#erc revenue reduction test
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12 Commonly Requested Questions On The Worker Retention Credit
The tax credit is the same as 70% of qualified salaries given to workers by certified employers within the fiscal 12 months 2021, with a maximum return of $7,000 per worker each quarter. Amount of the ERC –The ERC is 70% of eligible wages and healthcare costs as much as $10,000 per worker for the related calendar quarter. No ERC Revenue Reduction am I still qualified means that the ERC resets every quarter; thus, the maximum credit per employee is $14,000 for the primary two quarters of 2021. Most useful is that the election could be made for either quarter and it doesn't need to be made for both quarters. This allows a taxpayer that meets the check for one quarter to qualify for two quarters of the 2021 ERC.
Wages reported as payroll costs for PPP mortgage forgiveness or certain different tax credits cannot be claimed for the ERC in any tax interval.
These credit reward qualified corporations for qualifying wage funds, encouraging them to maintain their workers in the course of the COVID-19 pandemic.
If you wish to claim ERC or need details about this tax credit score, hold reading.
If you receive a restaurant revitalization fund grant or a shuttered venues operator grant, the wages you pay with the grant funds can’t be used to assert the ERC.
Employers with greater than 500 workers are not capable of receive an advanceable ERTC. Companies trying to declare the ERTC must report their total certified wages, as properly as the associated medical insurance costs, on their quarterly tax returns . This refundable credit score shall be taken towards the employer’s share of Social Security tax. If you proceed to provide health care benefits to workers who aren’t working, those advantages may be certified wages.
Help On The Means To Get Employee Retention Tax Credit (erc / Ertc): Obtain Up To $26,000 Per Worker For Your Business
In Example 2, the business suffered more than 50% income decline in the second quarter, so it's eligible for the ERC in the second quarter. However, because the third quarter revenues declined by solely 19%, the business won't be able to assert the ERC for the fourth quarter. This is although the fourth quarter revenues were the same because the third quarter. For a enterprise that began in 2019, the quarter the enterprise started should be the bottom of determining the quarterly decline, until the enterprise reaches a yr of operations. For example, a new business that began within the second quarter of 2019 would use that quarter as the base to discover out income decline for either first quarter 2020 or second quarter 2020.
The self-employment earnings of self-employed individuals are not thought of qualified wages. Employers would compare their 2021 quarterly income to the identical quarter for 2019. The Taxpayer Certainty and Disaster Tax Relief Act of provided numerous changes to the Employee Retention Tax Credit . Most of those adjustments are only relevant beginning Jan. 1, 2021 and solely applied to the first two quarters of 2021. Congress has since extended the ERTC from June 30, 2021 to Dec. 31, 2021. If your organization was not in business in 2019, you would use a corresponding quarter in 2020 to point out you had a revenue discount between 2020 and 2021 and qualify for the ERTC.
The Method To Calculate Worker Retention Credit Score 2021?
Eligible employers should declare the ERC for prior quarters by submitting an applicable adjusted employment tax return within the deadline set forth within the corresponding type directions. The definition of ERTC certified wages and qualified health expenses is noticeably different than the definition used in the PPP law and laws. Under PPP adjustments made as part of the CAA, an employer can assist the PPP mortgage using any period of time within the PPP interval (which is April 1 – December 31, 2020), not simply the eight weeks or 24 weeks offered underneath prior guidance.
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#No ERC Revenue Reduction am I still qualified#ERTC Assist#ERC Revenue Reduction#erc revenue reduction test#erc credit 2021 revenue reduction#erc tax credit revenue reduction#2020 erc revenue reduction
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ERC Tax Credit Physicians New
Local Physician Practices Could Benefit From A Retention Tax Credit September 2021 Compendium
At the time it was started in the CARES Act, business that had actually received PPP funding were not permitted to take part in the credit. When the Consolidated Appropriations Act of was handed down Dec. 27, 2020, however, this limitation was gotten rid of. This activity allows over one million even more companies to qualify for the program. The internal revenue service deems that the federal, state, or local COVID-19 government order had a more-than-nominal effect on your business if it minimized your capacity to supply items or solutions in the normal program of your business by not much less than 10 percent. Numerous health care practices were affected beginning in the 2nd quarter 2020.
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A medical gadget business that mounted and also serviced robotic surgical treatment tools and also whose service technicians were restricted from going into a hospital due to COVID orders.
Copyright (c) 2022 Arizona Medical Professional, An Electronic Magazine Of The Maricopa Area Clinical Society All Legal Rights Booked
You intend to maximize your PPP forgiveness while likewise leaving area to declare the ERC. CRI can help you apply payroll expenses in a manner that will certainly enhance your use of both programs. It tells us that suggestions can be counted as incomes and also consisted of in the quantity made use of to calculate the ERC. Section 45B idea credit may be asserted on the employer's share of FICA tax obligations on excess suggestions received by its employees. Companies can declare both the ERC and also the Section 45B idea credit for the exact same incomes.
If you paid certified incomes to an employee in Q of $14,000, the tax credit is topped at $7,000. The substantial decline in gross invoices test can generally be simple. Nonetheless, the suspension of the operations test is based on truths and also scenarios, unique per taxpayer. While we have helped lots of customers in enjoying the tremendous benefits of the ERC, lots of others were deemed ineligible.
When Will The Irs Take Into Consideration Operations To Be Totally Or Partly Put On Hold?
The HHS Carrier Relief Funds is a federal program, applied by the Division of Health And Wellness and also Person Solutions, to reimburse dental practices for healthcare-related expenses to either stop, get ready for, or respond to COVID-19. The funds can likewise be made use of to reimburse the practice for any kind of lost earnings that were attributable to COVID-19. This program is very similar to the Employee Retention Credit and employee retention credit refund delays PPP finances where the income in the practice is compared by quarter for 2019 and also 2020 to determine if there was any kind of reduction in any of those quarters. That said, it is very important to begin with a solid interpretation of eligible incomes. It can be different for business considered to be big companies under the credit.
For 2020, the credit is 50% of up to $10,000 in certified incomes paid per employee in 2020.
I personally think a number of these reimbursement declares will not endure analysis by the Irs.
This means that medical/dental practices and also various other healthcare entities may be able to take advantage of these refundable credit scores if their businesses were impacted by COVID-19 restrictions.
Due to the fact that this kind of activity occurred in lots of various other states as well, it's important that doctor that may have had even a partial effect due to the COVID-19 pandemic evaluation their ERC qualification.
Companies who requested and also got an advanced payment of the ERTC for incomes paid in the 4th quarter of 2021 will certainly be needed to repay the advancements by the due date for the appropriate work income tax return that includes the 4th quarter of 2021.
The Coronavirus Aid, Relief, and also Economic Safety and security Act, authorized right into regulation on March 27, 2020, offers numerous rewards for medical facilities and also health care companies.
This blog site is meant to resolve a few of the most-frequently heard mistaken beliefs concerning the ERC. Ultimately, you'll need to submit particular amended tax forms; you need to talk to a specialist for this step. There are very complex estimations needed to apply, so make sure to fill it out entirely and also precisely. While the regulations for larger companies are similar to those for smaller companies, they do have a few exceptions. As we went over in previous problems of this Newsletter, health is vital to a thriving dental practice, and also the loss of a health day have to be avoided.
Exactly how can you see if you are eligible for the ERC?
After doing some first study concerning the employee retention tax credit you need to take some time to examine your records and also see if you qualify for the ERC. You can likewise follow this list of actions:
https://erctaxcreditphysiciansnews.blogspot.com/2022/11/erc-tax-credit-physicians-news.html
What is the Employee Retention Tax Credit?
Employee Retention Credit Doctors
Doctors ERTC Tax Credit
Physicians ERTC Tax Credit
Medical Offices ERTC Tax Credit
https://twitter.com/CryptoCrispsBee/status/1591169676150984704/
https://erctaxcreditdoctors.blogspot.com/
https://erctaxcreditdoctors.blogspot.com/2022/11/erc-tax-credit-doctors.html
https://amadowelch.tumblr.com/post/701200695553097728/erc-tax-credit-dentists
https://goalsettingtechnique58.blogspot.com/
https://goalsettingtechnique58.blogspot.com/2022/11/goal-setting-technique.html
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Intelligent Building Automation Technology Market 2019 Insights, Industry Key Players, Global Trends, Sales, Supply, Demand, Analysis & Forecast to 2026| Esticast Research
An insightful analysis of the industry by Esticast Research & Consulting introduces a worldwide report named as Global Intelligent Building Automation Technology Market. This analysis is informative enough to take you and inside and out judgment for the Intelligent Building Automation Technology market state and the dynamic scene globally. It separates the ability of the Intelligent Building Automation Technology Industry in the existing and future forecasts from various edges in detail. The major purpose of this is to separate the worldwide and key locales Market potential and preferred position, opportunity and test, restrictions and dangers.
About Intelligent Building Automation Technology Market
Intelligent Building Automation Technology also known as IBAT, is an interconnected framework of centralized automatic control. The technology primarily refers to automation and integration of various components including heating, ventilation and air conditioning (HVAC), lightings, safety & security and many other systems. The major objective of IBAT is to improve the occupant comfort and ergonomics, reduction of energy consumption and operational costs, enhancement of safety features and others. The growing need for eco-friendly technologies and ability to reduce the operational costs has led the government to take initiatives for the growth and support of IBAT market. High profit margins in the industry is also an influential factor and has resulted into more number of players entering into the IBAT market.
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Competitive Landscape
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Siemens Building Technologies
Schneider Electricals
Honeywell International
Echelon Corporation
Bosch Security System
ABB
General Electric
Rockwell Automation
Tyco International
Ingersoll Rand
The research study for the Intelligent Building Automation Technology market includes each and every aspect of the market on a global level, starting from the market description to the market competitive landscape. The report firstly introduces the basics: definitions, classifications, applications, industry chain overview, industry plans and policies, product specifications, manufacturing processes, cost structures, and many others. Secondly, the report analyzes the major regional market conditions, including the profit, product price, production capacity, supply & demand, and industry growth rate, etc. Finally, the report introduces a new project SWOT analysis, investment feasibility analysis, and investment return analysis.
The report is informative enough to explain the parent market trends, macro-economic indicators, and governing factors along with market attractiveness as per segments. Moreover, the report also maps the qualitative and quantitative impact of numerous market factors on Intelligent Building Automation Technology market segments and geographies. Nevertheless, the research report measures the current as well as the impending performance of the Intelligent Building Automation Technology market, in addition to with newest trends in the market.
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Key Reasons to purchase this report:
The report provides a futuristic perspective on various micro and macroeconomic factors having an impact on the global Intelligent Building Automation Technology market growth
Analyzing the global industry outlook of the Intelligent Building Automation Technology market with the recent trends and SWOT analysis.
This report deals with a complete guide which gives market insights and in-depth data on every market segment
Detail information on competitive landscape, current market trends and evolving technologies that can be useful for the companies which are competing in this market
Explore further market prospects and identify high potential categories based on comprehensive volume and value analysis
Recommendations and suggestions are provided by the industry experts to the companies to help in consolidating their position in the global Intelligent Building Automation Technology market
Intelligent Building Automation Technology Market scope
ERC industry experts have studied deep about the market and came up with major segments such as product type, application, and region. Each and every segment and their sub-segments are studied based on their market share, growth prospects, and CAGR. Each segment of the market offers in-depth information on the qualitative and quantitative outlook of the market.
The global Intelligent Building Automation Technology Market Revenue & Growth Rate by Type
Life Safety Systems
Physical Security Systems
Facilities Management Systems
The global Intelligent Building Automation Technology Market Revenue & Growth Rate by Application
HVAC (Heating, Ventilating, and Air Conditioning)
Lighting
Fire and Life Safety
Building Management Systems
Energy
Security and Access control Systems
Explosive Detector
Screening Solutions
Car Park Management Services
Other Applications
Regional Analysis
This report holds each and every piece of the worldwide market for this specific region, going from the basic market data to various basic criteria, as indicated by which the Intelligent Building Automation Technology market is standardized. The standard working regions of the global market are also verified reliant on their execution. The report covers research of present methodologies, headings, and market chain. This clear and thorough assessment of the segments would help the players to focus on revenue-generating areas of the global Intelligent Building Automation Technology market
North America Market: United States, Canada, Mexico
Europe Market: Germany, Netherlands, UK, France, Russia, Spain, Italy, and Others.
Asia-Pacific Market: China, India, Japan, Korea, Southeast Asia, etc.
The Middle East & Africa Market: GCC, North Africa, South Africa, and Rest of MEA
South America Market: Brazil and Argentina among others
Table of Content
Chapter 1 Executive Summary, Market Definition, and Market Scope
Chapter 2 Research Methodology
Chapter 3 Market Trend Analysis
Chapter 4 Porters Five Force Analysis
Chapter 5 Global Intelligent Building Automation Technology Market, By Type/Product Type
Chapter 6 Global Intelligent Building Automation Technology Market, By Application/End-User
Chapter 7 Global Intelligent Building Automation Technology Market, By Region/Geography
Chapter 8 Global Intelligent Building Automation Technology Market, By Key Players
Chapter 9 Company Profiling
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51% Attacks for Rent : The Trouble with a Liquid Mining Market
Anthony Xie is the founder of HodlBot, a tool that helps investors diversify their portfolios and automate their trading strategies.
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In order to remain decentralized, cryptocurrencies using a proof-of-work system must not allow a single party to control the majority of total hashing power.
But as the global pool of hashing power grows more liquid, cryptocurrencies need to pass another important test. They must be able to resist an attack from the total rentable global hashing power for their specific algorithm. Otherwise, arbitrageurs may find it financially attractive to rent hashing power in order to perform 51% attacks.
There are a few things preventing this from happening:
Algorithm-specific miners — Many rigs are optimized for a certain hashing algorithm, and switching to another, e.g. SHA-256 → X11, is unfeasible.
Illiquid mining market — Most of the global hash power is illiquid and not rentable. Therefore, a large upfront investment is required to build significant hashing power. The upfront cost for an attack is almost always not worth it.
Opportunity cost — Cryptocurrencies are usually designed to heavily favor good actors by providing them with greater rewards for acting in the benefit of the entire network. Any attack must outweigh the risk of failure including loss of mining rewards, loss of reputation and damage to the network. Long-term miners do not want to destroy their future earning potential by successfully attacking a network, shaking market confidence, and causing the price to fall.
But times are changing. The mining market is becoming more liquid.
Why is the liquid mining market growing?
Computer storage was once an illiquid market, now it is an extremely liquid online commodity. The same thing is happening to hash power.
There are two major forces driving this.
The long-run price increase of cryptocurrency will incentivize miners to invest in hashing power until any incremental gain is equal to the cost. In other words, if prices continue to go up, so will global hashing power.
The total percentage of hashing power for rent will increase because buyers and sellers both benefit from the ability to rent and lend respectively. Separation of concern leads to higher degrees of specialization and increased operational efficiency. This is why hardware manufacturers sell their mining rigs and don’t mine themselves. If renters focus all of their time on finding opportunities with the highest amount of ROI, they are likely going to be the best at extracting value per unit of hashing power.Conversely, lenders can de-risk their business because their rental income is implicitly diversified across each entire hashing algorithm. In this world, lenders can simply focus on rental relations, asset utilization, and upkeep.
Rent-a-miner attacks are already possible
Crypto51 calculates how much it would cost to rent enough hashing power to match the given network hashing power for an hour. NiceHash does not have enough hashing power for most larger coins, so this figure is sometimes theoretically above 100 percent.
Hash rates are from Mine the Coin, coin prices are from CoinMarketCap, and rental pricing is from NiceHash.
A few caveats:
The quoted attack costs do not include the money you earn in the form of block rewards, so in many cases, the costs will actually be substantially lower.
Crypto51 is quoting the spot price for what is available on NiceHash. In real life, the more you rent, the more expensive it will be because of supply and demand.
Coins vulnerable to rent-a-miner attacks
Ranked by Market Cap
ETP is the #91 ranked coin on CMC. You can rent up to 21x the network’s hashing power. The cost of an attack is only $162 per hour. ETP/BTC and ETP/USD pairs are available on Bitfinex.
Vulnerable coins assuming 2x the rental capacity
Currently, these coins are out of reach since the total rental capacity available on NiceHash is not enough to fully match the network’s hashing power.
But let’s imagine the likely circumstance that NiceHash is able to 2x their total rental capacity. Now coins like ETC (rank 18), BCN (rank 40), are easily in reach.
Vulnerable coins assuming 5x the rental capacity
A 5x increase in rental capacity puts coin like DASH (rank 15) and BTG (rank 28) in danger.
So what if 51% attacks are possible? How do attackers make money?
Fortunately, it’s impossible to ever create a transaction for a wallet that you do not own the private key to. But, controlling the majority hashing power means you can execute a double spend attack by temporarily reverting certain transactions on the ledger.
The mechanics of a double spend attack
When miners find a new block, they are supposed to broadcast this to all other miners so that they can verify it, and add a new block to the blockchain. However, a corrupt miner can create their own blockchain in stealth.
To execute a double-spend, the attacker will spend his or her coins on the truthful chain. But they will leave out these transactions on the stealth chain.
If the corrupted miner can build a longer chain faster than all the other miners on the network, they can broadcast the stealth chain to the rest of the network.
Because the protocol adheres to the longest chain, the newly broadcasted corrupt chain will become the de facto, truthful blockchain. The transaction history for the attacker’s previous spend will be erased.
Note that just because a miner controls 51% of hashing power, does not mean they will always have a longer chain. In long-run they will probably have a longer chain. To guarantee this in the short-run, an attacker would likely want to control closer to 80% of the network power.
Where to spend the coins? Exchanges are likely the target
For a double-spend to pay-off, you need to find a way to actually extract value from the spent coins. If you can’t spend the coins in the first place, there’s no point.
The most likely place an attacker would spend their coins on is an exchange because they are the single biggest buyers of various cryptocurrencies.
Here’s what the attack would look like:
Choose a target network that looks profitable
Accumulate a significant amount of coins on the target network
Rent NiceHash hashing power and silently grow the stealth chain
Trade these coins on an exchange for another currency e.g. BTC
Withdraw BTC to another wallet.
Broadcast the stealth chain to the network
Get the initial coins back
Repeat with a different exchange.
How exchanges will likely respond
As you can probably imagine, exchanges do not enjoy being bamboozled. If this kind of behavior becomes too costly for them, they will likely respond by increasing security surrounding withdrawal periods, deposit periods, and account verification.
Waiting longer for withdrawal will make it more costly for attackers, as they must then maintain the majority hashing power for longer. But this also draws the ire of legitimate traders and exchange users who already complain about the inordinate time it takes to get their cryptocurrencies out.
Another way exchanges may respond is by carefully screening coins that are so easily compromised. However, delisting coins also mean a reduction in trading volume and revenue. I hope this happens, because altcoins that are solely used for speculation, are in dire need of an existential threat.
Ultimately, we’ll likely see a combination of both. The harder it becomes to successfully get away with a double-spend attack, the less money an attacker can justify spending. In the long-run, the balance of these two forces will converge on some market equilibrium.
How cryptocurrencies will respond
Altcoins may find new ways to combat this threat by:
Using more obscure algorithms for which there are few miners. This is at best a band-aid solution. Fewer miners for your algorithm means it’s difficult to grow your hashing power. If your network grows, then the algorithm will no longer be obscure.
New projects may be to stake their security on the blockchains of larger networks. e.g. ERC-20. Pushing for new consensus algorithms that are more resilient to 51% attacks e.g. proof of stake. POS isn’t perfect though and has challenges of its own.
Big is beautiful
How much larger is the rental market going to grow? It’s not inconceivable to witness a 100x increase, so how many coins are really safe?
Coins with high market caps and low cost of attack are particularly fallible. Given that this is true, will the market respond accordingly by discounting insecure coins? Conversely, will the market place a premium on cryptocurrencies with mammoth mining networks?
To quote a Hacker News comment:
“Rent-a-miner attacks seem like another amusing example of when the emergence of a market can break a system. Satoshi foresaw people trying to mount a 51% attack by buying a ton of machines, and so he went to great lengths to ensure this was unlikely using mining. I don’t think Satoshi foresaw the liquid AWS-like market for instant hashing power. The ability to mount a limited-time 51% attack makes the attack literally 1000x easier than a buy-machine 51% attack.”
Oil slick image via Shutterstock
This news post is collected from CoinDesk
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WePower In Its Own Words: Six Questions (Blockchain Report Excerpt)
New Post has been published on https://cryptnus.com/2018/10/wepower-in-its-own-words-six-questions-blockchain-report-excerpt/
WePower In Its Own Words: Six Questions (Blockchain Report Excerpt)
CleanTechnica
Published on October 14th, 2018 |
by Michael Barnard
October 14th, 2018 by Michael Barnard
Along with our regular daily clean tech news coverage, CleanTechnica also produces in-depth reports on various aspects of clean energy and clean transport. One of the emerging technologies we cover that isn’t directly a clean tech innovation is blockchain, which promises to be a catalyst for innovation in the green economy in the very near future. Blockchain is probably most widely known to the public as “having something to do with cryptocurrency and Bitcoin, right?,” which is partially correct, but the technology itself has a wide range of applications, some of which will be crucial in the fields of distributed renewable energy, grid management and energy storage, and smart contracts, among others.
The full report Blockchain – An Innovation Enabler for Clean Technology, which was published in July, is a deep dive into blockchain and its potential, and we will be posting more excerpts from the report over the coming weeks. (Read the last installment here.)
WePower is building a blockchain platform to allow renewable projects to get funding.
WePower started in Europe but has recently expanded to Australia. Its premise is that you can raise capital using its platform by pre-selling commitments to produce electricity. Currently, its model is commitments of 1 KWH and is represented by the WPR token. This allows a common hub similar similar to Kickstarter or GoFundMe but with a clear revenue model and focus on renewable projects. It’s easier to find investors if the investors are on a single platform. WePower’s first client was a 1 gigawatt Spanish solar farm, secured in July of 2017.
The following questions were answered by Nick Martyniuk, co-founder and CEO of WePower, and have been lightly edited.
What is the governance model you have put in place to ensure your offering is not misused or abused?
We are building on a public blockchain, so we are using the governance model built in it. Our WPR token is a ERC-20 token and runs on the Ethereum blockchain. For our internal energy token we are testing a few different solutions to find the best balance between the needed functionality and scalability for each of our roadmap stages.
What is the incentive model you have put in place to balance value across the set of blockchain participants?
Our main goal is to create an ecosystem where green energy producers, energy traders and buyers, as well as crypto community could all work together and benefit from each other. Our WPR token (the ICO token) carries multiple values: a) it provides access to the energy donation pool, which is filled by energy donations from project developers on-boarded on the platform; b) it is a tradable crypto token with high trading volumes and good liquidity into the crypto market; c) it also gives priority access to the energy actions ran on the WePower platform. With such system energy producers can contribute to the platform that helps them raise funds in a more efficient way, energy buyers and traders can get into the auctions with the best conditions and crypto traders can use the WPR as an asset that carries liquidity into crypto as well as energy trade markets. The WPR token works hand in hand with the internal Energy token where both benefit each other.
How are you hedging against significant reductions in cryptocurrency value as seen in Q1 2018?
The WPR token is linked to the energy contribution pool, which holds liquidity into the energy markets as well. This can be seen as a hedging option simply because if a holder is not fine with the crypto market volatility of performance, there is also an option to sell the tokens as energy. Generally, when it comes to value reductions in the market, I would not see it this way. The total market capitalization of the industry is back to the early December numbers. Yes, there was a large gain but then there was a correction all happening in just a few month period. I would say it is a highly volatile market. This is why we have designed our token to have liquidity into this market for the risk-tolerant and also the energy market for the more conservative individuals.
Is proof-of-stake an end-state consensus approach or an intermediary step like proof-of-work, and if so, what consensus approaches do you foresee dominating?
None and all at the same time. I believe that the consensus model is an important part of token and value transfer design. There are some projects that for example work on decentralized file storage solutions that have a very natural fit with the proof-of-stake models. Other projects that focus more on the value store solutions probably will benefit more from the already proven proof-of-work model with all its pros and cons. I believe that the domination of certain approaches over others will not be driven by the approaches themselves but more by the popularity of products that are built on them. For example, if decentralized storage will become the dominant blockchain business application, then probably the proof-of-stake will become the dominant consensus mechanism.
What key metrics or key performance indicators do you consider critical for your offering and business model?
The key metrics and focus areas change as we grow and discover new better ways of realizing our goals. For now we are focused on the total generation capacity of the green energy development projects as well as the share of the financing we can facilitate. We also see geographical coverage of the key areas we operate in and infrastructure partnership count and depth as very important indicators to our business. As we move forward, we also will increasingly be focusing on the trading volumes of WePower Energy tokens within our platform.
As an early mover, what one piece of advice would you give to people consider entering the cleantech blockchain space in the coming year?
I think one of the key aspects of our success so far has been driven by the fact that we have spent a tremendous amount of time structuring our experience and knowledge of the energy industry and financial markets; also, really thinking through how the token mechanics of the WPR token should be designed in order to align and create value for all parties in the ecosystem. So my advice would be to really focus on building a really well developed concept that would take the opportunities and limitations of blockchain and token economics in mind. To me, this is the key factor that separates potential projects from a big mass of little thought through ideas.
Stay tuned for more excerpts from Blockchain – An Innovation Enabler for Clean Technology, or view the summary and request the full report at https://products.cleantechnica.com/reports/
Support CleanTechnica’s work by becoming a Member, Supporter, or Ambassador.
Or you can buy a cool t-shirt, cup, baby outfit, bag, or hoodie or make a one-time donation on PayPal.
Tags: blockchain, WePower
About the Author
Michael Barnard is a C-level technology and strategy consultant who works with startups, existing businesses and investors to identify opportunities for significant bottom line growth in the transforming low-carbon economy. He is editor of The Future is Electric, a Medium publication. He regularly publishes analyses of low-carbon technology and policy in sites including Newsweek, Slate, Forbes, Huffington Post, Quartz, CleanTechnica and RenewEconomy, with some of his work included in textbooks. Third-party articles on his analyses and interviews have been published in dozens of news sites globally and have reached #1 on Reddit Science. Much of his work originates on Quora.com, where Mike has been a Top Writer annually since 2012. He’s available for consulting engagements, speaking engagements and Board positions.
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51% Attacks for Rent : The Trouble with a Liquid Mining Market
Anthony Xie is the founder of HodlBot, a tool that helps investors diversify their portfolios and automate their trading strategies.
–––––––––
In order to remain decentralized, cryptocurrencies using a proof-of-work system must not allow a single party to control the majority of total hashing power.
But as the global pool of hashing power grows more liquid, cryptocurrencies need to pass another important test. They must be able to resist an attack from the total rentable global hashing power for their specific algorithm. Otherwise, arbitrageurs may find it financially attractive to rent hashing power in order to perform 51% attacks.
There are a few things preventing this from happening:
Algorithm-specific miners — Many rigs are optimized for a certain hashing algorithm, and switching to another, e.g. SHA-256 → X11, is unfeasible.
Illiquid mining market — Most of the global hash power is illiquid and not rentable. Therefore, a large upfront investment is required to build significant hashing power. The upfront cost for an attack is almost always not worth it.
Opportunity cost — Cryptocurrencies are usually designed to heavily favor good actors by providing them with greater rewards for acting in the benefit of the entire network. Any attack must outweigh the risk of failure including loss of mining rewards, loss of reputation and damage to the network. Long-term miners do not want to destroy their future earning potential by successfully attacking a network, shaking market confidence, and causing the price to fall.
But times are changing. The mining market is becoming more liquid.
Why is the liquid mining market growing?
Computer storage was once an illiquid market, now it is an extremely liquid online commodity. The same thing is happening to hash power.
There are two major forces driving this.
The long-run price increase of cryptocurrency will incentivize miners to invest in hashing power until any incremental gain is equal to the cost. In other words, if prices continue to go up, so will global hashing power.
The total percentage of hashing power for rent will increase because buyers and sellers both benefit from the ability to rent and lend respectively. Separation of concern leads to higher degrees of specialization and increased operational efficiency. This is why hardware manufacturers sell their mining rigs and don’t mine themselves. If renters focus all of their time on finding opportunities with the highest amount of ROI, they are likely going to be the best at extracting value per unit of hashing power.Conversely, lenders can de-risk their business because their rental income is implicitly diversified across each entire hashing algorithm. In this world, lenders can simply focus on rental relations, asset utilization, and upkeep.
Rent-a-miner attacks are already possible
Crypto51 calculates how much it would cost to rent enough hashing power to match the given network hashing power for an hour. NiceHash does not have enough hashing power for most larger coins, so this figure is sometimes theoretically above 100 percent.
Hash rates are from Mine the Coin, coin prices are from CoinMarketCap, and rental pricing is from NiceHash.
A few caveats:
The quoted attack costs do not include the money you earn in the form of block rewards, so in many cases, the costs will actually be substantially lower.
Crypto51 is quoting the spot price for what is available on NiceHash. In real life, the more you rent, the more expensive it will be because of supply and demand.
Coins vulnerable to rent-a-miner attacks
Ranked by Market Cap
ETP is the #91 ranked coin on CMC. You can rent up to 21x the network’s hashing power. The cost of an attack is only $162 per hour. ETP/BTC and ETP/USD pairs are available on Bitfinex.
Vulnerable coins assuming 2x the rental capacity
Currently, these coins are out of reach since the total rental capacity available on NiceHash is not enough to fully match the network’s hashing power.
But let’s imagine the likely circumstance that NiceHash is able to 2x their total rental capacity. Now coins like ETC (rank 18), BCN (rank 40), are easily in reach.
Vulnerable coins assuming 5x the rental capacity
A 5x increase in rental capacity puts coin like DASH (rank 15) and BTG (rank 28) in danger.
So what if 51% attacks are possible? How do attackers make money?
Fortunately, it’s impossible to ever create a transaction for a wallet that you do not own the private key to. But, controlling the majority hashing power means you can execute a double spend attack by temporarily reverting certain transactions on the ledger.
The mechanics of a double spend attack
When miners find a new block, they are supposed to broadcast this to all other miners so that they can verify it, and add a new block to the blockchain. However, a corrupt miner can create their own blockchain in stealth.
To execute a double-spend, the attacker will spend his or her coins on the truthful chain. But they will leave out these transactions on the stealth chain.
If the corrupted miner can build a longer chain faster than all the other miners on the network, they can broadcast the stealth chain to the rest of the network.
Because the protocol adheres to the longest chain, the newly broadcasted corrupt chain will become the de facto, truthful blockchain. The transaction history for the attacker’s previous spend will be erased.
Note that just because a miner controls 51% of hashing power, does not mean they will always have a longer chain. In long-run they will probably have a longer chain. To guarantee this in the short-run, an attacker would likely want to control closer to 80% of the network power.
Where to spend the coins? Exchanges are likely the target
For a double-spend to pay-off, you need to find a way to actually extract value from the spent coins. If you can’t spend the coins in the first place, there’s no point.
The most likely place an attacker would spend their coins on is an exchange because they are the single biggest buyers of various cryptocurrencies.
Here’s what the attack would look like:
Choose a target network that looks profitable
Accumulate a significant amount of coins on the target network
Rent NiceHash hashing power and silently grow the stealth chain
Trade these coins on an exchange for another currency e.g. BTC
Withdraw BTC to another wallet.
Broadcast the stealth chain to the network
Get the initial coins back
Repeat with a different exchange.
How exchanges will likely respond
As you can probably imagine, exchanges do not enjoy being bamboozled. If this kind of behavior becomes too costly for them, they will likely respond by increasing security surrounding withdrawal periods, deposit periods, and account verification.
Waiting longer for withdrawal will make it more costly for attackers, as they must then maintain the majority hashing power for longer. But this also draws the ire of legitimate traders and exchange users who already complain about the inordinate time it takes to get their cryptocurrencies out.
Another way exchanges may respond is by carefully screening coins that are so easily compromised. However, delisting coins also mean a reduction in trading volume and revenue. I hope this happens, because altcoins that are solely used for speculation, are in dire need of an existential threat.
Ultimately, we’ll likely see a combination of both. The harder it becomes to successfully get away with a double-spend attack, the less money an attacker can justify spending. In the long-run, the balance of these two forces will converge on some market equilibrium.
How cryptocurrencies will respond
Altcoins may find new ways to combat this threat by:
Using more obscure algorithms for which there are few miners. This is at best a band-aid solution. Fewer miners for your algorithm means it’s difficult to grow your hashing power. If your network grows, then the algorithm will no longer be obscure.
New projects may be to stake their security on the blockchains of larger networks. e.g. ERC-20. Pushing for new consensus algorithms that are more resilient to 51% attacks e.g. proof of stake. POS isn’t perfect though and has challenges of its own.
Big is beautiful
How much larger is the rental market going to grow? It’s not inconceivable to witness a 100x increase, so how many coins are really safe?
Coins with high market caps and low cost of attack are particularly fallible. Given that this is true, will the market respond accordingly by discounting insecure coins? Conversely, will the market place a premium on cryptocurrencies with mammoth mining networks?
To quote a Hacker News comment:
“Rent-a-miner attacks seem like another amusing example of when the emergence of a market can break a system. Satoshi foresaw people trying to mount a 51% attack by buying a ton of machines, and so he went to great lengths to ensure this was unlikely using mining. I don’t think Satoshi foresaw the liquid AWS-like market for instant hashing power. The ability to mount a limited-time 51% attack makes the attack literally 1000x easier than a buy-machine 51% attack.”
Oil slick image via Shutterstock
This news post is collected from CoinDesk
Recommended Read
Editor choice
BinBot Pro – Safest & Highly Recommended Binary Options Auto Trading Robot
Do you live in a country like USA or Canada where using automated trading systems is a problem? If you do then now we ...
9.5
Demo & Pro Version Try It Now
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The post 51% Attacks for Rent : The Trouble with a Liquid Mining Market appeared first on Click 2 Watch.
More Details Here → https://click2.watch/51-attacks-for-rent%e2%80%8a-the-trouble-with-a-liquid-mining-market-7
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Text
51% Attacks for Rent : The Trouble with a Liquid Mining Market
Anthony Xie is the founder of HodlBot, a tool that helps investors diversify their portfolios and automate their trading strategies.
–––––––––
In order to remain decentralized, cryptocurrencies using a proof-of-work system must not allow a single party to control the majority of total hashing power.
But as the global pool of hashing power grows more liquid, cryptocurrencies need to pass another important test. They must be able to resist an attack from the total rentable global hashing power for their specific algorithm. Otherwise, arbitrageurs may find it financially attractive to rent hashing power in order to perform 51% attacks.
There are a few things preventing this from happening:
Algorithm-specific miners — Many rigs are optimized for a certain hashing algorithm, and switching to another, e.g. SHA-256 → X11, is unfeasible.
Illiquid mining market — Most of the global hash power is illiquid and not rentable. Therefore, a large upfront investment is required to build significant hashing power. The upfront cost for an attack is almost always not worth it.
Opportunity cost — Cryptocurrencies are usually designed to heavily favor good actors by providing them with greater rewards for acting in the benefit of the entire network. Any attack must outweigh the risk of failure including loss of mining rewards, loss of reputation and damage to the network. Long-term miners do not want to destroy their future earning potential by successfully attacking a network, shaking market confidence, and causing the price to fall.
But times are changing. The mining market is becoming more liquid.
Why is the liquid mining market growing?
Computer storage was once an illiquid market, now it is an extremely liquid online commodity. The same thing is happening to hash power.
There are two major forces driving this.
The long-run price increase of cryptocurrency will incentivize miners to invest in hashing power until any incremental gain is equal to the cost. In other words, if prices continue to go up, so will global hashing power.
The total percentage of hashing power for rent will increase because buyers and sellers both benefit from the ability to rent and lend respectively. Separation of concern leads to higher degrees of specialization and increased operational efficiency. This is why hardware manufacturers sell their mining rigs and don’t mine themselves. If renters focus all of their time on finding opportunities with the highest amount of ROI, they are likely going to be the best at extracting value per unit of hashing power.Conversely, lenders can de-risk their business because their rental income is implicitly diversified across each entire hashing algorithm. In this world, lenders can simply focus on rental relations, asset utilization, and upkeep.
Rent-a-miner attacks are already possible
Crypto51 calculates how much it would cost to rent enough hashing power to match the given network hashing power for an hour. NiceHash does not have enough hashing power for most larger coins, so this figure is sometimes theoretically above 100 percent.
Hash rates are from Mine the Coin, coin prices are from CoinMarketCap, and rental pricing is from NiceHash.
A few caveats:
The quoted attack costs do not include the money you earn in the form of block rewards, so in many cases, the costs will actually be substantially lower.
Crypto51 is quoting the spot price for what is available on NiceHash. In real life, the more you rent, the more expensive it will be because of supply and demand.
Coins vulnerable to rent-a-miner attacks
Ranked by Market Cap
ETP is the #91 ranked coin on CMC. You can rent up to 21x the network’s hashing power. The cost of an attack is only $162 per hour. ETP/BTC and ETP/USD pairs are available on Bitfinex.
Vulnerable coins assuming 2x the rental capacity
Currently, these coins are out of reach since the total rental capacity available on NiceHash is not enough to fully match the network’s hashing power.
But let’s imagine the likely circumstance that NiceHash is able to 2x their total rental capacity. Now coins like ETC (rank 18), BCN (rank 40), are easily in reach.
Vulnerable coins assuming 5x the rental capacity
A 5x increase in rental capacity puts coin like DASH (rank 15) and BTG (rank 28) in danger.
So what if 51% attacks are possible? How do attackers make money?
Fortunately, it’s impossible to ever create a transaction for a wallet that you do not own the private key to. But, controlling the majority hashing power means you can execute a double spend attack by temporarily reverting certain transactions on the ledger.
The mechanics of a double spend attack
When miners find a new block, they are supposed to broadcast this to all other miners so that they can verify it, and add a new block to the blockchain. However, a corrupt miner can create their own blockchain in stealth.
To execute a double-spend, the attacker will spend his or her coins on the truthful chain. But they will leave out these transactions on the stealth chain.
If the corrupted miner can build a longer chain faster than all the other miners on the network, they can broadcast the stealth chain to the rest of the network.
Because the protocol adheres to the longest chain, the newly broadcasted corrupt chain will become the de facto, truthful blockchain. The transaction history for the attacker’s previous spend will be erased.
Note that just because a miner controls 51% of hashing power, does not mean they will always have a longer chain. In long-run they will probably have a longer chain. To guarantee this in the short-run, an attacker would likely want to control closer to 80% of the network power.
Where to spend the coins? Exchanges are likely the target
For a double-spend to pay-off, you need to find a way to actually extract value from the spent coins. If you can’t spend the coins in the first place, there’s no point.
The most likely place an attacker would spend their coins on is an exchange because they are the single biggest buyers of various cryptocurrencies.
Here’s what the attack would look like:
Choose a target network that looks profitable
Accumulate a significant amount of coins on the target network
Rent NiceHash hashing power and silently grow the stealth chain
Trade these coins on an exchange for another currency e.g. BTC
Withdraw BTC to another wallet.
Broadcast the stealth chain to the network
Get the initial coins back
Repeat with a different exchange.
How exchanges will likely respond
As you can probably imagine, exchanges do not enjoy being bamboozled. If this kind of behavior becomes too costly for them, they will likely respond by increasing security surrounding withdrawal periods, deposit periods, and account verification.
Waiting longer for withdrawal will make it more costly for attackers, as they must then maintain the majority hashing power for longer. But this also draws the ire of legitimate traders and exchange users who already complain about the inordinate time it takes to get their cryptocurrencies out.
Another way exchanges may respond is by carefully screening coins that are so easily compromised. However, delisting coins also mean a reduction in trading volume and revenue. I hope this happens, because altcoins that are solely used for speculation, are in dire need of an existential threat.
Ultimately, we’ll likely see a combination of both. The harder it becomes to successfully get away with a double-spend attack, the less money an attacker can justify spending. In the long-run, the balance of these two forces will converge on some market equilibrium.
How cryptocurrencies will respond
Altcoins may find new ways to combat this threat by:
Using more obscure algorithms for which there are few miners. This is at best a band-aid solution. Fewer miners for your algorithm means it’s difficult to grow your hashing power. If your network grows, then the algorithm will no longer be obscure.
New projects may be to stake their security on the blockchains of larger networks. e.g. ERC-20. Pushing for new consensus algorithms that are more resilient to 51% attacks e.g. proof of stake. POS isn’t perfect though and has challenges of its own.
Big is beautiful
How much larger is the rental market going to grow? It’s not inconceivable to witness a 100x increase, so how many coins are really safe?
Coins with high market caps and low cost of attack are particularly fallible. Given that this is true, will the market respond accordingly by discounting insecure coins? Conversely, will the market place a premium on cryptocurrencies with mammoth mining networks?
To quote a Hacker News comment:
“Rent-a-miner attacks seem like another amusing example of when the emergence of a market can break a system. Satoshi foresaw people trying to mount a 51% attack by buying a ton of machines, and so he went to great lengths to ensure this was unlikely using mining. I don’t think Satoshi foresaw the liquid AWS-like market for instant hashing power. The ability to mount a limited-time 51% attack makes the attack literally 1000x easier than a buy-machine 51% attack.”
Oil slick image via Shutterstock
This news post is collected from CoinDesk
Recommended Read
Editor choice
BinBot Pro – Safest & Highly Recommended Binary Options Auto Trading Robot
Do you live in a country like USA or Canada where using automated trading systems is a problem? If you do then now we ...
9.5
Demo & Pro Version Try It Now
Read full review
The post 51% Attacks for Rent : The Trouble with a Liquid Mining Market appeared first on Click 2 Watch.
More Details Here → https://click2.watch/51-attacks-for-rent%e2%80%8a-the-trouble-with-a-liquid-mining-market-6
0 notes
Text
51% Attacks for Rent : The Trouble with a Liquid Mining Market
Anthony Xie is the founder of HodlBot, a tool that helps investors diversify their portfolios and automate their trading strategies.
–––––––––
In order to remain decentralized, cryptocurrencies using a proof-of-work system must not allow a single party to control the majority of total hashing power.
But as the global pool of hashing power grows more liquid, cryptocurrencies need to pass another important test. They must be able to resist an attack from the total rentable global hashing power for their specific algorithm. Otherwise, arbitrageurs may find it financially attractive to rent hashing power in order to perform 51% attacks.
There are a few things preventing this from happening:
Algorithm-specific miners — Many rigs are optimized for a certain hashing algorithm, and switching to another, e.g. SHA-256 → X11, is unfeasible.
Illiquid mining market — Most of the global hash power is illiquid and not rentable. Therefore, a large upfront investment is required to build significant hashing power. The upfront cost for an attack is almost always not worth it.
Opportunity cost — Cryptocurrencies are usually designed to heavily favor good actors by providing them with greater rewards for acting in the benefit of the entire network. Any attack must outweigh the risk of failure including loss of mining rewards, loss of reputation and damage to the network. Long-term miners do not want to destroy their future earning potential by successfully attacking a network, shaking market confidence, and causing the price to fall.
But times are changing. The mining market is becoming more liquid.
Why is the liquid mining market growing?
Computer storage was once an illiquid market, now it is an extremely liquid online commodity. The same thing is happening to hash power.
There are two major forces driving this.
The long-run price increase of cryptocurrency will incentivize miners to invest in hashing power until any incremental gain is equal to the cost. In other words, if prices continue to go up, so will global hashing power.
The total percentage of hashing power for rent will increase because buyers and sellers both benefit from the ability to rent and lend respectively. Separation of concern leads to higher degrees of specialization and increased operational efficiency. This is why hardware manufacturers sell their mining rigs and don’t mine themselves. If renters focus all of their time on finding opportunities with the highest amount of ROI, they are likely going to be the best at extracting value per unit of hashing power.Conversely, lenders can de-risk their business because their rental income is implicitly diversified across each entire hashing algorithm. In this world, lenders can simply focus on rental relations, asset utilization, and upkeep.
Rent-a-miner attacks are already possible
Crypto51 calculates how much it would cost to rent enough hashing power to match the given network hashing power for an hour. NiceHash does not have enough hashing power for most larger coins, so this figure is sometimes theoretically above 100 percent.
Hash rates are from Mine the Coin, coin prices are from CoinMarketCap, and rental pricing is from NiceHash.
A few caveats:
The quoted attack costs do not include the money you earn in the form of block rewards, so in many cases, the costs will actually be substantially lower.
Crypto51 is quoting the spot price for what is available on NiceHash. In real life, the more you rent, the more expensive it will be because of supply and demand.
Coins vulnerable to rent-a-miner attacks
Ranked by Market Cap
ETP is the #91 ranked coin on CMC. You can rent up to 21x the network’s hashing power. The cost of an attack is only $162 per hour. ETP/BTC and ETP/USD pairs are available on Bitfinex.
Vulnerable coins assuming 2x the rental capacity
Currently, these coins are out of reach since the total rental capacity available on NiceHash is not enough to fully match the network’s hashing power.
But let’s imagine the likely circumstance that NiceHash is able to 2x their total rental capacity. Now coins like ETC (rank 18), BCN (rank 40), are easily in reach.
Vulnerable coins assuming 5x the rental capacity
A 5x increase in rental capacity puts coin like DASH (rank 15) and BTG (rank 28) in danger.
So what if 51% attacks are possible? How do attackers make money?
Fortunately, it’s impossible to ever create a transaction for a wallet that you do not own the private key to. But, controlling the majority hashing power means you can execute a double spend attack by temporarily reverting certain transactions on the ledger.
The mechanics of a double spend attack
When miners find a new block, they are supposed to broadcast this to all other miners so that they can verify it, and add a new block to the blockchain. However, a corrupt miner can create their own blockchain in stealth.
To execute a double-spend, the attacker will spend his or her coins on the truthful chain. But they will leave out these transactions on the stealth chain.
If the corrupted miner can build a longer chain faster than all the other miners on the network, they can broadcast the stealth chain to the rest of the network.
Because the protocol adheres to the longest chain, the newly broadcasted corrupt chain will become the de facto, truthful blockchain. The transaction history for the attacker’s previous spend will be erased.
Note that just because a miner controls 51% of hashing power, does not mean they will always have a longer chain. In long-run they will probably have a longer chain. To guarantee this in the short-run, an attacker would likely want to control closer to 80% of the network power.
Where to spend the coins? Exchanges are likely the target
For a double-spend to pay-off, you need to find a way to actually extract value from the spent coins. If you can’t spend the coins in the first place, there’s no point.
The most likely place an attacker would spend their coins on is an exchange because they are the single biggest buyers of various cryptocurrencies.
Here’s what the attack would look like:
Choose a target network that looks profitable
Accumulate a significant amount of coins on the target network
Rent NiceHash hashing power and silently grow the stealth chain
Trade these coins on an exchange for another currency e.g. BTC
Withdraw BTC to another wallet.
Broadcast the stealth chain to the network
Get the initial coins back
Repeat with a different exchange.
How exchanges will likely respond
As you can probably imagine, exchanges do not enjoy being bamboozled. If this kind of behavior becomes too costly for them, they will likely respond by increasing security surrounding withdrawal periods, deposit periods, and account verification.
Waiting longer for withdrawal will make it more costly for attackers, as they must then maintain the majority hashing power for longer. But this also draws the ire of legitimate traders and exchange users who already complain about the inordinate time it takes to get their cryptocurrencies out.
Another way exchanges may respond is by carefully screening coins that are so easily compromised. However, delisting coins also mean a reduction in trading volume and revenue. I hope this happens, because altcoins that are solely used for speculation, are in dire need of an existential threat.
Ultimately, we’ll likely see a combination of both. The harder it becomes to successfully get away with a double-spend attack, the less money an attacker can justify spending. In the long-run, the balance of these two forces will converge on some market equilibrium.
How cryptocurrencies will respond
Altcoins may find new ways to combat this threat by:
Using more obscure algorithms for which there are few miners. This is at best a band-aid solution. Fewer miners for your algorithm means it’s difficult to grow your hashing power. If your network grows, then the algorithm will no longer be obscure.
New projects may be to stake their security on the blockchains of larger networks. e.g. ERC-20. Pushing for new consensus algorithms that are more resilient to 51% attacks e.g. proof of stake. POS isn’t perfect though and has challenges of its own.
Big is beautiful
How much larger is the rental market going to grow? It’s not inconceivable to witness a 100x increase, so how many coins are really safe?
Coins with high market caps and low cost of attack are particularly fallible. Given that this is true, will the market respond accordingly by discounting insecure coins? Conversely, will the market place a premium on cryptocurrencies with mammoth mining networks?
To quote a Hacker News comment:
“Rent-a-miner attacks seem like another amusing example of when the emergence of a market can break a system. Satoshi foresaw people trying to mount a 51% attack by buying a ton of machines, and so he went to great lengths to ensure this was unlikely using mining. I don’t think Satoshi foresaw the liquid AWS-like market for instant hashing power. The ability to mount a limited-time 51% attack makes the attack literally 1000x easier than a buy-machine 51% attack.”
Oil slick image via Shutterstock
This news post is collected from CoinDesk
Recommended Read
Editor choice
BinBot Pro – Safest & Highly Recommended Binary Options Auto Trading Robot
Do you live in a country like USA or Canada where using automated trading systems is a problem? If you do then now we ...
9.5
Demo & Pro Version Try It Now
Read full review
The post 51% Attacks for Rent : The Trouble with a Liquid Mining Market appeared first on Click 2 Watch.
More Details Here → https://click2.watch/51-attacks-for-rent%e2%80%8a-the-trouble-with-a-liquid-mining-market-5
0 notes
Text
51% Attacks for Rent : The Trouble with a Liquid Mining Market
Anthony Xie is the founder of HodlBot, a tool that helps investors diversify their portfolios and automate their trading strategies.
–––––––––
In order to remain decentralized, cryptocurrencies using a proof-of-work system must not allow a single party to control the majority of total hashing power.
But as the global pool of hashing power grows more liquid, cryptocurrencies need to pass another important test. They must be able to resist an attack from the total rentable global hashing power for their specific algorithm. Otherwise, arbitrageurs may find it financially attractive to rent hashing power in order to perform 51% attacks.
There are a few things preventing this from happening:
Algorithm-specific miners — Many rigs are optimized for a certain hashing algorithm, and switching to another, e.g. SHA-256 → X11, is unfeasible.
Illiquid mining market — Most of the global hash power is illiquid and not rentable. Therefore, a large upfront investment is required to build significant hashing power. The upfront cost for an attack is almost always not worth it.
Opportunity cost — Cryptocurrencies are usually designed to heavily favor good actors by providing them with greater rewards for acting in the benefit of the entire network. Any attack must outweigh the risk of failure including loss of mining rewards, loss of reputation and damage to the network. Long-term miners do not want to destroy their future earning potential by successfully attacking a network, shaking market confidence, and causing the price to fall.
But times are changing. The mining market is becoming more liquid.
Why is the liquid mining market growing?
Computer storage was once an illiquid market, now it is an extremely liquid online commodity. The same thing is happening to hash power.
There are two major forces driving this.
The long-run price increase of cryptocurrency will incentivize miners to invest in hashing power until any incremental gain is equal to the cost. In other words, if prices continue to go up, so will global hashing power.
The total percentage of hashing power for rent will increase because buyers and sellers both benefit from the ability to rent and lend respectively. Separation of concern leads to higher degrees of specialization and increased operational efficiency. This is why hardware manufacturers sell their mining rigs and don’t mine themselves. If renters focus all of their time on finding opportunities with the highest amount of ROI, they are likely going to be the best at extracting value per unit of hashing power.Conversely, lenders can de-risk their business because their rental income is implicitly diversified across each entire hashing algorithm. In this world, lenders can simply focus on rental relations, asset utilization, and upkeep.
Rent-a-miner attacks are already possible
Crypto51 calculates how much it would cost to rent enough hashing power to match the given network hashing power for an hour. NiceHash does not have enough hashing power for most larger coins, so this figure is sometimes theoretically above 100 percent.
Hash rates are from Mine the Coin, coin prices are from CoinMarketCap, and rental pricing is from NiceHash.
A few caveats:
The quoted attack costs do not include the money you earn in the form of block rewards, so in many cases, the costs will actually be substantially lower.
Crypto51 is quoting the spot price for what is available on NiceHash. In real life, the more you rent, the more expensive it will be because of supply and demand.
Coins vulnerable to rent-a-miner attacks
Ranked by Market Cap
ETP is the #91 ranked coin on CMC. You can rent up to 21x the network’s hashing power. The cost of an attack is only $162 per hour. ETP/BTC and ETP/USD pairs are available on Bitfinex.
Vulnerable coins assuming 2x the rental capacity
Currently, these coins are out of reach since the total rental capacity available on NiceHash is not enough to fully match the network’s hashing power.
But let’s imagine the likely circumstance that NiceHash is able to 2x their total rental capacity. Now coins like ETC (rank 18), BCN (rank 40), are easily in reach.
Vulnerable coins assuming 5x the rental capacity
A 5x increase in rental capacity puts coin like DASH (rank 15) and BTG (rank 28) in danger.
So what if 51% attacks are possible? How do attackers make money?
Fortunately, it’s impossible to ever create a transaction for a wallet that you do not own the private key to. But, controlling the majority hashing power means you can execute a double spend attack by temporarily reverting certain transactions on the ledger.
The mechanics of a double spend attack
When miners find a new block, they are supposed to broadcast this to all other miners so that they can verify it, and add a new block to the blockchain. However, a corrupt miner can create their own blockchain in stealth.
To execute a double-spend, the attacker will spend his or her coins on the truthful chain. But they will leave out these transactions on the stealth chain.
If the corrupted miner can build a longer chain faster than all the other miners on the network, they can broadcast the stealth chain to the rest of the network.
Because the protocol adheres to the longest chain, the newly broadcasted corrupt chain will become the de facto, truthful blockchain. The transaction history for the attacker’s previous spend will be erased.
Note that just because a miner controls 51% of hashing power, does not mean they will always have a longer chain. In long-run they will probably have a longer chain. To guarantee this in the short-run, an attacker would likely want to control closer to 80% of the network power.
Where to spend the coins? Exchanges are likely the target
For a double-spend to pay-off, you need to find a way to actually extract value from the spent coins. If you can’t spend the coins in the first place, there’s no point.
The most likely place an attacker would spend their coins on is an exchange because they are the single biggest buyers of various cryptocurrencies.
Here’s what the attack would look like:
Choose a target network that looks profitable
Accumulate a significant amount of coins on the target network
Rent NiceHash hashing power and silently grow the stealth chain
Trade these coins on an exchange for another currency e.g. BTC
Withdraw BTC to another wallet.
Broadcast the stealth chain to the network
Get the initial coins back
Repeat with a different exchange.
How exchanges will likely respond
As you can probably imagine, exchanges do not enjoy being bamboozled. If this kind of behavior becomes too costly for them, they will likely respond by increasing security surrounding withdrawal periods, deposit periods, and account verification.
Waiting longer for withdrawal will make it more costly for attackers, as they must then maintain the majority hashing power for longer. But this also draws the ire of legitimate traders and exchange users who already complain about the inordinate time it takes to get their cryptocurrencies out.
Another way exchanges may respond is by carefully screening coins that are so easily compromised. However, delisting coins also mean a reduction in trading volume and revenue. I hope this happens, because altcoins that are solely used for speculation, are in dire need of an existential threat.
Ultimately, we’ll likely see a combination of both. The harder it becomes to successfully get away with a double-spend attack, the less money an attacker can justify spending. In the long-run, the balance of these two forces will converge on some market equilibrium.
How cryptocurrencies will respond
Altcoins may find new ways to combat this threat by:
Using more obscure algorithms for which there are few miners. This is at best a band-aid solution. Fewer miners for your algorithm means it’s difficult to grow your hashing power. If your network grows, then the algorithm will no longer be obscure.
New projects may be to stake their security on the blockchains of larger networks. e.g. ERC-20. Pushing for new consensus algorithms that are more resilient to 51% attacks e.g. proof of stake. POS isn’t perfect though and has challenges of its own.
Big is beautiful
How much larger is the rental market going to grow? It’s not inconceivable to witness a 100x increase, so how many coins are really safe?
Coins with high market caps and low cost of attack are particularly fallible. Given that this is true, will the market respond accordingly by discounting insecure coins? Conversely, will the market place a premium on cryptocurrencies with mammoth mining networks?
To quote a Hacker News comment:
“Rent-a-miner attacks seem like another amusing example of when the emergence of a market can break a system. Satoshi foresaw people trying to mount a 51% attack by buying a ton of machines, and so he went to great lengths to ensure this was unlikely using mining. I don’t think Satoshi foresaw the liquid AWS-like market for instant hashing power. The ability to mount a limited-time 51% attack makes the attack literally 1000x easier than a buy-machine 51% attack.”
Oil slick image via Shutterstock
This news post is collected from CoinDesk
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The post 51% Attacks for Rent : The Trouble with a Liquid Mining Market appeared first on Click 2 Watch.
More Details Here → https://click2.watch/51-attacks-for-rent%e2%80%8a-the-trouble-with-a-liquid-mining-market-4
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Text
51% Attacks for Rent : The Trouble with a Liquid Mining Market
Anthony Xie is the founder of HodlBot, a tool that helps investors diversify their portfolios and automate their trading strategies.
–––––––––
In order to remain decentralized, cryptocurrencies using a proof-of-work system must not allow a single party to control the majority of total hashing power.
But as the global pool of hashing power grows more liquid, cryptocurrencies need to pass another important test. They must be able to resist an attack from the total rentable global hashing power for their specific algorithm. Otherwise, arbitrageurs may find it financially attractive to rent hashing power in order to perform 51% attacks.
There are a few things preventing this from happening:
Algorithm-specific miners — Many rigs are optimized for a certain hashing algorithm, and switching to another, e.g. SHA-256 → X11, is unfeasible.
Illiquid mining market — Most of the global hash power is illiquid and not rentable. Therefore, a large upfront investment is required to build significant hashing power. The upfront cost for an attack is almost always not worth it.
Opportunity cost — Cryptocurrencies are usually designed to heavily favor good actors by providing them with greater rewards for acting in the benefit of the entire network. Any attack must outweigh the risk of failure including loss of mining rewards, loss of reputation and damage to the network. Long-term miners do not want to destroy their future earning potential by successfully attacking a network, shaking market confidence, and causing the price to fall.
But times are changing. The mining market is becoming more liquid.
Why is the liquid mining market growing?
Computer storage was once an illiquid market, now it is an extremely liquid online commodity. The same thing is happening to hash power.
There are two major forces driving this.
The long-run price increase of cryptocurrency will incentivize miners to invest in hashing power until any incremental gain is equal to the cost. In other words, if prices continue to go up, so will global hashing power.
The total percentage of hashing power for rent will increase because buyers and sellers both benefit from the ability to rent and lend respectively. Separation of concern leads to higher degrees of specialization and increased operational efficiency. This is why hardware manufacturers sell their mining rigs and don’t mine themselves. If renters focus all of their time on finding opportunities with the highest amount of ROI, they are likely going to be the best at extracting value per unit of hashing power.Conversely, lenders can de-risk their business because their rental income is implicitly diversified across each entire hashing algorithm. In this world, lenders can simply focus on rental relations, asset utilization, and upkeep.
Rent-a-miner attacks are already possible
Crypto51 calculates how much it would cost to rent enough hashing power to match the given network hashing power for an hour. NiceHash does not have enough hashing power for most larger coins, so this figure is sometimes theoretically above 100 percent.
Hash rates are from Mine the Coin, coin prices are from CoinMarketCap, and rental pricing is from NiceHash.
A few caveats:
The quoted attack costs do not include the money you earn in the form of block rewards, so in many cases, the costs will actually be substantially lower.
Crypto51 is quoting the spot price for what is available on NiceHash. In real life, the more you rent, the more expensive it will be because of supply and demand.
Coins vulnerable to rent-a-miner attacks
Ranked by Market Cap
ETP is the #91 ranked coin on CMC. You can rent up to 21x the network’s hashing power. The cost of an attack is only $162 per hour. ETP/BTC and ETP/USD pairs are available on Bitfinex.
Vulnerable coins assuming 2x the rental capacity
Currently, these coins are out of reach since the total rental capacity available on NiceHash is not enough to fully match the network’s hashing power.
But let’s imagine the likely circumstance that NiceHash is able to 2x their total rental capacity. Now coins like ETC (rank 18), BCN (rank 40), are easily in reach.
Vulnerable coins assuming 5x the rental capacity
A 5x increase in rental capacity puts coin like DASH (rank 15) and BTG (rank 28) in danger.
So what if 51% attacks are possible? How do attackers make money?
Fortunately, it’s impossible to ever create a transaction for a wallet that you do not own the private key to. But, controlling the majority hashing power means you can execute a double spend attack by temporarily reverting certain transactions on the ledger.
The mechanics of a double spend attack
When miners find a new block, they are supposed to broadcast this to all other miners so that they can verify it, and add a new block to the blockchain. However, a corrupt miner can create their own blockchain in stealth.
To execute a double-spend, the attacker will spend his or her coins on the truthful chain. But they will leave out these transactions on the stealth chain.
If the corrupted miner can build a longer chain faster than all the other miners on the network, they can broadcast the stealth chain to the rest of the network.
Because the protocol adheres to the longest chain, the newly broadcasted corrupt chain will become the de facto, truthful blockchain. The transaction history for the attacker’s previous spend will be erased.
Note that just because a miner controls 51% of hashing power, does not mean they will always have a longer chain. In long-run they will probably have a longer chain. To guarantee this in the short-run, an attacker would likely want to control closer to 80% of the network power.
Where to spend the coins? Exchanges are likely the target
For a double-spend to pay-off, you need to find a way to actually extract value from the spent coins. If you can’t spend the coins in the first place, there’s no point.
The most likely place an attacker would spend their coins on is an exchange because they are the single biggest buyers of various cryptocurrencies.
Here’s what the attack would look like:
Choose a target network that looks profitable
Accumulate a significant amount of coins on the target network
Rent NiceHash hashing power and silently grow the stealth chain
Trade these coins on an exchange for another currency e.g. BTC
Withdraw BTC to another wallet.
Broadcast the stealth chain to the network
Get the initial coins back
Repeat with a different exchange.
How exchanges will likely respond
As you can probably imagine, exchanges do not enjoy being bamboozled. If this kind of behavior becomes too costly for them, they will likely respond by increasing security surrounding withdrawal periods, deposit periods, and account verification.
Waiting longer for withdrawal will make it more costly for attackers, as they must then maintain the majority hashing power for longer. But this also draws the ire of legitimate traders and exchange users who already complain about the inordinate time it takes to get their cryptocurrencies out.
Another way exchanges may respond is by carefully screening coins that are so easily compromised. However, delisting coins also mean a reduction in trading volume and revenue. I hope this happens, because altcoins that are solely used for speculation, are in dire need of an existential threat.
Ultimately, we’ll likely see a combination of both. The harder it becomes to successfully get away with a double-spend attack, the less money an attacker can justify spending. In the long-run, the balance of these two forces will converge on some market equilibrium.
How cryptocurrencies will respond
Altcoins may find new ways to combat this threat by:
Using more obscure algorithms for which there are few miners. This is at best a band-aid solution. Fewer miners for your algorithm means it’s difficult to grow your hashing power. If your network grows, then the algorithm will no longer be obscure.
New projects may be to stake their security on the blockchains of larger networks. e.g. ERC-20. Pushing for new consensus algorithms that are more resilient to 51% attacks e.g. proof of stake. POS isn’t perfect though and has challenges of its own.
Big is beautiful
How much larger is the rental market going to grow? It’s not inconceivable to witness a 100x increase, so how many coins are really safe?
Coins with high market caps and low cost of attack are particularly fallible. Given that this is true, will the market respond accordingly by discounting insecure coins? Conversely, will the market place a premium on cryptocurrencies with mammoth mining networks?
To quote a Hacker News comment:
“Rent-a-miner attacks seem like another amusing example of when the emergence of a market can break a system. Satoshi foresaw people trying to mount a 51% attack by buying a ton of machines, and so he went to great lengths to ensure this was unlikely using mining. I don’t think Satoshi foresaw the liquid AWS-like market for instant hashing power. The ability to mount a limited-time 51% attack makes the attack literally 1000x easier than a buy-machine 51% attack.”
Oil slick image via Shutterstock
This news post is collected from CoinDesk
Recommended Read
Editor choice
BinBot Pro – Safest & Highly Recommended Binary Options Auto Trading Robot
Do you live in a country like USA or Canada where using automated trading systems is a problem? If you do then now we ...
9.5
Demo & Pro Version Try It Now
Read full review
The post 51% Attacks for Rent : The Trouble with a Liquid Mining Market appeared first on Click 2 Watch.
More Details Here → https://click2.watch/51-attacks-for-rent%e2%80%8a-the-trouble-with-a-liquid-mining-market-3
0 notes
Text
51% Attacks for Rent : The Trouble with a Liquid Mining Market
Anthony Xie is the founder of HodlBot, a tool that helps investors diversify their portfolios and automate their trading strategies.
–––––––––
In order to remain decentralized, cryptocurrencies using a proof-of-work system must not allow a single party to control the majority of total hashing power.
But as the global pool of hashing power grows more liquid, cryptocurrencies need to pass another important test. They must be able to resist an attack from the total rentable global hashing power for their specific algorithm. Otherwise, arbitrageurs may find it financially attractive to rent hashing power in order to perform 51% attacks.
There are a few things preventing this from happening:
Algorithm-specific miners — Many rigs are optimized for a certain hashing algorithm, and switching to another, e.g. SHA-256 → X11, is unfeasible.
Illiquid mining market — Most of the global hash power is illiquid and not rentable. Therefore, a large upfront investment is required to build significant hashing power. The upfront cost for an attack is almost always not worth it.
Opportunity cost — Cryptocurrencies are usually designed to heavily favor good actors by providing them with greater rewards for acting in the benefit of the entire network. Any attack must outweigh the risk of failure including loss of mining rewards, loss of reputation and damage to the network. Long-term miners do not want to destroy their future earning potential by successfully attacking a network, shaking market confidence, and causing the price to fall.
But times are changing. The mining market is becoming more liquid.
Why is the liquid mining market growing?
Computer storage was once an illiquid market, now it is an extremely liquid online commodity. The same thing is happening to hash power.
There are two major forces driving this.
The long-run price increase of cryptocurrency will incentivize miners to invest in hashing power until any incremental gain is equal to the cost. In other words, if prices continue to go up, so will global hashing power.
The total percentage of hashing power for rent will increase because buyers and sellers both benefit from the ability to rent and lend respectively. Separation of concern leads to higher degrees of specialization and increased operational efficiency. This is why hardware manufacturers sell their mining rigs and don’t mine themselves. If renters focus all of their time on finding opportunities with the highest amount of ROI, they are likely going to be the best at extracting value per unit of hashing power.Conversely, lenders can de-risk their business because their rental income is implicitly diversified across each entire hashing algorithm. In this world, lenders can simply focus on rental relations, asset utilization, and upkeep.
Rent-a-miner attacks are already possible
Crypto51 calculates how much it would cost to rent enough hashing power to match the given network hashing power for an hour. NiceHash does not have enough hashing power for most larger coins, so this figure is sometimes theoretically above 100 percent.
Hash rates are from Mine the Coin, coin prices are from CoinMarketCap, and rental pricing is from NiceHash.
A few caveats:
The quoted attack costs do not include the money you earn in the form of block rewards, so in many cases, the costs will actually be substantially lower.
Crypto51 is quoting the spot price for what is available on NiceHash. In real life, the more you rent, the more expensive it will be because of supply and demand.
Coins vulnerable to rent-a-miner attacks
Ranked by Market Cap
ETP is the #91 ranked coin on CMC. You can rent up to 21x the network’s hashing power. The cost of an attack is only $162 per hour. ETP/BTC and ETP/USD pairs are available on Bitfinex.
Vulnerable coins assuming 2x the rental capacity
Currently, these coins are out of reach since the total rental capacity available on NiceHash is not enough to fully match the network’s hashing power.
But let’s imagine the likely circumstance that NiceHash is able to 2x their total rental capacity. Now coins like ETC (rank 18), BCN (rank 40), are easily in reach.
Vulnerable coins assuming 5x the rental capacity
A 5x increase in rental capacity puts coin like DASH (rank 15) and BTG (rank 28) in danger.
So what if 51% attacks are possible? How do attackers make money?
Fortunately, it’s impossible to ever create a transaction for a wallet that you do not own the private key to. But, controlling the majority hashing power means you can execute a double spend attack by temporarily reverting certain transactions on the ledger.
The mechanics of a double spend attack
When miners find a new block, they are supposed to broadcast this to all other miners so that they can verify it, and add a new block to the blockchain. However, a corrupt miner can create their own blockchain in stealth.
To execute a double-spend, the attacker will spend his or her coins on the truthful chain. But they will leave out these transactions on the stealth chain.
If the corrupted miner can build a longer chain faster than all the other miners on the network, they can broadcast the stealth chain to the rest of the network.
Because the protocol adheres to the longest chain, the newly broadcasted corrupt chain will become the de facto, truthful blockchain. The transaction history for the attacker’s previous spend will be erased.
Note that just because a miner controls 51% of hashing power, does not mean they will always have a longer chain. In long-run they will probably have a longer chain. To guarantee this in the short-run, an attacker would likely want to control closer to 80% of the network power.
Where to spend the coins? Exchanges are likely the target
For a double-spend to pay-off, you need to find a way to actually extract value from the spent coins. If you can’t spend the coins in the first place, there’s no point.
The most likely place an attacker would spend their coins on is an exchange because they are the single biggest buyers of various cryptocurrencies.
Here’s what the attack would look like:
Choose a target network that looks profitable
Accumulate a significant amount of coins on the target network
Rent NiceHash hashing power and silently grow the stealth chain
Trade these coins on an exchange for another currency e.g. BTC
Withdraw BTC to another wallet.
Broadcast the stealth chain to the network
Get the initial coins back
Repeat with a different exchange.
How exchanges will likely respond
As you can probably imagine, exchanges do not enjoy being bamboozled. If this kind of behavior becomes too costly for them, they will likely respond by increasing security surrounding withdrawal periods, deposit periods, and account verification.
Waiting longer for withdrawal will make it more costly for attackers, as they must then maintain the majority hashing power for longer. But this also draws the ire of legitimate traders and exchange users who already complain about the inordinate time it takes to get their cryptocurrencies out.
Another way exchanges may respond is by carefully screening coins that are so easily compromised. However, delisting coins also mean a reduction in trading volume and revenue. I hope this happens, because altcoins that are solely used for speculation, are in dire need of an existential threat.
Ultimately, we’ll likely see a combination of both. The harder it becomes to successfully get away with a double-spend attack, the less money an attacker can justify spending. In the long-run, the balance of these two forces will converge on some market equilibrium.
How cryptocurrencies will respond
Altcoins may find new ways to combat this threat by:
Using more obscure algorithms for which there are few miners. This is at best a band-aid solution. Fewer miners for your algorithm means it’s difficult to grow your hashing power. If your network grows, then the algorithm will no longer be obscure.
New projects may be to stake their security on the blockchains of larger networks. e.g. ERC-20. Pushing for new consensus algorithms that are more resilient to 51% attacks e.g. proof of stake. POS isn’t perfect though and has challenges of its own.
Big is beautiful
How much larger is the rental market going to grow? It’s not inconceivable to witness a 100x increase, so how many coins are really safe?
Coins with high market caps and low cost of attack are particularly fallible. Given that this is true, will the market respond accordingly by discounting insecure coins? Conversely, will the market place a premium on cryptocurrencies with mammoth mining networks?
To quote a Hacker News comment:
“Rent-a-miner attacks seem like another amusing example of when the emergence of a market can break a system. Satoshi foresaw people trying to mount a 51% attack by buying a ton of machines, and so he went to great lengths to ensure this was unlikely using mining. I don’t think Satoshi foresaw the liquid AWS-like market for instant hashing power. The ability to mount a limited-time 51% attack makes the attack literally 1000x easier than a buy-machine 51% attack.”
Oil slick image via Shutterstock
This news post is collected from CoinDesk
Recommended Read
Editor choice
BinBot Pro – Safest & Highly Recommended Binary Options Auto Trading Robot
Do you live in a country like USA or Canada where using automated trading systems is a problem? If you do then now we ...
9.5
Demo & Pro Version Try It Now
Read full review
The post 51% Attacks for Rent : The Trouble with a Liquid Mining Market appeared first on Click 2 Watch.
More Details Here → https://click2.watch/51-attacks-for-rent%e2%80%8a-the-trouble-with-a-liquid-mining-market-2
0 notes
Text
51% Attacks for Rent : The Trouble with a Liquid Mining Market
Anthony Xie is the founder of HodlBot, a tool that helps investors diversify their portfolios and automate their trading strategies.
–––––––––
In order to remain decentralized, cryptocurrencies using a proof-of-work system must not allow a single party to control the majority of total hashing power.
But as the global pool of hashing power grows more liquid, cryptocurrencies need to pass another important test. They must be able to resist an attack from the total rentable global hashing power for their specific algorithm. Otherwise, arbitrageurs may find it financially attractive to rent hashing power in order to perform 51% attacks.
There are a few things preventing this from happening:
Algorithm-specific miners — Many rigs are optimized for a certain hashing algorithm, and switching to another, e.g. SHA-256 → X11, is unfeasible.
Illiquid mining market — Most of the global hash power is illiquid and not rentable. Therefore, a large upfront investment is required to build significant hashing power. The upfront cost for an attack is almost always not worth it.
Opportunity cost — Cryptocurrencies are usually designed to heavily favor good actors by providing them with greater rewards for acting in the benefit of the entire network. Any attack must outweigh the risk of failure including loss of mining rewards, loss of reputation and damage to the network. Long-term miners do not want to destroy their future earning potential by successfully attacking a network, shaking market confidence, and causing the price to fall.
But times are changing. The mining market is becoming more liquid.
Why is the liquid mining market growing?
Computer storage was once an illiquid market, now it is an extremely liquid online commodity. The same thing is happening to hash power.
There are two major forces driving this.
The long-run price increase of cryptocurrency will incentivize miners to invest in hashing power until any incremental gain is equal to the cost. In other words, if prices continue to go up, so will global hashing power.
The total percentage of hashing power for rent will increase because buyers and sellers both benefit from the ability to rent and lend respectively. Separation of concern leads to higher degrees of specialization and increased operational efficiency. This is why hardware manufacturers sell their mining rigs and don’t mine themselves. If renters focus all of their time on finding opportunities with the highest amount of ROI, they are likely going to be the best at extracting value per unit of hashing power.Conversely, lenders can de-risk their business because their rental income is implicitly diversified across each entire hashing algorithm. In this world, lenders can simply focus on rental relations, asset utilization, and upkeep.
Rent-a-miner attacks are already possible
Crypto51 calculates how much it would cost to rent enough hashing power to match the given network hashing power for an hour. NiceHash does not have enough hashing power for most larger coins, so this figure is sometimes theoretically above 100 percent.
Hash rates are from Mine the Coin, coin prices are from CoinMarketCap, and rental pricing is from NiceHash.
A few caveats:
The quoted attack costs do not include the money you earn in the form of block rewards, so in many cases, the costs will actually be substantially lower.
Crypto51 is quoting the spot price for what is available on NiceHash. In real life, the more you rent, the more expensive it will be because of supply and demand.
Coins vulnerable to rent-a-miner attacks
Ranked by Market Cap
ETP is the #91 ranked coin on CMC. You can rent up to 21x the network’s hashing power. The cost of an attack is only $162 per hour. ETP/BTC and ETP/USD pairs are available on Bitfinex.
Vulnerable coins assuming 2x the rental capacity
Currently, these coins are out of reach since the total rental capacity available on NiceHash is not enough to fully match the network’s hashing power.
But let’s imagine the likely circumstance that NiceHash is able to 2x their total rental capacity. Now coins like ETC (rank 18), BCN (rank 40), are easily in reach.
Vulnerable coins assuming 5x the rental capacity
A 5x increase in rental capacity puts coin like DASH (rank 15) and BTG (rank 28) in danger.
So what if 51% attacks are possible? How do attackers make money?
Fortunately, it’s impossible to ever create a transaction for a wallet that you do not own the private key to. But, controlling the majority hashing power means you can execute a double spend attack by temporarily reverting certain transactions on the ledger.
The mechanics of a double spend attack
When miners find a new block, they are supposed to broadcast this to all other miners so that they can verify it, and add a new block to the blockchain. However, a corrupt miner can create their own blockchain in stealth.
To execute a double-spend, the attacker will spend his or her coins on the truthful chain. But they will leave out these transactions on the stealth chain.
If the corrupted miner can build a longer chain faster than all the other miners on the network, they can broadcast the stealth chain to the rest of the network.
Because the protocol adheres to the longest chain, the newly broadcasted corrupt chain will become the de facto, truthful blockchain. The transaction history for the attacker’s previous spend will be erased.
Note that just because a miner controls 51% of hashing power, does not mean they will always have a longer chain. In long-run they will probably have a longer chain. To guarantee this in the short-run, an attacker would likely want to control closer to 80% of the network power.
Where to spend the coins? Exchanges are likely the target
For a double-spend to pay-off, you need to find a way to actually extract value from the spent coins. If you can’t spend the coins in the first place, there’s no point.
The most likely place an attacker would spend their coins on is an exchange because they are the single biggest buyers of various cryptocurrencies.
Here’s what the attack would look like:
Choose a target network that looks profitable
Accumulate a significant amount of coins on the target network
Rent NiceHash hashing power and silently grow the stealth chain
Trade these coins on an exchange for another currency e.g. BTC
Withdraw BTC to another wallet.
Broadcast the stealth chain to the network
Get the initial coins back
Repeat with a different exchange.
How exchanges will likely respond
As you can probably imagine, exchanges do not enjoy being bamboozled. If this kind of behavior becomes too costly for them, they will likely respond by increasing security surrounding withdrawal periods, deposit periods, and account verification.
Waiting longer for withdrawal will make it more costly for attackers, as they must then maintain the majority hashing power for longer. But this also draws the ire of legitimate traders and exchange users who already complain about the inordinate time it takes to get their cryptocurrencies out.
Another way exchanges may respond is by carefully screening coins that are so easily compromised. However, delisting coins also mean a reduction in trading volume and revenue. I hope this happens, because altcoins that are solely used for speculation, are in dire need of an existential threat.
Ultimately, we’ll likely see a combination of both. The harder it becomes to successfully get away with a double-spend attack, the less money an attacker can justify spending. In the long-run, the balance of these two forces will converge on some market equilibrium.
How cryptocurrencies will respond
Altcoins may find new ways to combat this threat by:
Using more obscure algorithms for which there are few miners. This is at best a band-aid solution. Fewer miners for your algorithm means it’s difficult to grow your hashing power. If your network grows, then the algorithm will no longer be obscure.
New projects may be to stake their security on the blockchains of larger networks. e.g. ERC-20. Pushing for new consensus algorithms that are more resilient to 51% attacks e.g. proof of stake. POS isn’t perfect though and has challenges of its own.
Big is beautiful
How much larger is the rental market going to grow? It’s not inconceivable to witness a 100x increase, so how many coins are really safe?
Coins with high market caps and low cost of attack are particularly fallible. Given that this is true, will the market respond accordingly by discounting insecure coins? Conversely, will the market place a premium on cryptocurrencies with mammoth mining networks?
To quote a Hacker News comment:
“Rent-a-miner attacks seem like another amusing example of when the emergence of a market can break a system. Satoshi foresaw people trying to mount a 51% attack by buying a ton of machines, and so he went to great lengths to ensure this was unlikely using mining. I don’t think Satoshi foresaw the liquid AWS-like market for instant hashing power. The ability to mount a limited-time 51% attack makes the attack literally 1000x easier than a buy-machine 51% attack.”
Oil slick image via Shutterstock
This news post is collected from CoinDesk
Recommended Read
Editor choice
BinBot Pro – Safest & Highly Recommended Binary Options Auto Trading Robot
Do you live in a country like USA or Canada where using automated trading systems is a problem? If you do then now we ...
9.5
Demo & Pro Version Try It Now
Read full review
The post 51% Attacks for Rent : The Trouble with a Liquid Mining Market appeared first on Click 2 Watch.
More Details Here → https://click2.watch/51-attacks-for-rent%e2%80%8a-the-trouble-with-a-liquid-mining-market
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