Re: [bitcoin-dev] We need to fix the block withholding attack

[Jonathan Toomim <j@toom.im>]

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On Dec 25, 2015, at 3:15 AM, Ittay via bitcoin-dev <bitcoin-dev@lists.linuxfoundation.org> wrote:

> Treating the pool block withholding attack as a weapon has bad connotations, and I don't think anyone directly condones such an attack.

I directly condone the use of block withholding attacks whenever pools get large enough to perform selfish mining attacks. Selfish mining and large, centralized pools also have bad connotations.

It's an attack against pools, not just large pools. Solo miners are immune. As such, the presence or use of block withholding attacks makes Bitcoin more similar to Satoshi's original vision. One of the issues with mining centralization via pools is that miners have a direct financial incentive to stay relatively small, but pools do not. Investing in mining is a zero-sum game, where each miner gains revenue by making investments at the expense of existing miners. This also means that miners take revenue from themselves when they upgrade their hashrate. If a miner already has 1/5 of the network hashrate, then the marginal revenue for that miner of adding 1 TH/s is only 4/5 of the marginal revenue for a miner with 0% of the network and who adds 1 TH/s. The bigger you get, the smaller your incentive to get bigger.

This incentive applies to miners, but it does not apply to pools. Pools have an incentive to get as big as possible (except for social backlash and altruistic punishment issues). Pools are the problem. I think we should be looking for ways of making pooled mining less profitable than solo mining or p2pool-style mining. Block withholding attacks are one such tool, and maybe the only usable tool we'll get. If we have to choose between making bitcoin viable long-term and avoiding things with bad connotations, it might be better to let our hands get a little bit dirty.

I don't intend to perform any such attacks myself. I like to keep my hat a nice shiny white. However, if anyone else were to perform such an attack, I would condone it.

P.S.: Sorry, pool operators. I have nothing against you personally. I just think pools are dangerous, and I wish they didn't exist.

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