Quote from: MineForeman.com on August 18, 2014, 07:45:30 PM

Quote from: FandangledGizmo on August 18, 2014, 05:17:31 PM

Quote from: bytemaster on August 16, 2014, 04:46:57 AM

Step 4) Don't submit winning hashes, reducing the REVENUE of competitors by 3%

When mining you don't know if you have the winning hash until after you submit it (sometimes not even then).

Neil

Hi Neil, thanks for the input. This is the latest response I've got from BM on the forum https://bitsharestalk.org/index.php?topic=7003.msg94085#msg94085

Quote from: bytemaster on August 18, 2014, 08:17:59 PM

You know if your hash might produce a block.

You are not "submitting billions of hashes to the pool" you are only submitting hashes below a certain threshold. Simply don't return any hash below the current block chain difficulty to the pool.

You still end up submitting a lot of "work shares" but no "work shares" that might qualify as a winning hash.

It is impossible for the pools to efficiently distribute the "search process" while keeping the target of the search a "secret". The miner needs to know they found the "secret" before they decided to broadcast it to the pool. Because the miner is the one who knows the hash first and must DECIDE to broadcast then the miner is in control.

Effectively everyone who mines "work shares" but never shares anything that could also claim a block is earning income from the pool without actually helping to secure the network or increasing the Bitcoin difficulty.

An attacker who can mine more efficiently than everyone else can perform this attack on the network.

Suppose the average profitability of miners is 5% and someone is able to mine with 10% margins. They can attack the pool by doing "negative mining". With "negative mining" they will "earn 5%" while their competitors are forced to eat losses or stop mining all together.

With positive mining you end up increasing the bitcoin difficulty and pushing out competition. With negative mining you end up decreasing the bitcoin difficulty while earning the same profit.

Bitcoin difficulty is a function of the profitability of mining. When mining in a pool it is a function of the pool payout. If the attacker can reduce the payout of all public pools, then it will reduce the profitability of all small miners to the point where they stop mining and the network difficulty drops.

The end result is that all pools must go private or have very stringent verification processes for people to join the pool.