Nano
$5.08 -3.50%
NANO · 1w

There is a major vulnerability in mineable cryptocurrencies. Why Im moving all of my BTC into Nano

The issue boils down to this: Most miners mine for centrally controlled pools, where they receive a stable payout in exchange for a small fee paid to the pool operator. Miners are economically rational and mine for the most profitable pool they can. This means that pools are in competition for providing the best payout and lowest fees. This system is incredibly vulnerable to a 51% attack. Pool operators, not miners, determine which transactions are included in each block. So in order to successfully perform a 51% attack, a pool just needs 51% of miners to mine for them. Since miners are constantly looking for the most profitable pool, a bad actor would simply have to offer the lowest pool fees to monopolize the hashrate. Miners operate on razor thin margins, so a zero fee pool or one with a small negative fee could very quickly take control of the network. Remember, the way bitcoin is designed, miners in a pool have no inherent incentive to protect the network. Their job is to look for the most profitable way to mine. So how much money would it cost to perform this attack? Well, most mining pools currently have fees of around 1-2%. If you were to offer a massively subsidized pool with a 2% incentive (-2% fee) you would quickly take over a large percentage of the hashrate. At 6.25btc every 10 minutes, this 2% incentive would cost the pool operator a little less than $1M per day to maintain network control and double spending ability. Thats $1M per day to destroy a $1T asset. Does this seem too easy to be true? Its not. A pool actually did this in 2014, and that was without anyone trying to make it happen. GHash.IO took over 51% of the hashrate, but thankfully they took precautionary steps to redistribute that hashrate. From [wikipedia](https://en.m.wikipedia.org/wiki/Ghash.io): *In July 2014, the GHash.IO mining pool briefly exceeded the 51% threshold, which forced the bitcoin community to discuss the possibility of finding a common solution to this threat......
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