on literally the first Bitcoin topic ever discussed.

So I am not speaking for Satoshi in my post above: I am pointing out that he strongly disagreed with Poon & Dryja's reasoning right from day one.

As you can see above, Joseph uses the same language some of the other Bitcoin Core folks use ... they like to say "our understanding is much better now". They do not like to explain exactly what this "better understanding" actually is, given that computers haven't got any slower. They just assert that it could never work. That's unfortunate.

[/URL]
https://news.ycombinator.com/item?id=10794244
https://news.ycombinator.com/item?id=10794244

 

[_mr_e]

Fair arguments, anyone care to give a response?

 

[theZerg]

@Zangelbert Bingledack
Interestingly, a large miner with a huge amount of hash rate could just continually add 1 GB blocks to the chain, growing it faster than anyone else can keep up. But if the economy can't keep up, then is that large miner even mining Bitcoin any longer?

I address this in http://www.bitcoinunlimited.info/1txn "Effect on Block Size" and find that you are right. In the case of a miner whose transaction validation significantly exceeds the rest of the network, the optimum strategy (for miners to optimize their profitability) is for the rest of the network to ignore that miner's blocks -- effectively kicking him out of the main blockchain.

 

[Zangelbert Bingledack]

@lunarboy

The comments are still up for me.

Those filters sound great, though more useful for finding single golden posts than for finding and tracking ongoing conversation. To archive the conversations would require manually identifying each post in each conversation in order and copying them painstakingly into separate archival threads.

 

[Mengerian]

@Zangelbert Bingledack, @Peter R, @VeritasSapere:

The block propagation/orphaning arguments also fail to take into account the large miners can have orphaning within their operations. Block propagation is never "0 seconds". Large miners like BitFury are geographically dispersed, as there are diseconomies that come with over-concentration. Large mining firms have to invest in reducing communication latency within their operations, just as pools also need to strive to reduce latency with their hashers, and all miners have incentives to reduce communication latency amongst each other.

It is not obvious a-priori what the optimal level of consolidation within the Bitcoin mining industry will be. Will it be like car manufacturing which is concentrated in large industrial facilities, or like the hair cutting industry which is highly decentralized? However it turns out, it is virtually unheard of that an entire industry sector on the free market gets entirely concentrated in one firm, and I think it highly unlikely that bitcoin mining would be unique in this regard.

 

[Zangelbert Bingledack]

I address this in http://www.bitcoinunlimited.info/1txn "Effect on Block Size" and find that you are right. In the case of a miner whose transaction validation significantly exceeds the rest of the network, the optimum strategy (for miners to optimize their profitability) is for the rest of the network to ignore that miner's blocks -- effectively kicking him out of the main blockchain.

Holy shit! I think you got it:

if a single mining pool chooses to ignore the large block and is able to find a short competing block while other pools are still validating a large block, it is in the other pools best interest to switch to this new sibling.

@all

Doesn't this completely invalidate the big block attack?

Maybe @cypherdoc has been hammering on this for a while now, but I never saw the mechanism until now. This seems to be the actual method by which my vague sense that "the rest of the network would ignore it" is implemented. I knew there was something fishy about the idea that part of the network could just do its own thing and force everyone else along later on.

 

[VeritasSapere]

I think it is interesting to note here that some of these people are talking about a singular large miner gaining a monopoly and using this power to destroy Bitcoin. I suspect that many of us here know why this is actually a ridiculous position to hold, regardless of the way that this takes place. For the same reasons that a fifty one percent so far is only really a theoretical problem. This is because Bitcoin relies on the miners being incentivized not to harm the network as a whole, not to undermine the value proposition of their own investments. This is the game theory and psychology that Bitcoin relies on for its continues operation, if this was not true then Bitcoin would indeed be fundamentally flawed, the last six years however have proven that this is not the case. Bitcoin works, even though some thinkers seem to still deny this fact and maintain that Bitcoin is broken and that they need to fix it.

I really do believe in the original vision of Satoshi, I think that it will continue to function, we need to allow this experiment to continue to run its course as it was intended. Radically different concepts should be implemented in alternative cryptocurrencies instead. Since many people did sign up for this original vision, if they do manage to change the economic policy of Bitcoin without us having the ability hard fork away, it would effectively break the social contract of Bitcoin. This is why the ability hard fork is so essential for maintaining the continued freedom of the protocol.

 

[AdrianX]

What is wrong with this argument?

Merry Christmas all.

I've added my 0.02btc to his comments tl;dr any orphan risk attacks on other miners happen in a dynamic market where behavior will modify so the fixed example provided is unluckily in the first place and it's also unlikely that small miners won't respond by reducing their own propagation risk.