Re: [bitcoin-dev] Centralizing mining by force

[Eric Voskuil <eric@voskuil.org>]

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It is not the case in practice that there exists no incentive to disrupt the market for transaction confirmation. Statism is profitable, and a primary source of revenue is seigniorage. Given Bitcoin's threat to that privilege, its destruction presents a hefty incentive.

The security model of Bitcoin is not based on balancing power between miners (those who confirm) and merchants (those who validate). It is based on these parties defending their mutually-beneficial market from the state.

Neither technology nor incentives resolve this conflict. People must be willing to defend their mines and their economic nodes. This requires personal risk. The risk to each individual is mitigated by broad decentralization, but remains nonetheless.

Even in a highly-decentralized system, overpowering taxpayer-funded disruption of the confirmation market will require that merchants pay aggregate fees exceeding the mining subsidy expended by the taxpayer to disrupt it. Who prevails in that tug of war is unclear, but working on Bitcoin implies one believes it is possible for individuals to do so.

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> On Nov 7, 2017, at 21:04, Marc Bevand via bitcoin-dev <bitcoin-dev@lists.linuxfoundation.org> wrote:
> 
> What you describe is an example of a majority attack ("51% attack"). No technical mechanism in Bitcoin prevents this. However in practice, miners are not incentivized to perform this attack as it would destroy confidence in Bitcoin, and would ultimately impact their revenues.
> 
> -Marc
> 
> 
>> On Mon, Nov 6, 2017, 22:32 Robert Taylor via bitcoin-dev <bitcoin-dev@lists.linuxfoundation.org> wrote:
>> Forgive me if this has been asked elsewhere before, but I am trying to understand a potential failure mode of Bitcoin mining.
>> 
>> A majority of miners can decide which valid blocks extend the chain. But what would happen if a majority of miners, in the form of a cartel decided to validly orphan any blocks made by miners outside of their group? For example, they could soft fork a new rule where the block number is signed by set of keys known only to the cartel, and that signature placed in the coinbase. Miners outside of the cartel would not be able to extend the chain.
>> 
>> It would be immediately obvious but still valid under the consensus rules. What are the disincentives for such behavior and what countermeasures could be done to stop it and ensure mining remained permissionless? I think this is a valid concern because while it may not be feasible for one actor to gain a majority of hash alone, it is certainly possible with collusion.
>> 
>> Robert
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