September 22, 2014

More on Useful Proof of Work

Since posting that thought balloon on proof of work and its unfortunate social costs, I've been informed in private conversation that there are two considerations that I missed:

1. if the cost of the proof of work is brought down to zero by means of some re-use of the hashing, whatever that is, then we bring into question the security of the network. The network is secured literally because it costs to vote. If the vote is free, in some sense or other, then those with a free vote can seek to dominate.

2. the proof of work suffers a security weakness in that it must be verifiable at much lower cost than doing the work, as otherwise an attacker can provide junk proofs.

On the first, it is somewhat clear that this is the case in grand principle, but examining the edge cases reveals some exceptions. Take for example a 1 kilowatt hashing unit that could be used to simply provide building heat. If I use the waste output to heat my house, this is considered to result in a free vote. But this is not an adequate attack at the 51% level; my house isn't that big.

In apparent paradox, PoW as heating leads to more security because if I can heat my house and vote for the price, getting both for the price of one, it is still an effect that is capped at very low shares of the overall hashset. So, the result is more distribution in hashing and mining, rather than less, and this is a defence against today's more worrying trend being the concentration of mining in few people's hands.

More distribution directly attacks one of the current flaws of the current system. So how about this: instead of selling the latest hardware in Megawatt sizes, sell some smaller units in kilowatt sizes. I'd happily run a kilowatt grade heater instead of a bar heater, especially if it had a little panel on it showing its progress on voting, and it occasionally purred as it earned some proportion of heating costs back in shares in a hashpool.

On the second: cheaply verifiable problems are rare but they are not non-existent. Specifically, verification of some public key signatures is one. So why can't the PoW be refactored to make public key signatures?

For example, big SSL servers often outsource the hard crypto to accelerators and so forth; if the hard iron being built now could also be used for that factor, two things become possible. One is that the research effort being expended could be shared across the two requirements. Right now, all this ASIC building is resulting in some usefully fast petahashing but that has only limited spin-off potential beyond bitcoin mining.

The second plausibility, when a bitcoin mining rig passes its 6 months viable window, and becomes just more mining excrement, it can then be re-purposed to some other task. I would happily pay $1000 for something that hypothetically sped up my signature signing or verification by a factor of a 1000. The fact that this device would have fetched 100 times as much 6 months back and scored me 25 BTC every week isn't a problem, but an opportunity: for both myself and the old owner.

How would this be done in practice? Well, I want to load up my key in the device and run sigs through it. So we would need a design where each block's PoW were dependent on the full operation of a private/public key and hash signing process. E.g., take the last block, use the entropy within it to feed a known DRGB, create a deterministic private key pair, and load that up. Keep feeding the PoW machine new signature inputs ...

But, these ruminations aside, it appears that the socially unbeneficial criticism of PoW is a bent arrow. The purpose of PoW is much more subtle than might seem from first appearances. I think it is important to find a more socially aligned method, but it seems equally likely that the existing PoW of petahashing will be very hard to dislodge.

Posted by iang at September 22, 2014 04:09 PM | TrackBack

Another day, another bitcoin scam. This time the culprit is an outfit called Butterfly Labs that charged would-be bitcoin miners $149 to $29,899 for mining rigs "specialized computer equipment set up to harvest bitcoin" but then delivered worthless machines late or not at all.

The details of the caper are set out in an announcement from the Federal Trade Commission in which the agency says it obtained a court order to shut down the Butterfly gang, who apparently fleeced nearly 20,000 customers, and spent much of their money on guns and saunas.

As the FTC explains, Butterfly Labs promised to deliver special 'Bitforce' computers for mining bitcoins. Unfortunately for the customers, "the passage of time rendered some of their machines as effective as a 'room heater' " (perhaps giving new meaning to the term 'boiler room').

Posted by: Not this sort of heater... at October 1, 2014 12:42 PM

Heat Your House with Someone Else's Computers

Data centers have no use for all of the waste heat that they generate, but there are plenty of situations in which waste heat isn't wasted at all: say, inside your house, in the middle of winter, especially if you live somewhere cold. The obvious solution here is to just live in a data center and bask in its warmth, or slightly less ridiculously, put a very small data center in your home or office that generates a useful amount of heat on demand.

In 2011, Microsoft Research published a paper [PDF] suggesting that it might make a lot of sense (i.e. be commercially viable) to use cloud computing servers installed in homes and offices to provide inexpensive, efficient heat and hot water.

The consumer wins because they get free heat, and the cloud computing company wins because they don't have to build and maintain huge data centers. This "data furnace" concept seems like the proverbial win-win, and several different companies have started trying to make it happen.

Posted by: Heat Your House with Someone Else's Computers at November 17, 2014 11:59 AM

It seems like the notion of heating ones house with residual heat from Bitcoin mining has been around for a long term, see slashdot

from 2011.12.21 and also FTAlphaville from 2014.09.05

which calls it "the latest fad." Vitalik Buterin also spotted the security argument in 2012.02.28

"If miners figure out that they can dual-use their mining electricity by making their computers heat their homes during the winter, that would be a very positive change since it would decentralize mining to something every home or business does rather than a task done by centralized, specialized supercomputers and it would increase the network's hash power and thus security but it would not ultimately reduce the mining cost."

This comment all on the back of FtAlpahville's piece revealing that now 21Inc (formerly 21e6) are doing exactly that:

"Its core business plan it turns out will be embedding ASIC bitcoin mining chips into everyday devices like USB battery chargers, routers, printers, gaming consoles, set-top boxes and -- the piece de resistance -- chipsets to be used by internet of things devices.

21 Inc wants to put your toaster to work, forging our cryptocurrency future."

Here: although the link will not last long.

Posted by: Iang (link to Vitalik's piece) at May 1, 2015 08:12 AM
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