Isle of Mann is Bitcoin Friendly
Andrew Moran wrote an interesting piece about the Isle of Mann and their creation of an incubator for Bitcoin startups.
From the article:
The Isle of Man government announced that it would be monitoring and assessing innovations in the cryptocurrency industry. Essentially, it is becoming a hub for bitcoins and the virtual currency market as it will not require bitcoin licenses and the Junior Chamber of Commerce will be hosting an event next week so citizens can learn about digital currencies.
Aside from the assistance being offered by the Isle of Man’s Department of Economic Development, it is being reported that six businesses – ranging from an accountant firm to a broadband Internet provider – are coalescing to establish a so-called incubator for bitcoin startup companies.
It has been noted that these six businesses, including Wi-Manx, Dixcart, KPMG, and the national postal service, will offer either free or discounted services for bitcoin startups in order to help produce innovation in the marketplace. For instance, Wi-Manx will offer free engineering time, while Dixcart will help startups get their hands on discounted office space and leases.
Read the full article on Coin Buzz here
One of the interesting takeaways was the Isle of Mann may look to be to Bitcoin, what the Cayman Islands are to offshore banking.
51% Attack and Ghash.io gets DDOS’d
In another piece of Bitcoin news, CryptoCoinsNews.com did a long and detailed post on Ghash.io and their position on a 51% attack, For those that do not know what a 51% attack is, CoinReport.net sums it up here:
One of the most plausible failures of a cryptocurrency is called a 51% Attack, and it works like this:
When a version of the bitcoin software detects a conflict between two possible blockchains, and is unsure which one is real, it automatically defaults to the one that has the strongest proofs of work in it — the one on which the most hashing power has been expended.
In other words, given a conflict between two blockchains, the bitcoin client defaults to trusting the one that came from the largest pool of computing power. This works wonderfully — if the majority of the computing power in the network is in the hands of different people with different goals. If one single organization or individual ever amasses a majority of the computing power, then they can, on average, outspend the rest of the network combined, and ensure that their version of recent transaction history is the one that the network accepts.
If you’re in the fortunate position of owning 51% of all the mining hardware in a currency, you can do a number of things. You can double-spend your money by spending it, waiting for the transaction to be acknowledged, and then quickly generating a new, fake blockchain in which you did not spend the money and then throwing hashing power at it until the network accepts it as real, effectively overwriting your transaction and allowing you to spend the same money again.
You can use the same approach to cancel transactions of others. In theory, a successful 51% attacker could prevent anyone from making transactions on the network — or, perhaps worse, they could selectively limit access to transactions to push their own agenda, or hold Bitcoin balances for ransom, effectively becoming a malicious central authority in the network.
CCN conducted an interview with Jeffrey Smith the Chief Information Officer for CEX/Ghash.
CCN: What percentage of ghash.io’s hashing power is from cex.io? What percentage from other miners?
Jeffrey Smith: The hashing power of CEX.IO constitutes 25 percent of GHash.IO total hash rate. The rest are independent miners.
CCN: Also… how is the functionality for allowing cex users to point their hashing power elsewhere?
Jeffrey Smith: It is very hard to implement this functionality, since on CEX.IO we allow users to trade even small portions of GHS (e.g. 0.001 GHS), and these small amounts cannot be separately connected to other mining pools.
CCN: What has ghash.io learned from the last time this happened?
Jeffrey Smith: We understand that the Bitcoin community strongly reacts to GHash.IO’s percentage of the total hash rate. However, we would never do anything to harm the Bitcoin economy; we believe in it. We have invested all our effort, time and money into the development of the Bitcoin economy. We agree that mining should be decentralised, but you cannot blame GHash.IO for being the #1 mining pool.
CCN: What steps were put in place to ensure something like this didn’t happen again? (stop accepting miners when you guys are at 50%?)
Jeffrey Smith: <blank>
Read the full article and interview here
Now on the heels of the CCN article and Ghash being unapologetic, it appears others have not taken kindly to this and there was a post on Reddit that Ghash was DDOS’d overnight.
So CEX.io / Ghash were DDOS’d last night, and were down for several hours. Does anyone know anything about that? Was this a response to Ghash’s policy around having 51% of the mining power? That they said they weren’t worried about it, and that they just crossed that threshold yesterday. It seems really likely that hackers were like, well, fuck you then, and DDOS’d it.
edit: changed “hacked” to “DDOS’d”
Read the Reddit thread here
CCN summed their article up with this take on centralization of mining.
The community should realize that Ghash.io would never kill its golden goose by attempting a double spend. Even if Ghash.io were taken over or nationalized by an irrational and malicious actor, the Bitcoin community can and will still react to preserve the network. The 51% attack has become somewhat of a Bitcoin Boogeyman. In reality, the 51% attack is not the worst thing that could happen with centralization of mining power: Centralization is the worst thing in and of itself. Though the pool operator has every incentive to play by the rules, letting one Bitcoin mining pool have too much of the total network hashrate is implicitly allowing for unnecessary risk. As such, CCN recommends that readers use a P2pool, like Ognasty and nonnakip of NastyMining and NastyFans have set up.
