How prevalent are coin attacks with botique altcoins?

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I have deployed several altcoins using various PoW algorithms on my LAN for my buddies and I to mine/learn from. We ultimately want to go the distance of deploying an altcoin to the world, writing the white paper, doing the leg work of maintaining it and getting it listed on an exchange.

I have a fear that since our incredibly slim budget has limited us to a very small amount of computational power with which to develop these altcoins (at least initially) that if/when we go the distance of releasing a fully functioning altcoin we will be swiftly crashed by someone with a cabinet full of ASICs and a love of trolling.

I guess my question(s) are how common is this and what is the least expensive but effective way of preventing it. Please don't destroy my dreams, I understand making a coin that ever ends up worth anything is highly unlikely, I am asking for technical advice relative to the issue at hand, not to be told that having a coin of value with a small development team and little capital investment is impossible.

Thanks!

  • Schwifty

apt-getschwifty

Posted 2018-06-13T16:32:55.227

Reputation: 153

Answers

0

If you'd like to be absolutely sure that some malicious miner won't attack your coin, you could hard-code in a set of 'approved' miners (ie, your miners). Doing so greatly undermines some of the core concepts of a cryptocurrency though (open, permissionless system, etc), so that probably isn't a good option by most measures.

So then, what is the best option?

Many coins choose to employ an 'ASIC-resistant' algorithm, with the goal of preventing ASIC-wielding miners controlling their network. Instead, the idea is that GPU (and perhaps CPU) miners will be the ones securing the network, and many people argue that the the distribution and economies of scale involved in GPU mining are better-suited to create a decentralized network.

However, in practice we've seen that perhaps no algorithm is ASIC-proof. In fact, an algorithm that is extremely difficult to build an ASIC for may just concentrate mining power even further, as very few people will have the skills and resources to create an ASIC for such an algorithm. Such people could thus easily control the majority of hashpower on a network, once they have built some ASIC miners.

For a more in-depth look at this issue, check out this article written by David Vorick (a SiaCoin dev).

It is worth noting though: nobody is going to invest the resources to invent an ASIC that attacks a very small coin. There would be no economic incentive to do so, this problem only becomes apparent once the network has grown and is storing a worthwhile amount of value. (Keep in mind though, if you choose an algorithm also employed by a larger chain, then such ASICs might already exist).

Trolling aside, it is also worth noting that it is not necessarily in a miner's economic interest to attack your coin. If a miner owns some ASICs, and can make money by mining with them, then there is perhaps a substantial opportunity cost involved in instead using the ASICs to attack your chain. This incentive helps keep miners 'honest', in that they will benefit more by using their hashpower to secure a chain, rather than attack a chain.

chytrik

Posted 2018-06-13T16:32:55.227

Reputation: 10 276

Thank you for your response. I am going to read that article you referenced now. I definitely don't want to do anything that undermines the core ideology of cryptrocurrencies, nor do I want to employ an algorithm that is resistant to any form of mining hardware. Would it perhaps be best to privately grow the chain and achieve a decently high hashrate and thus a moderate difficulty before opening the network to the public? Would that be the least invasive, safest preventative measure I could take? – apt-getschwifty – 2018-06-13T17:48:29.190

Difficulty is affected by the number of hashes/second pointed at your chain (not the blockheight), so privately growing the chain with some amount of hashpower will not protect you against someone with a larger amount of hashpower. Put differently: if you control 'x' hashpower, it doesn't matter whether you make the chain public at block 1, or block 100,000, someone with '>x' hashpower will still be able to outrun you. The higher your 'x', the smaller the pool of other miners that could attack your coin. – chytrik – 2018-06-13T18:00:50.910

Yes I am aware of how the difficulty is targeted, what I meant by "privately grow the chain" was to add more nodes locally to increase the hashrate until it is at a point that is more difficult for someone to be able to surpass single-handedly, not just to add blocks/increase chain height, sorry I wasn't more clear on that. I really appreciate your responses, I am delighted to see how invested people are in this community. I will take all of your responses under advisement and proceed. – apt-getschwifty – 2018-06-13T18:09:14.920

Right, I understand your reply better now. Privately growing the chain would increase the resources needed to reorg your chain and thus overwrite your 'pre-mine'. But it would still not prevent an attacker with more hashpower from completely censoring transactions, ignoring all subsequent blocks that are not their own, etc (see: 51% attacks). Happy to help :) – chytrik – 2018-06-13T18:34:16.723

Yes, I am aware of the 51% attack, and it's actually my primary concern since at this point I lack the hardware and resources required to have an indomitable hashrate. Though as you've pointed out, it isn't really fiscally logical, and there isn't really too much that can be done if someone wishes to trollololol away. I will do everything in my power to have the network at a respectable hashrate before opening it up to the honest miners and trolls alike, aha. – apt-getschwifty – 2018-06-13T18:42:22.710

Asked: 2018-06-13T16:32:55.227

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Active: 2018-06-13T17:36:50.047