WUT?

in free market with voluntary use?

if pool gets too big miners will regulate it themselves if they wish so.

Its not really such a big problem if a mining pool gains over 50% of the total mining capacity. Its not a desirable situation, but the mining power is not from the pool, and so if the pool started cheating the people connecting to the pool would change to another one.


In general, so-called "antitrust" laws and other regulations are not used to attack abusive companies, but to defend the position of abusive companies and hurt competition.

It probably cannot be used for this purpose, and thank goodness.

I hope that such things are never seriously proposed. I'd like the government to stay the hell away.

This is a very interesting question. I had to think about it for awhile, do some research and think some more. From my prospective the short answer is yes.

Section 2 of the Sherman act deals with monopolization making it unlawful to monopolize, attempt to monopolize, or conspire to monopolize. The US Supreme Court has held that any market share of 50% or higher is sufficient to be of concern. Additionally the willful acquisition or maintenance such as a conscious acts designed to further or maintain a monompoly market share will violate section 2 of the Sherman act. What is clear is that the statute does not require that monopoly power be abused or intentionally exercised to drive out competition, although such conduct, if present, is sufficient to make out a violation.

Now with that said is it likely? Hell no!! First, it would be very cost prohibitive. Second, as most pools are not in the US the law is irrelevant. Sure other countries have anti competition laws how they would apply Im not sure. Thats is to say a nongovernmental entity. Now if a government was to take action, that is plausible but unlikely at the stage. Maybe in 10 or 15 years the landscape might be more accomidating to such action.

This is not ment to be legal advice. I post this to further the descussion.

But it's the pool operator that controls the block formation, right?

And it's the share of this pool operator relative to other pool operators and solo miners that would be the factor of concern, not the size of the pool.

A pool over 50% of hashing, but amongst hundreds of other pools is still just one of hundreds of block generators and so cannot propagate more than that share of blocks in the chain.

I'm pretty sure this is right - the miners don't get to choose block content in a pool. Right?
So getting 50% of hash rate or miner count means nothing.

If a single pool ever gets more than 50% of the mining power, it can rewrite transactions by producing its own chain that contains alternate versions of those transactions. Their chain will ultimately be longer than everyone else's chain because they have more computing power. The pool manager decides what transactions go in the block -- the miners have no idea what the contents of the block they found will actually be until it's published. (They only get the headers.)

Imagine we're at block 150,000. I form two transactions, one to send 35 bitcoins to you and one to send them to someone else. I send the transaction to send those 35 bitcoins to you to the network. The networks commits it and you begin to get confirmations. But the mining pool has actually started working on a chain with the alternate transaction and is not sharing its blocks with the network. You get, say, 10 confirmations and decide to give me the goods. Then the mining pool sends its longer chain to the world. The transaction gets rewritten and everyone who found blocks after that transaction loses their bitcoins, as do you.

In theory, if you controlled 51% of the computing power, you could make 100% of the mining revenue, and have total control over what valid transactions are included in the chain, simply by ignoring everyone else's work. You still win.

There are a lot of pools.  Problem is, there is little reason to NOT use one of the biggest pools.

The top 3 all have something to recommend themselves.  BTCguild can be low fee.  slush is for those who like the luck aspect of bitcoining.  And deepbit just works and works well (less than 1% rejects for me compared to 5%+ in other pools, e.g.).

The new pools just have a rough time getting off the ground.  Except for multipool there are no advantages to any of the newcomers, and nothing but disadvantages.  You could get a block from hell which takes 3 weeks to mine in a small pool.  The operator may just say screwit and take all the earnings since they don't see a future in running their pool.  And so on and so forth.

Now, if there were clear and obvious advantages to either solo mining or mining in a smaller pool we wouldn't have this centralization of power we see in our "distributed" network.  At the moment the network consists of basically 3 nodes.

No.

So what. It just ignores the block found by the smaller pool.

With slightly more than 50%, you can simply ignore every other block. You will win eventually because your chain will eventually be longer. The only blocks on the public chain will be your blocks.

With less than 50%, you will fall further and further behind. You will be using up more and more resources with a lower and lower probability of success. You'd do much better to accept blocks found by other miners because it makes your chain longer and thus gives you a better chance of getting your own blocks into the chain.

(By the way, there is a fix to this attack that requires no change to the protocol. It has some issues though, but if this ever became a huge problem, it could be perfected and deployed.)

Whether or not it applies, sherman act suits are not things that happen very often. Getting a state's attorney office interested is going to be a non-starter. If there was a pool in jurisdiction that actually got attention along these lines, I'm sure they'd just move overseas overnight.

If you really wanted to attack a pool I'd suggest a tax or employment authority. I consider it very unlikely most pools are conducting themselves appropriately in regards to accounting, withholding and employment law.

I can't see any way this would not be self-correcting.  Participating in a mining pool is voluntary affiliation.  As soon as the transactions started going awry, people would notice, pool miners too.  Pool miners have an obvious vested interest in the stability of valid transactions; they are part of the bitcoin market.  It would not be in their best interest to continue their affiliation.  The pool would self-destruct.

Or...what am I missing?