How can services that use the bitcoin blockchain help secure it?

There are many projects being worked on that involve using the bitcoin blockchain for its public verifiability and immutability. A few examples would be Counterparty, Medici, Factom, etc. But each use case for the bitcoin blockchain also adds an incentive to attack it.

For example, say some sort of a stock chain/ledger is secured by the bitcoin blockchain, and the total value of all stocks secured is more than 1 trillion USD. Then, even though the total market cap of the native currency to the ledger is only ~3.5 billion USD, there may be an incentive to reverse/modify the bitcoin blockchain in order to modify the stock market's chain of transactions. Miners do the necessary work to secure these types of services, but their fee does not correlate with the real-world value of the data they are securing.

Obviously, services that use the block chain like this can't be prevented, as it is a completely open peer-to-peer system.

How can external services that add incentives to attack the network also add incentives for miners to secure it?

Notes:

Merged mining with Namecoin, a decentralized service that uses the bitcoin blockchain for security, adds to the security of the bitcoin blockchain by awarding Namecoins. Centralized services, like a stock exchange, do have an incentive to keep the chain secure, because if the bitcoin block chain is attacked, then very few people will use their service. And they may be able to add to the mining incentive in a way that encourages people to try their service, similar to a marketing fee.

One upside is that just the existence of such services may bring utility to and encourage confidence in bitcoin, raising bitcoin's price and, hence, raising the reward for mining.

I am looking for descriptions of technical solutions for a standard process by which services can do their part to keep the blockchain secure, while maintaining the decentralization of the network.

morsecoder

Posted 2015-04-01T04:45:41.747

Reputation: 12 624

Answers

The Bitcoin network is fairly simple in terms of its core security, so technically there are three things these companies/projects can do to contribute:

Run and/or encourage development of the bitcoind codebase (including code reviews)
Run and/or encourage a higher number of solo miners
Run and/or encourage a higher number of full nodes

Point 3 is especially important and a no-brainer for any project that depends on the blockchain. Running your own full node(s) is a must, so that you don't have to trust a third party node. The tragedy of the commons does not apply to this point.

Each full node adds a layer of security to the network by verifying all transactions and blocks, reducing the chance for foul play, even from "malicious" miners.

ktorn

Posted 2015-04-01T04:45:41.747

Reputation: 1 205

Interesting viewpoint. For (1), I think this is a good idea, as it finds security fixes. For (2), the services themselves running miners means that other miners' profit margins will decrease and miners will drop of. There needs to be more incentives to mine to support more miners, adding more miners without more incentives just displaces other miners. This is really the heart of the question, how can other services that add incentives to attack the network also add incentives to secure it. For (3), Having more full nodes just increases the number of onlookers in a 51% attack. – morsecoder – 2015-04-07T16:12:27.643

1@StephenM347, full nodes do alot more than that. They form the backbone of the Bitcoin network and filter every transaction, verifying each one against the Bitcoin consensus rules. In a sense they protect the network even from malicious miners. They may not prevent a 51% attack but by enforcing all the rules they even limit the damage in such an event. – ktorn – 2015-04-10T03:22:52.950

I know what full nodes are and why they are critical. In this specific attack we are talking about defending against (51% attack), though, they do not help. – morsecoder – 2015-04-10T03:46:04.223

You never mentioned 51% attack in your question. – Jannes – 2015-04-14T09:28:35.703

So how can they be involved in securing the chain?

They cannot. Everyone wants to earn funds, not to help others to earn. https://en.wikipedia.org/wiki/Tragedy_of_the_commons

amaclin

Posted 2015-04-01T04:45:41.747

Reputation: 5 763

1That doesn't mean they, 'cannot', technically they can. They may try to get away with not doing it, but that's a risk for them too, not just for bitcoin. So there is an incentive to help secure the bitcoin blockchain. – Jannes – 2015-04-01T10:38:44.110

Technically they can send you to the Moon. But they never will do it. Trust me. – amaclin – 2015-04-01T11:16:30.423

It's their own "1 trillion USD" market that is at stake, so they damn well better make sure they provide some security (through Bitcoin or other means). If they don't then the people that put in that "1 trillion USD" are morons that shouldn't be investing in such an altcoin at all and deserve to lose it all. (ah yeah, I see the flaw in my reasoning there... people would blindly invest... sigh). Anyway, the original question was "how can", so your answer is not correct. – Jannes – 2015-04-01T11:42:50.910

@amaclin, While you bring up a good point with the tragedy of the commons, I think we can get a bit more creative ;-) – morsecoder – 2015-04-01T11:44:43.027