Are big miners a threat for Bitcoin?

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Anyone holding a large amount of computing power can be seen as a potential threat to the Bitcoin Network. However, those pools have been around for a long while and their owners have earned their reputation in the Bitcoin community, so they can be more trusted.

Moreover, as it is not just one pool but three, such collusion is less likely.

There already was an incident where a single pool was holding a majority of the computing power of the Bitcoin network due to another pool shutting down for awhile and nothing really happened. If something was happening, one could probably pick it up quite early on and probably a lot of miners using those pools would put their computing power elsewhere.

The mining pools are largely financially invested in Bitcoin, meaning that they might be less likely to harm the Bitcoin community. However, the same could not be said about alternative cryptocurrencies, as it was demonstrated by Eligius attack on Coiledcoin.

If,...

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What is Bitcoin mining? Bitcoin mining is how Bitcoin transactions are validated and confirmed by the Bitcoin network. Bitcoin miners create a new block by solving a proof of work problem that is chained through cryptographic proof to the previous block.

Each block builds upon the previous one creating a blockchain. Every transaction in the blockchain can be proven. In this way, the Bitcoin network can come to distributed consensus as to how many Bitcoins (100,000,000 satoshis) are allocated to each public key address.

What is a Bitcoin miner? A Bitcoin miner is a computer specifically designed to solve problems according to the proof of work algorithm. Currently, highly specialized chips called ASICs, Application Specific Integrated Circuits, are used as Bitcoin miners. There are many places where you can buy a Bitcoin miner.

What is Bitcoin? Bitcoin is an internet protocol that enables the transfer of value over a communications channel like the Internet or...

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The Bitcoin digital currency system is in danger of losing its credibility as an independent payment system because of the growing power of a group that runs some of the computers behind it.

In recent weeks, a British-based "mining pool" called GHash has amassed nearly half of the Bitcoin computing power and has briefly gone over 50 percent. Miners operate the computers that keep track of bitcoins and create additional coins.

Miners pool their computing power to spread the financial risk of their operations. If GHash amasses more than half of the computing power devoted to Bitcoin, it could in theory control the flow of transactions, freeze people out of the network and keep all future bitcoins for itself.

Although GHash says it's committed to preserving Bitcoin as a trustable technology, the mere fact that one player can amass majority control could undermine trust in the currency, which is worth only what people are willing to pay for it.

"The entire...

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Mining Bitcoin

There are various hardware choices and methods to use to mine bitcoin. Whatever hardware and method you choose, you'll either use your CPU or GPU, an FPGA, or the new ASICs. With the current difficulty over 2 billion, using a CPU is just a waste of time and money. A good ATI video card can still get a decent amount of Bitcoin, but at this point you really need to use an ASIC, or buy shares of GH at the online mining sites, shown below.

For example, a decent CPU today can get 300Khps (Kilohashes per second), while a good GPU can get 500Mhps.

An FPGA might get anywhere from 100-800Mhps and higher, and an ASIC can get 4.5Ghps up to 1.5Thps! See the Mining hardware comparison wiki page for details.

Check out my Bitcoin ASIC Miners page for more info on ASICs.

Check the Bitcoin mining profitability calculator to see if your hardware or the hardware you're looking at getting is worth purchasing, and if the energy use will still make it...

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While the actual process of Bitcoin mining is handled by the Bitcoin mining hardware itself, special Bitcoin mining software is needed to connect your Bitcoin miners to the blockchain and your Bitcoin mining pool as well, if you are part of a Bitcoin mining pool.

The software delivers the work to the miners and receives the completed work from the miners and relays that information back to the blockchain and your mining pool. The best Bitcoin mining software can run on almost any operating system, such as OSX, Windows, Linux, and has even been ported to work on a Raspberry Pi with some modifications for drivers depending on your mining setup.

Not only does the Bitcoin mining software relay the input and output of your Bitcoin miners to the blockchain, but it also monitors them and displays general statistics such as the temperature, hashrate, fan speed, and average speed of the Bitcoin miner.

There are a few different types of Bitcoin mining software...

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Ghash.io, one of the largest pools of individual bitcoin miners on the network, continues to cause headaches for bitcoin supporters who believe the mining process should remain decentralized and free of control from any single influencer.

To date, Ghash.io has twice come dangerously close to obtaining 51% of the bitcoin network's hashing power. The popular pool was able to gain 42% of the network in January, and, just last week, the pool reached a worrying 50%.

In theory, obtaining a majority of network power could potentially enable massive double spending and the ability to prevent transaction confirmations, among other potentially nefarious acts.

However, despite widespread concern about the vulnerability of the bitcoin network to large mining pools, there remains no easy solution to the issue.

Putting aside the ideological quandaries posed by the issue, many individual miners believe bigger pools can provide them with the best financial rewards – an...

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Recently I’ve gotten an email asking about a company called UFO miners that seems to be manufacturing ultra-powerful Bitcoin mining rigs. For example, their most powerful product is the NekrosMiner that has a whooping 85TH/s for just $4,800 (~$57 for 1 TH/s). For comparison, the most advanced known miner on the market today supplies around 14 TH/s for around $2,000(~$142 for 1 TH/s). So you can see why their offer would seem very lucrative.

However, in today’s Bitcoin ecosystem if something seems too good to be true it probably is. In the following post I’m going to present all of the evidence collected about the company from various sources in the past few days and try to decide if this company is legit or not.

TL;DR – It’s probably a scam…

Special thanks to this Bitcointalk thread that supplied a lot of useful info…

I started out with our very own Bitcoin scam test and run the website through all of the questions. I got the following result:

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Bitcoin may be the next big thing in finance, but it can be difficult for most people to understand how it works. There is a whole lot of maths and numbers involved, things which normally make a lot of people run in fear. What is Bitcoin mining? Well, it’s one of the most complex parts of Bitcoin, but it is also the most critical to its success.

As you know, Bitcoin is a digital currency. Currencies need checks and balances, validation and verification. Normally central governments and banks are the ones who perform these tasks, making their currencies difficult to forge while also keeping track of them.

The big difference with Bitcoin is that it is decentralized. If there is no central government regulating it, then how do we know that the transactions are accurate?

How do we know that person A has sent 1 bitcoin to person B?

How do we stop person A from also sending that bitcoin to person C?

The answer is mining.

What is Bitcoin...

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NEW YORK (AP) -- The Bitcoin digital currency system is in danger of losing its credibility as an independent payment system because of the growing power of a group that runs some of the computers behind it.

In recent weeks, a British-based "mining pool" called GHash has amassed nearly half of the Bitcoin computing power and has briefly gone over 50 percent. Miners operate the computers that keep track of bitcoins and create additional coins.

Miners pool their computing power to spread the financial risk of their operations. If GHash amasses more than half of the computing power devoted to Bitcoin, it could in theory control the flow of transactions, freeze people out of the network and keep all future bitcoins for itself.

Although GHash says it's committed to preserving Bitcoin as a trustable technology, the mere fact that one player can amass majority control could undermine trust in the currency, which is worth only what people are willing to pay for...

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HOLIDAY HIGH: Christmas is upon us and the Bitcoin exchange rate seems to hold up rather well, after Lingham's prediction came true. We're now looking forward to the new year, as Litecoin looks to try out Segwit there are still sceptics on whether it's a good idea to do so in Bitcoin.

And, if the holidays are boring; why don't play some provably fair gaming?

Also, to start the new year off in a great way check out the Bitcoin.com-sponsored

TNAB Conference

, taking place in Miami on January 17 & 18.

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USB Bitcoin miners are available to buy, but they don’t really generate any significant profits. You should buy one to learn how mining works, but other than that don’t expect much! If you are serious about making profit then check out better Bitcoin mining hardware.

Bitcoin USB Miners Comparison

ASICMiner Block Erupter USB 330MH/s Sapphire Miner

The Sapphire Block Erupters were the first Bitcoin USB miners. They have 330 MH/s of hash power which would net you less than $0.01 per month. It may be a good choice just to see how mining works, but like with most USB miners: do not expect to turn a profit.

GekkoScience Compac USB Stick Bitcoin Miner

The GekkoScience miners is just slightly better than the original block erupters. It will net you about $0.15 per month, which is more than a dollar per year! The company claims that the device runs completely silent. It works with just one USB port.

Avalon Nano 3

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New Delhi: The Bitcoin digital currency system is in danger of losing its credibility as an independent payment system because of the growing power of a group that runs some of the computers behind it.

In recent weeks, a British-based “mining pool” called GHash has amassed nearly half of the Bitcoin computing power and has briefly gone over 50 percent. Miners operate the computers that keep track of Bitcoins and create additional coins.

Miners pool their computing power to spread the financial risk of their operations. If GHash amasses more than half of the computing power devoted to Bitcoin, it could in theory control the flow of transactions, freeze people out of the network and keep all future Bitcoins for itself.

Although GHash says it's committed to preserving Bitcoin as a trustable technology, the mere fact that one player can amass majority control could undermine trust in the currency, which is worth only what people are willing to pay for...

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In economically-ravaged Venezuela, bitcoin has proven to be an important alternative currency, according to an article in Reason Magazine. And because the government supports cheap electricity, bitcoin mining is highly profitable.

But while bitcoin mining has helped provide an economic lifeline to much of the country and made miners wealthy, government harassment and violent crime have dogged the country’s mining community.

As the country’s economy further disintegrates, bitcoin becomes more widely used as both cash and the national currency have lost much of their value.

Bitcoin has more purchasing power in Venezuela than the government-issued currency. The bolivar trades for around one-thirtieth of a penny on the black market.

Some Venezuelan bitcoin miners fell into the profession in search of work. Skilled professionals such as computer scientists have had trouble finding reliable work as the economy has crumbled. For many such professionals, bitcoin...

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UPDATED on 9th January at 18:11 (GMT)

Bitcoin miners around the world are starting to leave the Ghash.io bitcoin pool following a significant increase in the pool’s hash share.

According to Blockchain.info, Ghash.io accounted for more than 42% of bitcoin mining power a day ago, but over the past 24 hours its share has dropped to 38%.

The fact that a single pool has such a high share has prompted some bitcoin miners to voice their concerns on social media and the mining community is starting to take notice. If a single entity ends up controlling more than 50% of the network’s computing power, it could – theoretically – wreak havoc on the whole network.

Bad maths

A so-called “51% attack” could, in theory, allow the attacker to reverse transactions, make double-spend transactions, prevent confirmations or even prevent other miners from mining valid blocks. It would corrupt the blockchain and render the whole system unsafe. However, this it is all...

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Many supporters have come to see bitcoin as a model of the perfectly secured digital good.

This view owes itself in no large part to the blockchain, the distributed database that secures units of the digital currency by allowing miners to add and verify transactions without a third party. But, as has long been detailed by academics, the balance of incentives that keeps the blockchain in operation is ever at risk of disruption.

Perhaps the most infamous potential attack, known as a '51% attack', would find a single entity introducing a version of the blockchain that it controls and is accepted as valid. While academics have argued attacks can be carried out with a smaller percentage of the network, at 51% of the hashrate, such an attack would be almost guaranteed to work.

To date, this threat has reared its head rarely, but new changes to how the bitcoin network incentivizes key participants have stoked fears that a 51% attack could again become...

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wrote: Quite simply, Bitcoin isn't like "digital gold".

If 51% of real gold miners decide that they want real gold with 200 particles in the nucleus such gold will turn into mercury in a couple of hours.

If 51% of digital gold miners decide that they want twice the original amount of gold then they will get it. Moreover the gold of the remaining 49% will continue to exist, but the two types of digital gold wont mix.

The transmutation of "digital gold" can be done with simple editing of a few lines in a C++ program and few truckloads of AMD graphic cards. Your claim of immutability is simply a specious nonsense or devious propaganda.

wrote: Well, the analogy is of course not perfect. But it gets the point across.

As discussed in the community, an attacker owning more than 50 percent of the mining power should have little incentive to undermine the validity of his own Bitcoin wealth by performing a majority attack. Instead he would benefit more...

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Naysayers love to nay. And the bitcoin skeptics — of which there are many — are at it again. In late June, Citi Research released a report that asked, "Could the Bitcoin Blockchain Disrupt Payments?"

The researchers' short answer — unsurprisingly — was: no. That short answer, however, was shortsighted. Even more troubling is that Citigroup is not alone in its critique of the cryptocurrency.

We have a little secret for all of those who once again have predicted bitcoin's imminent demise: They're wrong. Instead of simply shouting that point over and over again, let's carefully examine some of the faulty arguments cryptocurrency naysayers, when they are naying, seem to be saying in unison.

The U.S. and Western Europe are well served by existing financial systems.

Here, we mostly agree. Existing centralized payment systems can work for those within the established system. But what of the 2.5 billion people excluded from the established system? For the...

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Imagine a $50 million diamond heist that isn't investigated by any police body, and more than four days later, the broken vault that made the whole thing possible remains unfixed and suffers follow-on attacks by a group of marauding copycats. In essence, that's what's happening to an elite group of investors holding Bitcoin rival Ethereum, and the events threaten the very survival of the fledgling cryptocurrency.

The ransacked jeweler in this parable is The DAO, a crowdfunded investment fund that relies on highly specialized computer code and Ethereum to automatically execute investment decisions made by its members. On Friday, thieves exploited a software bug that allowed them to transfer more than 3.6 million "ether"—the base unit of the Ethereum currency—out of The DAO's coffers. The digital loot made up more than a third of The DAO's 11.5 million ether endowment. The seized booty is valued at anywhere from $45 million (based on the plummeting value of ether following the...

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The smart city is not a pipe dream, but it is a big, intimidating problem. We’ve become very good at networking together devices and their people. But modern cities are uniquely monstrous entities, often with millions of individuals creating billions of variables each and every day. It’s not just about tracking and coordinating all these variables in an efficient way; it’s also about doing so safely and securely. If you think cyber war is a threat today, wait until it could shut off power to whole areas or individual homes, bring all transportation to a grinding halt, and even mess with the city gardeners! As we inherit the advantages of automation in civil planning, we gain the disadvantages as well.

But there’s one up and coming software technology that was specifically designed to coordinate lots of things safely and securely: the blockchain, which was first brought to the public’s attention through its use in the Bitcoin cryptocurrency. Also known as a cryptographically...

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