3 important aspects for profiting from bitcoin forks
Bitcoin is no longer decentralized. GHash can control Bitcoin transactions. GHash is in a position to exercise complete control over which transactions appear on the blockchain and which miners reap mining rewards. Bitcoin is currently an expensive distributed database under the control of a single entity, albeit one whose maintenance requires constantly burning energy -- worst of all worlds.
Some people might say that this is a sensational claim. The main pillar of the Bitcoin narrative was decentralized trust. That narrative has now collapsed.
If you're going to trust GHash, you might as well store an account balance on a GHash server and do away with the rest of Bitcoin -- we'd all save a lot of energy. This is a big deal, and it would be a mistake to downplay it in the hope to buoy Bitcoin prices. It will be difficult to attract new people to Bitcoin when it's controlled or controlable by a single entity. If those people were willing to trust a single entity, they could have dodged inflation by putting their fiat into World of Warcraft or subway tokens.
They came to Bitcoin because it was decentralized, and now it isn't. The first step is to admit that we have a problem. Luckily, there is life after Armageddon, and there are possible fixes to get back to normal from here. GHash might just have gotten lucky. That's true, but they got lucky not just once, or twice, but over the span of blocks.
Laws of large numbers do apply. And even if they are really at In a possibly unrelated, or possibly very related development, someone has been using spare mining capacity to attack Eligius.
Essentially, someone has been pretending to be part of the Eligius mining pool and submitting near-solutions to cryptopuzzles in order to collect a share of any blocks discovered by Eligius.
But these same people have simply been discarding any blocks they discover, so Eligius pays them for their effort, but they don't contribute anything to the pool.
Note that the attacker doesn't gain anything from this behavior, either; it's purely destructive. This is not rational behavior in a simple game theoretic sense -- the only sensible explanation is that it is a competing miner that is using its spare capacity to dilute Eligius' profits to drive customers away from Eligius.
It's a dog eat dog world among 3 important aspects for profiting from bitcoin forks with very complex incentives. In addition, they can reject every block found by competing miners and selectively drive them bankrupt. They can reject selected transactions. They cannot take away your Bitcoins but they can make certain addresses unspendable. And that allows them to extort any mining fee they like. They are a de facto monopoly. Most religious texts claim that the devout and the righteous will disappear suddenly when the day of reckoning comes, while the remaining people are left to roam the earth.
3 important aspects for profiting from bitcoin forks there is life after armageddon, where the left-behinds can still inhabit Bitcoin talk forums and push their favorite cryptocurrency while badmouthing competing alt-coins. Religious texts tell us that sinners will continue to lie and cheat and steal, collect donations to improve the talk forums but spend them on extracurricular activities, or do Bitcoin IPOs and abscond with the cash or just gamble the cash away.
Andreas, the confident messiah of the Bitcoin crowd who, as far as I can tell, has no technical qualifications and an abysmal track record where he did not see the impending Mt. But the fact is, this is a monumental event. The Bitcoin narrative, based on decentralization and distributed trust, is no more. True, the Bitcoin economy is about as healthy as it was yesterday, and the Bitcoin price will likely remain afloat for quite a while. But the Bitcoin economy and price are trailing indicators.
The core pillar of the Bitcoin value equation has collapsed. Their main argument was "No miner would do that, it'd be against their self-interests. Why, they would destroy their own investment! We tried to point out that there are lots of different players in the Bitcoin universe, that not everyone will have the long-term best interests of the currency in mind, that someone could enroll the help of partially rational or short-term rational miners to their cause.
But it's hard to argue rationally with people who have money at stake. Bitcoin was going to go to the moon, and we were bad people 3 important aspects for profiting from bitcoin forks actual words used were far worse for pointing out a part of objective, inescapable reality that interfered with their plans to get rich. By God, they were entitled to retire based on the fruits of their graphics cards, everyone was an early adopter no matter how late, and, they were heavily 3 important aspects for profiting from bitcoin forks in Bitcoin, convinced of a hyperinflationary future to come.
Even though we provided a fix for the problem we identified, they tried to drown out our message, math be damned. A secondary argument these people latched onto was that "the developers would never allow that to happen. We were in the Caribbean surf with the core devs and half the Bitcoin foundation, and no one brought a waterproof keyboard!
In any case, the core developers seem to be nowhere to be found at this monumentous occasion, except Peter Todd wrote that he is liquidating half his Bitcoins and Luke-Jr posted earlier today that Bitcoin was just an experiment. No one knows the ultimate aims of GHash. The people who join the GHash pool do so because GHash has zero fees -- these people are essentially optimizing for short term profits over the long term well-being of the currency.
All of these are precisely the points we cautioned about. The knee-jerk reaction from the Bitcoin lunatic fringe will be to try 3 important aspects for profiting from bitcoin forks minimize the issue. Worse, GHash has a well-known track record of actually engaging in double-spend attacks even when they did not command a majority of the hashing power.
GHash used its hashing power to attack a gambling site that accepted 0-confirmation transactions. In essence, they would make a bet, as in red-or-black in roulette, and if the virtual roulette wheel spin came out the wrong way, they would cancel their losing bet and place a new one. This is outright theft: GHash stole from a gambling operator. Overall, there is absolutely no reason to trust GHash or any other miner.
People in positions of power are known to abuse it. And why should any miner have Bitcoin's long-term future in mind? A common response to this question is "because of their investment in their mining equipment.
Instead, the mining rigs have a fairly short useful lifetime. If a miner knows that they will be overtaken by the next generation of hardware about to be unleashed by a competing mining pool, it will have a definite time horizon for extracting every last 3 important aspects for profiting from bitcoin forks of value, and that plan may not have room in it for a voyage to the moon. It's time for a hard fork. Such a hard fork needs to fix three outstanding, fundamental problems related to the broken incentives of the mining protocol:.
The hard fork need not respect the existing blockchain in which case, it would be a new currency with new rules and a fresh blockchain but it should. That would enable the system to retain the Bitcoin name, and keep everyone's existing investment in Bitcoin intact. The Bitcoin system weathered a hard fork just slightly over a year ago, and can pull off another one again. Or we can carry on as if nothing of importance happened.
GHash will be on their best behavior for the next few weeks, and Bitcoin will limp along. What will bring the actual demise of Bitcoin is the subject of a future blog post, but this is by no means the end. 3 important aspects for profiting from bitcoin forks can still use Bitcoin to buy drugs, trinkets from Overstock.
There is an afterworld. And for everything else, there is dirty fiat and Mastercard. But the 3 important aspects for profiting from bitcoin forks thing to do is to implement the few simple fixes to align miners' incentives with those of the greater Bitcoin community. Once pools are eliminated, the constant pleas on Bitcoin forums to avoid the biggest mining pool will cease. These fixes do not make Bitcoin perfect, and there may still be other issues to fix, but they fix the most important issues in a way that respects the existing investment in Bitcoin infrastructure.
My Research Interests are distributed systems and algorithms, specifically distributed storage algorithms, the distributed aspects of Bitcoin, and reliable aggregation in distributed sensor networks. Hacker and professor at Cornell, with interests that span distributed systems, OSes and networking. Is This Really Armageddon? What Happens At Armageddon? What Not To Do. What To Do Now?