As GHash.IO‘s hashing power now represents a wavering control of the overall bitcoin network somewhere between 40% and 60%, many are worried that the mining pool’s control could ultimately destroy bitcoin. However, according to Gavin Andresen, these concerns are simply unwarranted.
Andresen explains that bitcoin mining has been far too centralized for years, with a number of operators reaching a majority control of the hashing power throughout the network in the past. The issue is nothing new. Nonetheless, the bitcoin developer is still urging members of the mining community to make the transition to smaller pools in order to further alleviate concerns.
According to Andresen, the doomsday scenario in which many have warned, should one entity control the majority of the network’s hashing power, isn’t quite all its made out to be. In fact, there are only two things such an entity could do:
“The first thing they could do would be to double-spend already confirmed transactions. For example, they could send some bitcoins to an exchange, trade them for dollars, wire the dollars to their bank account, and then announce a longer blockchain where the transfer to the exchange never happened. Now they have dollars and bitcoins.”
To sum it up, even if GHash.IO was evil and wanted to carry such an attack, there are a number of implications that would still make it quite difficult. For instance, they would likely be caught due to the fact that it is impossible to wire money into a bank account anonymously.
The second concern, according to Andresen, is perhaps a more valid one:
“The second thing they could do would be to prevent transactions or new blocks from other people getting accepted, effectively stopping all payments and shutting down the network. I wrote about neutralizing that attack a couple of years ago.”
Any economically rational mining pool, such as GHash.IO has no monetary interest in carrying out such an attack. Even if they wanted to, Andresen notes that blockchain history would quickly reveal a misuse of power.
— Bitcoin Foundation (@BTCFoundation) June 14, 2014
Despite the potential and short-term effects of which a potential attack could have on the bitcoin network, Andresen reiterates that he feels such an attack to be “extremely unlikely.” He stresses that it is important to remember that bitcoin remains a work in progress and that you should only invest what you can afford to lose.
Image Credit: huffpost