Bitcoin's decentralized consensus mechanism works based on some cleverly crafted incentive structures. The First and foremost, the best chain is one that has done the most work. This The single rule eliminates any need for central arbitration, and instead, determines which chain is right based on the work of thousands decentralized parties that are each trying to further the blockchain. The subsidy to miners keeps moving the blockchain forward, creating painful opportunity costs for miners who don't mine the tip. These The game theory framework is set by the mechanisms and the adjustment of the level of difficulty. This has allowed a chain to progress, one block at a time, for 15 years with almost 100% accuracy.
The The only caveat to this is that, if a miner, or a coalition of mining groups, is able marshal 50% of hashrate they can overwrite blocks and prevent other miners writing blocks in the future. They will also be able to determine what transactions appear on the canonical ledger. This The entire purpose was to avoid situations where a single person was in charge. So This is the definitive piece of Game Theory designed by Satoshi There is a strong incentive to stop this happening. As Whitepaper – Described in detail
The Nodes may be encouraged to remain honest by offering incentives. If If a malicious attacker can assemble more computing power than the nodes that are honest, then he will have to decide whether to use it for fraud by taking back payments or to create new coins. He It is more lucrative to follow the rules and get more coins for himself than anyone else, rather than undermine the system or his wealth.
He It is more lucrative to follow the rules
IndeedThe basis of game theory is this. Bitcoin. Bitcoin It only makes sense when at all times, 50% or more of the miner’s are motivated to remain honest. This This has been true since 2009.
An Underdiscussed but possibly the most critical part of the Theory is why he should find it more lucrative to play by rules. The Answer: The answer to this question has been the same in 2009, 2010 and 2011. Because if he didn't, it would break. If When it breakss, Bitcoin The experiment has ended and now the miner is the proud owner a landfill full worthless E waste. This What is it? Satoshi The community panicked when the ghash pools exceeded 50% in 2014. The Everyone tries to stay away from the idea that a party could control everything, even if they are just pool.
Built The game theory assumes that someone, with considerable costs, could theoretically direct more than 50% of hashrate to act in an untrustworthy way and force a constitutional crisis. But The natural outcome of this crisis will be mutual destruction between all miner and holders. This The ultimate deterrent to misbehavior is the law.
Note It is important to note that the possibility of a theoretical 51% attack will always exist, regardless of current hashrates or costs for electricity, cooling and ASICs. This is a tautological consequence of the fact that 51% < 100%: At A pool with malign intentions could be set up at any time. 60% of the miners would then join it. The Recent statistics show that 100% of all miners choose to use the tip. It It is never a question of physical plausibility, but always one of incentives.
For Security model forbids anyone outside of the system who does not have ASICs to attack the system. But the security model is designed not only to protect from external threats (it's an open system after all) it's designed to protect from actors within the system as well. Miners don't just protect the system from non-miners, they protect the system from other miners.
Consider Selfish mining is a form of selfishness. This It is mathematically proven that 34% of the miners are at an advantage if this technique is used beyond a period of difficulty adjustment. Selfish mining doesn't involve explicit stealing or even censorship, just a better ROI for the miners who would form the coalition. Recent According to reports, the share of publicly-held mining companies that are miner owned is close to 30 percent and increasing. Toss We can reach the point of selfishness by adding a handful of large, private mines. Does Does it appear that selfish mining will always be a part of the industry? All that is required is that a collection of miners comprising 34% to hop on a call and start the process; three weeks later they're reaping the rewards. Yet No group of miners has yet to attempt this. Why This is what I mean
Selfish Crossing this line is a violation of major norms. Bitcoin In a tense place, competing groups are fighting it out. The The grand prize is the ability to negotiate directly with fees or set them themselves. But This would be a catastrophe for BitcoinFor this reason, no one is making the call.
In my book, I have a chapter on coalitional game theories that analyzes this exact problem with regard to monopoly mines. The Analysis boils down to comparisons of profits earned by a coalition with 51%, which shares the rewards from an monopolized chain. Or the little profits made by the grand alliance if they continue on a competitive course. In In the beginning, the answer to this question was simple: Monopoly Mining would have destroyed all of it, and there’s no reason for a new coalition to be formed.
Enter USG
If USG is committed to investing in a long-term plan over many years. Bitcoin. They have made something impossible to fail. It You simply cannot. Regardless Who mines? Bitcoin, who is priced out, what parties use the chain, it cannot fail, and it won't fail. If The constitutional crisis surrounding mining will be addressed in a clear, definitive manner.
There When you include central options in your view, there are many ways to solve a constitutional crises. In If failure isn’t an option then these options are considered. USG, and US-controlled miners could assert their 51% share of power with brute force (this does not have to be censorial). Another The only solution that works is to use a soft-fork with permissions, which will allow new blocks for the miners who are publicly traded. Obviously, Proof You can also find out more about the following: Stake It’s on the table. Another Converting the UTXO Set to a UTXO Bitcoin CBDCs whose transactions have been confirmed by the Fed. This Bring about Bitcoin Early holders will benefit from massive returns and the ability to reach the mass market at lightning speeds.
The The point to make is that, under this regime monopoly mining no longer represents a failure in itself. Any The coalition could begin with selfish mining before snowballing to 51%. As long as they don't do anything that directly irritates the USG, they can't break the system. If The USG will still be there to backstop them, even if they have a monopoly on mining. Bitcoin.
In Short, USG has a long history of enmeshing themselves with Bitcoin's success decades into the future removes Bitcoin's ultimate weapon against centralization; its option to fail.
It's hard to imagine that miners who are fighting for tiny profit margins would continue with the decentralization theater, when they ought to find it more profitable to form a coalition and monopoly mine, which strictly speaking, isn't even against the rules.
This This is a post written by a guest. Micah Warren. Opinions BTC does not endorse the views or opinions of any third parties. Inc The following are some examples of how to use Bitcoin Magazine.
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