There seem to be a lot of people making an issue about the increasing hash power of ghash.io at the moment, so I’m going to post my comments here. First of all, however I’d like to point out that ghash.io has already attempted to double spend bitcoins even without having the easy ability to do so. The times this has happened in the past, the network was not taken advantage of with the so-called 51% attack. Since ghash.io has already proven themselves, as can be seen in the blockchain, to have attempted to cheat the system, no one should have any faith that they will do the right thing if they do get to 51% of the network.
People are drawn to Ghash.IO primarily because it has a high hash rate which provides quick results (people like instant gratification). The website is slick with the automatically updating stats. It merge mines several coins (perceived value, even if some of those coins are not worth much). There is zero fee. It allows someone to automatically split up the mining proceeds by percentage, for example, for a group buy. There is also the gambling / trading aspect of cex.io which has its own lure. Additionally, and perhaps most hurtful of all is the marketing aspect that incentivises people to advertise for them.
Ghash is a big threat, and there is no way to know for certain that cex/ghash do not have additional hashpower running on other “unknown” private pools. Knowing that they will hurt themselves if they dump too much into cex.io at once. It is also unknown just what the ratio of their own hash power to individual’s personal hash power pointed at that pool is. The other threat is that there is no representative (that I have seen anyway) that interacts with the community. They do not seem to be publicly interested in cleaning up their name in many of the threads about their past with double spending, for example. Ask yourself for a moment – how do they make any money themselves? They charge no fees for trading, minimum fees for withdrawing, very minimal fees for their own hash rate rentals. There is something else going on there, and this puts them in a class by their own.
I do not agree that something “needs to be done” about BTC Guild. The pool admin seems a very standup guy who is himself interested in the health of the community. I think that if it ever did come down to short term personal gain or the community, he would do the right thing for the community, and ultimately his own long-term personal gain as well. The vast majority of the hash power there is voluntary – meaning that people could pull their miners en masse and the pool could instantly be smaller. The pool has also not had the same bursting growth rate as ghash.io, and right now is also the biggest weapon the community has in fighting cex.io if it attempted to run a 51% attack. When bringing up new mining equipment, putting it on any pool other than those two is probably the best thing any of us can do individually, but it doesn’t help that (from my testing) the most profitable pool is BTC Guild – in spite of its fees. If I’m in a group buy or trying to get a full return on a piece of hardware, it is silly to mine on a pool that I know will return a lower profit over enough time that I know variance isn’t the cause.
Anyway – my 2 cents. I think what the rest of the pools need (other than the top 2) is very clear, but I’m going to spell it out briefly below. Note that this is in addition to implementing the features that set GHash apart from the rest such as split payments, and slick stats:
Eligius – Transparency with the shelved shares and namecoin. BTC Guild has transparency and the ability to audit work that Eligius lacks.
Slush – An operator who cares about the pool. Slush is absentee and the pool suffers from payment and accounting issues. Why anyone still mines there is odd.
EclipseMC – This pool has the best implementation of DGM out there, however some people will never mine there with Josh from BFL at the helm. From my own testing, it also pays out less than BTC Guild and Eligius for the same amount of work. See the experiment link for more info.
Any other PPLNS pool: Too low value of N.
Any other pool has too low hashrate to keep variance at bay. I think some pools are going to have to take a loss temporarily or go PPS to some extent in order to pull hash rate away from ghash. Remember, however, that this is just covers the personal power pointed at ghash. We will not be pulling cex.io power away, although to the extent cex.io can be believed, that is a feature that they are planning to implement.