It's pretty easy to break delegation, but the cure is worse than the illness— to reduce mining variance there you must use hosted mining, where miners have even less control (absent more fixes…). GHash.IO is substantially hosted mining in any case.
Really the more important point to note is that pooling for variance reduction has absolutely nothing to do with delegating control. Running a outbound only bitcoin full node, past initial syncup uses less than 20kbit/sec bandwith and a fraction of a percent of cpu... it's not costly to do, purposefully so.
It's perfectly possible to individually run your own consensus decisions but agree with others to, in a provable way, pool your payments. This is what P2Pool does.
Unfortunately many Bitcoin miners don't have a rigorous mathematical understanding of how mining works— they erroneously believe it to be a race where the fastest wins disproportionally— something entirely untrue (absent some proposed attacks which are not happening in practice)... just keeping yourself from getting scammed by the many scammy hardware companies is basically a full time job itself. Then you have various technically unsophisticated Bitcoin pundits claiming that hashpower consolidations in pools isn't something to worry about... not a great mix.
Fortunately, the reasons for the current behavior are mostly inertia— if P2Pool had been invented first the symmetry would have broken differently. It's still possible that there might be a massive swing (say if GHash.io decides to steal a bunch of coins from their miners and makes a runner).
The non-outsourceable puzzle discourages hosted mining as well as pools (though if users are trusting, then hosted mining might persist anyway).
The non-outsourceable puzzle would have to be adopted at the same time as another change, which would allow solo-miners to enjoy the low variance they get in a pool.
Essentially you would need to allow miners to choose a lower difficulty, for proportionally lower block reward. This opens up DoS concerns if it can go arbitrarily low, and might generally require more bandwidth. This would essentially be Bitcoin internalizing p2pool.
I'd be interested to learn how mining delegation could (in theory) be avoided. It seems to me that as long as you have a proof-of-work designed around something that can be solved with distributed computing power, there may always be incentives for delegation and cooperation (especially to reduce variance). I'm genuinely curious to hear what other approaches can be used to "break delegation."
The intuition (which is described in the original article, by the way) is that in this puzzle, whoever actually finds the solution can take the entire reward for themselves.
We've expanded this idea into a rigorous research paper that's currently undergoing peer review, but we may release a preprint soon.
After reading the post, I would rather phrase the key insight as: in the proposed protocol you don't have to reveal the nonce that hashes to the low value; rather, you prove you have it, thus destroying the connection between the nonce and the pool, so a solution can go out without any pool member being able to say "hey -- that was ours!"
This destroys the ability of pool members to trust that their nonces, where valid, will actually be used to claim a reward for the pool.
I'm not familiar with the work, but I assume there are validated zero knowledge proof protocols that prove you know a partial hash inversion of a particular quality, like the Pinocchio one referred to.
Edit: with that said, I don't agree that eliminating mining pools is a good thing; that just rewards those who can enforce cooperation by some other means (say, having the capital to personally run the farm), which has a far more unequal distribution than mining pools.
> Edit: with that said, I don't agree that eliminating mining pools is a good thing; that just rewards those who can enforce cooperation by some other means (say, having the capital to personally run the farm), which has a far more unequal distribution than mining pools.
In order for Bitcoin to work, in the sense that you don't have to trust anyone for it to be fair, then no group can ever have 51% of the hashing power of the network. It has now been proven that a mining pool can reach that threshold. It has NOT been proven that it is practically possible to buy that much hashing power. We should get rid of mining pools because they are the current cause of this crisis. We can cross the other bridge when we come to it (which it seems unlikely we ever will).
>to reduce mining variance there you must use hosted mining
Why should people [miners] be able to reduce variance at all? That's not a necessary feature of the system, and it doesn't seem like a goal worth pursuing. Security is paramount; mining variance is "first-world-problems".
>say if GHash.io decides to steal a bunch of coins from their miners
It seems far more likely that GHash would try to be sneaky about theft, rather than overt. This would allow them to keep getting away with it (that "long term revenue stream").
I know this sounds sort of unlikely, but consider e.g. GHash functionality to identify and subtly interfere with the operation of automated tools (e.g. ZeroCoin) that make lots of bitcoin transactions. The less likely that human eyes will see a transaction, the easier it will probably be to subvert.
Really the more important point to note is that pooling for variance reduction has absolutely nothing to do with delegating control. Running a outbound only bitcoin full node, past initial syncup uses less than 20kbit/sec bandwith and a fraction of a percent of cpu... it's not costly to do, purposefully so.
It's perfectly possible to individually run your own consensus decisions but agree with others to, in a provable way, pool your payments. This is what P2Pool does.
Unfortunately many Bitcoin miners don't have a rigorous mathematical understanding of how mining works— they erroneously believe it to be a race where the fastest wins disproportionally— something entirely untrue (absent some proposed attacks which are not happening in practice)... just keeping yourself from getting scammed by the many scammy hardware companies is basically a full time job itself. Then you have various technically unsophisticated Bitcoin pundits claiming that hashpower consolidations in pools isn't something to worry about... not a great mix.
Fortunately, the reasons for the current behavior are mostly inertia— if P2Pool had been invented first the symmetry would have broken differently. It's still possible that there might be a massive swing (say if GHash.io decides to steal a bunch of coins from their miners and makes a runner).