Quote from: Piper67 on December 27, 2013, 04:35:58 PM

Quote from: bryant.coleman on December 27, 2013, 03:47:03 PM

Quote from: neutralist on December 27, 2013, 07:59:42 AM

This is a flaw of a decentralized currency powered by democracy. The following is a nice video on explaining the implications of this effect:

http://www.youtube.com/watch?v=s7tWHJfhiyo

In essence, those who are worrying about a single pool getting to 51% (i.e. "first past the post") will go to the second largest pool, instead to the smaller ones. Essentially only two pools will be left.

Same with the two-party system in America.

If only two pools are left, then definitely one of them will cross the 51% mark and the other one will be decimated.

The analogy is false. Firstly, there is no cultural component that favours membership in any one pool over any other (as there is with the political party system). Secondly, as opposed to the political party system, when it comes to Bitcoin there is a much more limited number of variables at play. Thirdly, switching pools is trivial, and since it is the miners themselves who stand to lose the most by destroying the network, they have the greatest incentive to switch, as opposed to the political party system where, in principle at least, achieving 100% power is desirable.

I would add, simply, that this is an explanation for two parties emerging in a system of winner-take-all elections. It doesn't apply to mining because it's not winner take all. With smaller pools, and individual miner simply gets bigger shares of less-frequent blocks.