E57 – Protoshares & Selfish Mining

Subscribe to Let’s Talk Bitcoin! for free to automatically download new episodes.

Shownotes for Episode 57 – Protoshares & Selfish Mining

Daniel Larimer is the driving force behind Project Keyhotee, Bitshares futures markets and the Protoshares decentralized, CPU minable currency that he hopes will power it all. Our talk on episode 44 (Mindtomatter – E44-ive-seen-better-days-lets) about Project Keyhotee, the secure Identity/Money/Communications platform was one of the most popular we’ve ever run, and I caught up with Daniel a few days ago about what happens next.

Then, you might have heard it. Bitcoin is broken, and selfish mining (bitcoinmagazine.com/7953/selfish-mi…itcoin-network/) is to blame. Hair-on-fire headlines aside, Andreas’s got a bee in his bonnet on this one, and we not only break down the problem but get a great example of how the core Dev team has fewer, but better options for dealing with things like this than your standard currency. Stephanie, Andreas and I really dig into this one and there’s meat on those bones.

Episode 57 Tip Address

General Support Addresses:
Bitcoin: 1LTBShowv5nZ2fgZ4hWU7ieeDRNKSAxtov
Litecoin: LZxkcspyUj3LnMjukTzcSSPkDvLu1uudZp

Want each new episode sent to you?  Enter your email address:Delivered by FeedBurner

Let’s Talk Bitcoin filmed Jeffrey Tucker’s Crypto Currency Conference in Atlanta, Georgia on October 5th, 2013.  View the Keynote and first speaker panel for free, pay with Bitcoin to access the next 3.5hrs of talks and panels.

By Adam B. Levine
Adam B. Levine

5 tips so far
0.0635959 BTC
(avg tip 0.01272 BTC)

Why You Should Tip Our Writers

Let's Talk Bitcoin is powered by volunteers doing good work through the Cryptocurrency ecosystem, and sharing their experiences with the community as a whole. If you found this article to be valuable, please send a bitcoin tip which will go straight from your wallet directly to the wallet of the writer. No middle men. No payment processor. Pure Value for Value. Thank you for supporting our model!

One Pingback
Date Source Name URL
22 November 2013 at 9:11am[…] http://letstalkbitcoin.com/e57-protoshares-selfish-mining/ ...Protoshares & Selfish Mining | The Freedom Watch
  • Guest

    Great episode! Tipped! Protoshares is

    Since there is no exchange for Protoshares currently, and you want to buy some just shoot me some mail at me@super3.org

  • Shawn Wilkinson

    Great episode! Tipped! Protoshares is an awesome little coin so far.

    Since there is no exchange for Protoshares currently, just shoot me some mail at me@super3.org if you want to buy some.

  • Guest

    Seems like you misunderstood the 25% attack. The attacker does not get ahead the entire network and then dumps its blocks all at once. Instead the attacker gets ahead of the network, and every time the network creates a block, quickly releases just one. If the attacker is efficient enough at getting its block out (which is tied with the network’s) it has a chance that this block will be adopted. The other blocks it mined lie in wait for the next block the network will build.

  • ProtoPTSD

    I was very excited about bitshares (protoshares), but let’s count his screw ups & times he unintentionally or not screwed over his users in 5 days since it launched:


1.) He (Dan) launched and started mining 2+ hours ahead of the announced launch time! 

    The reasons given for this was that he said they spotted an IP when testing the network that they didn’t recognize so they went for it too and started mining. But here is the thing, for this to happen they have to push the genesis block to the code base for people outside of his circle to have access to it, which they apparently did push to Github hours early. Pushing a genesis block hours early and mining the coin before your announced launch time is either a huge mistake (incompetence?) or intentionally a way to premine without calling it a premine. So while your users are waiting until the announced launch time, you get 2 hours of mining at the lowest difficulty before the announced launch time.


2.) Over 524,021 protoshares were mined in less than 5 days (Tues-Sun) of the max 2 million scheduled over 2 years.


The cause of this was another big mistake, they released the protoshares code without changing all the parameters from bitcoin to protoshare’s spec. The net result of this is that literally many or months worth of protosharesprotoshares (PTS) were generated in days for the early miners like Dan, since the blocks were being generated way ahead of schedule. In less than 5 days (Tues-Sun) after launch, over 524,021 protoshares were mined of the max 2 million scheduled over 2 years. http://bitsharestalk [dot] org/index.php?topic=286.0

    This issue was known right away, but it wasn’t considered a problem when Dan and the early miners with big server clusters were happy with increased rate at easy mining. One miner was offering blocks of 10,000K for sale on the forums! Dan chose not to fix it for days when there were relatively few miners, but by Sunday AM when more miners joined and the block times become even quicker (ever 15 sec) but this time going to more diverse miners who had joined, he decided to take action:


”At the rate we were going 50% of the money supply would have been mined out in the first 2 weeks… not only is this bad for late comers, it 
was bad for Invictus because our mining strategy was based upon a longer mining window. Perhaps that is selfish, but Invictus is ultimately the one providing backing to ProtoShares. The chain was operating outside of spec, this is a bug fix.” Byteshates (Dan) http://bitsharestalk [dot] org/index.php?topic=236.msg3137#msg3137

    Yeah, a ‘bug fix’ that he knew about days before but was happy to let it generate PTS way faster than spec when he and a handful of miners benefited. Once too many others joined and the pace increased even more, he deemed it worthy of a *hard fork*, but only after 1/4 of the total supply had been mined!

    3.) Dan *hard forked* the code with only 2 hours of notice! 

    Keep in mind that hard forking takes down all existing miners leaving only those who know about it and are still around the opportunity to mine. This was for a bug known about 5 days earlier. Yet when he decides to take action he gives only 2 hours notice before *hard forking* it! I agree with this user who said this was definitely a management failure: http://bitsharestalk [dot] org/index.php?topic=370.msg3279#msg3279

    To make it clear, this was a glaring flaw (it was one of protoshares core specs!) and should have never been released in that state. But since it did, he should have planned a fix for it as soon as he knew about it and not just say say it’ll stand because no current miners are objecting to it, then waiting until 5 days later to take action by issuing a hard fork, which takes down competing miners, with only 2 hours notice and is again to his mining advantage .

    How is any of this better than a premine?

    I really want Bitshares and Dan’s other projects to succeed because understands how important decentralization solutions are to the problems he is trying to solve. I also see he is working hard and want to be believe he had/has honest intentions. But at best, protoshares has been incredibly mishandled. He is trying to do too much at once and making major mistakes and alienating even early adopters like me. Maybe he should take what he learned, fix protoshares, and relaunch it. Or better yet, drop Protoshares wait to mine Bitshares when it is actually ready and have everything ready (i.e. no crucial spec errors, actually launched at the announced time, etc etc).

  • Let’s Talk Bitcoin!

    Hey Proto, I’ve asked Dan to write a post-mortem for LTB talking about what the heck happened. Some mistakes were definitely made that spiraled but I don’t think Daniel is on the winning end of what’s happening here. I caught him on Skype a few hours ago, he sounded exhausted and a bit dejected – his miners don’t even arrive until tomorrow so the few protocoins he had, he bought.

    Deciding when to fork seems like a no-win situation – Once it was obvious that more interest was coming into the network than the 4x difficulty increase could compensate for, would it have been better to fix the problem or let the whole thing mine-out in a few weeks instead of two years as planned?

    I look forward to speaking with Daniel the next time, I think some painful lessons were learned. From my perspective, this is unfortunate but doesn’t break the value – So long as Invictus honors the social contract to issue all blockchain products by forking the protoshares base, giving each holder of protoshares a share of the new blockchain on a 1:1 basis.

    That is unique among cryptocurrencies I’m familiar with and fascinates me, I’m trying to buy some but for something supposedly 500k were mined of there aren’t many sellers.

    Edit: One thing I asked dan was “What did you learn from this”, his response was to treat the starting difficulty like the IPO price of a new stock, gotta get it right of it can overheat or collapse. This was clearly too cheap (in terms of difficulty), I would expect future blockchains to be MUCH more conservative.

  • PANI:C

    - The White paper discussing bitshares+keyhotee+protoshares+bitUSD+bitGold is a mess.
    - Aligning a virtual currency to gold prices and USD? sounds like Liberty Reserve.
    - Protoshares is susceptible to paralyzed mining. It’s limited more by MEMORY BUS count, not speed.
    - Danial’s response today was not a good first impression of what the future may hold for invictus co.

  • Jorj_X_McKie

    I tried to get the Protoshares client mining the day this episode aired on 2 different PCs and it never could connect to its network until last night. I’m not expecting much if any PTS at this ‘late’ date.. bummer..

  • Pingback: Protoshares & Selfish Mining | The Freedom Watch