<p>After reading two papers: <a href="https://blog.ethereum.org/2015/01/28/p-epsilon-attack/" rel="nofollow noreferrer">https://blog.ethereum.org/2015/01/28/p-epsilon-attack/</a> and <a href="https://www.cs.cornell.edu/%7Eie53/publications/btcProcFC.pdf" rel="nofollow noreferrer">https://www.cs.cornell.edu/%7Eie53/publications/btcProcFC.pdf</a> I conclude, that the neither ETH nor BTC (and most if not all any other crypto currencies) are secure against such attacks. It is also not secure against a so-called Schelling scheme, i.e. attack made not by the party that controls a big pool of miners, but simply a party that has enough coins to bribe miners into mining his own double-spending block. If the attacker is able to bribe majority of the miners, such an attack can be zero-cost for the attacker. </p>

<p>Specifically, "The P + epsilon Attack" paper concludes:</p>

<blockquote>
  <p>Of course, in practice, proof of work has survived despite this flaw,
  and indeed it may continue to survive for a long time still; it may
  just be the case that there’s a high enough degree of altruism that
  attackers are not actually 100% convinced that they will succeed – but
  then, if we are allowed to rely on altruism, naive proof of stake
  works fine too. Hence, Schelling schemes too may well simply end up
  working in practice, even if they are not perfectly sound in theory.</p>
</blockquote>

<p>I hate to be a bearer of bad news, but the world with affordable, decentralized and deregulated finance services Ethereum and other cryptcurrencies bring might not be as secure, as we might want think. </p>

<hr>

<p>Another sad update in this article: <a href="https://arxiv.org/abs/1801.03998" rel="nofollow noreferrer">Decentralization in Bitcoin and Ethereum Networks, 11 Jan 2018</a></p>

CC BY-SA 3.0
2017-08-30T11:40:25.180Z
81% of current hashing power is hosted with some power miners in China. Collusion risk is very real. https://www.buybitcoinworldwide.com/mining/pools/
asami
CC BY-SA 3.0
2017-08-30T12:16:04.290Z
@asami You refer to the BTC. With the ETH situation is a little better for now.
Adam Ryczkowski
CC BY-SA 3.0
2017-08-30T12:21:02.650Z
Update: Not very better, and at least one big pool, the f2pool, is already accused of wrong-doing: http://www.trustnodes.com/2017/06/22/ethereum-investors-call-miners-boycott-f2pool
Adam Ryczkowski
CC BY-SA 3.0
2017-10-04T12:39:37.723Z
Apparently my answer seems wrong to someone. Why?
Adam Ryczkowski
CC BY-SA 3.0
2017-08-29T19:50:50.693Z
2018-01-19T13:23:06.903Z
2018-01-19T13:23:06.903Z
Adam Ryczkowski
<p><em>This question interest me mostly in the context of the Ethereum, but it might be interesting to see how this problem is solved by the other cryptos as well.</em></p>

<p>I understand that the consensus about what is included in the ledger of the next block is established by the game-theoretic disadvantage of the miners who mine a block that includes ledger entries which are likely to be disputed by majority of the other miners.</p>

<p>But as a mining pools get bigger and sometimes advocate using their own software to mine the coins, once their hash rate exceeds 50% they will have a power to form their own consensus, based on the whim of the admins of the mining software. </p>

<p>With that power they will be able to block certain transactions to get into the chain, effectively freezing assets on any accounts they don't like and disturbing the execution of the smart contracts.</p>

<p>This situation can happen even more easily, when the ETH would switch to the proof-of-stake, since it is easier to accumulate a capital rather than to accumulate the hardware. </p>

<p>What are (if any) provisions in ETH and other crypto currencies against such scenario?</p>

<hr>

<p>I find it is strange and somewhat disturbing, that such a fundamental question did not got answered. AFAIK the situation I described is very real concern for the bitcoin: <a href="https://www.cs.cornell.edu/%7Eie53/publications/btcProcFC.pdf" rel="nofollow noreferrer">https://www.cs.cornell.edu/%7Eie53/publications/btcProcFC.pdf</a> . How does the Ethereum fare?</p>

CC BY-SA 3.0
2017-08-16T10:47:57.657Z
This might be interesting for you: https://www.reddit.com/r/Bitcoin/comments/o6qwx/lukejr_attacks_and_kills_coiledcoin_altcurrency/
MCCCS
CC BY-SA 3.0
2017-08-16T17:36:05.617Z
@MCCCS That link isn't true; he didn't use pool hashpower.
Nick ODell
CC BY-SA 3.0
2017-08-16T17:37:36.927Z
@NickODell Yes he did, CoiledCoin's merged mining allowed him to do that. How do you think he did that?
MCCCS
CC BY-SA 3.0
2017-08-16T17:38:13.277Z
@MCCCS I think he used his own mining hardware.
Nick ODell
CC BY-SA 3.0
2017-08-16T17:42:45.050Z
@NickODell https://web.archive.org/web/20170607085028/https://bitcoin.stackexchange.com/questions/3472/what-is-the-story-behind-the-attack-on-coiledcoin
MCCCS
CC BY-SA 3.0
2017-08-16T17:44:33.097Z
@MCCCS That page doesn't contradict what I said.
Nick ODell
CC BY-SA 3.0
2017-08-16T17:46:08.603Z
@NickODell Yes you're right > He claims that he didn't actually use Eligius' hashpower to perform the attack, that he only used his own computers
MCCCS
<blockchain><mining-pools><security><mining-theory>
What would happen if a mining pool admins having majority of hash power turns evil?
Adam Ryczkowski
# What would happen if a mining pool admins having majority of hash power turns evil?

(Asked by: username_0 on 2017-08-12)

*This question interest me mostly in the context of the Ethereum, but it might be interesting to see how this problem is solved by the other cryptos as well.*

I understand that the consensus about what is included in the ledger of the next block is established by the game-theoretic disadvantage of the miners who mine a block that includes ledger entries which are likely to be disputed by majority of the other miners.

But as a mining pools get bigger and sometimes advocate using their own software to mine the coins, once their hash rate exceeds 50% they will have a power to form their own consensus, based on the whim of the admins of the mining software.

With that power they will be able to block certain transactions to get into the chain, effectively freezing assets on any accounts they don't like and disturbing the execution of the smart contracts.

This situation can happen even more easily, when the ETH would switch to the proof-of-stake, since it is easier to accumulate a capital rather than to accumulate the hardware.

What are (if any) provisions in ETH and other crypto currencies against such scenario?

---

I find it is strange and somewhat disturbing, that such a fundamental question did not got answered. AFAIK the situation I described is very real concern for the bitcoin: <https://www.cs.cornell.edu/%7Eie53/publications/btcProcFC.pdf> . How does the Ethereum fare?

**Tags:** blockchain, mining-pools, security, mining-theory

> **Comments:**
> **username_1**: This might be interesting for you: https://www.reddit.com/r/Bitcoin/comments/o6qwx/lukejr_attacks_and_kills_coiledcoin_altcurrency/  
> **username_2**: @username_1 That link isn't true; he didn't use pool hashpower.  
> **username_1**: @NickODell Yes he did, CoiledCoin's merged mining allowed him to do that. How do you think he did that?  
> **username_2**: @username_1 I think he used his own mining hardware.  
> **username_1**: @NickODell https://web.archive.org/web/20170607085028/https://bitcoin.stackexchange.com/questions/3472/what-is-the-story-behind-the-attack-on-coiledcoin  
> **username_2**: @username_1 That page doesn't contradict what I said.  
> **username_1**: @NickODell Yes you're right > He claims that he didn't actually use Eligius' hashpower to perform the attack, that he only used his own computers  

---

## 1 answers

### Answer by username_0 on 2017-08-29. Score: 2

After reading two papers: <https://blog.ethereum.org/2015/01/28/p-epsilon-attack/> and <https://www.cs.cornell.edu/%7Eie53/publications/btcProcFC.pdf> I conclude, that the neither ETH nor BTC (and most if not all any other crypto currencies) are secure against such attacks. It is also not secure against a so-called Schelling scheme, i.e. attack made not by the party that controls a big pool of miners, but simply a party that has enough coins to bribe miners into mining his own double-spending block. If the attacker is able to bribe majority of the miners, such an attack can be zero-cost for the attacker.

Specifically, "The P + epsilon Attack" paper concludes:

> Of course, in practice, proof of work has survived despite this flaw,
> and indeed it may continue to survive for a long time still; it may
> just be the case that there’s a high enough degree of altruism that
> attackers are not actually 100% convinced that they will succeed – but
> then, if we are allowed to rely on altruism, naive proof of stake
> works fine too. Hence, Schelling schemes too may well simply end up
> working in practice, even if they are not perfectly sound in theory.

I hate to be a bearer of bad news, but the world with affordable, decentralized and deregulated finance services Ethereum and other cryptcurrencies bring might not be as secure, as we might want think.

---

Another sad update in this article: [Decentralization in Bitcoin and Ethereum Networks, 11 Jan 2018](https://arxiv.org/abs/1801.03998)

> **Comments:**
> **username_3**: 81% of current hashing power is hosted with some power miners in China. Collusion risk is very real. https://www.buybitcoinworldwide.com/mining/pools/  
> **username_0**: @username_3 You refer to the BTC. With the ETH situation is a little better for now.  
> **username_0**: Update: Not very better, and at least one big pool, the f2pool, is already accused of wrong-doing: http://www.trustnodes.com/2017/06/22/ethereum-investors-call-miners-boycott-f2pool  
> **username_0**: Apparently my answer seems wrong to someone. Why?  

---

