- Thank you.
Hello, good morning everyone.
So, I'm Irni from Universiti Teknologi MARA.
Today I would like to present my paper with my co-author,
Corina Sas from Lancaster University
on the topic of an exploration of Bitcoin mining practices,
focusing on miners' trust, challenges, and motivations.
So, Bitcoin is a cryptocurrency, which unlike fiat currency
is created through a process called mining.
This process is conducted on blockchain technology
by a distributed network miners
who both collaborate and compete with each other
to solve algorithm problems
for validating Bitcoin transactions
between anonymous parties.
Mining is also called as trustless
because it does not require any third party to verify
transactions depending only on the consensus among miners.
Mining also occurs in the absence
of any central authority regarding regulating.
It is decentralized as well as transparent,
as any validation transaction is recorded on public ledger
and can not be longer modified.
For their work on validating Bitcoin transactions
miners are financially rewarded.
Okay here, oops, sorry.
Okay, sorry.
Okay.
Okay here, if you can see here is an overview
of Bitcoin mining practices, okay?
So let's say Alice pays
Bob for one Bitcoin.
For this she needs the public key of Bob's wallet's address
as well as the public key and private key of her wallet
with address to sign the transaction.
They create the transactions to be verified by full nodes,
which is the machine's verified rules
according to the predefined consensus rules.
Once verified, the transaction is broadcasted
to the memory pool, which a place that holding
the pending transaction which awaits miners' validations.
Miners then collect such transactions from the memory pool
and put them in a block that's sized up to one megabyte.
The miners compete by using the computational power
by solving the blocks and produce the proof of work.
The first miners who produce the quickest
and longest solutions to the block's transaction
is the winner which will receive the financial rewards.
The new block validated by the winning miners
is recorded on the public ledger,
and finally the transaction is recorded on the public ledger
as a permanent, which is visible to everybody.
While HCI work has started to explore
how people use Bitcoins,
miners' work remains largely invisible
and has been less explored.
In this research, we focus on four research questions
which these are the questions targeted:
miners' motivations, the blockchain's characteristics,
impacting on miners' trust,
how is the mining practice socially organized,
and which are the trust challenges
and how do miners attempt to mitigate them?
In order to address these research questions,
we conducted interview with 20 Bitcoin miners in Malaysia
between the end of 2015 until February 2016.
Malaysia offers a unique opportunity for exploration
Bitcoin practices in it experienced massive growth
of remittance market
and a growing interest in cryptocurrency.
Being a developing country, Malaysia is the first
to consider fintech regulations.
We ask about participants motives for mining,
their perceived benefit and challenges
and in particular, trust issues.
We also explore their perception
and risk of mitigating strategies.
Based on interviews, we have highlighted
several important findings.
First is the motivation of miners.
Almost half participants mentioned that they mine
because of financial reward they could earn from mining.
People also enjoy the limited regulation regarding
the taxation of such rewards.
For a few others, the motivation to mine
really is due to curiosity towards the technology
and desire experimenting Bitcoin mining.
Findings also reveal the blockchain's supporting
hindering miners' trust.
First, one such factor supporting miners' trust
includes the decentralized and transparent qualities
for mining protocols.
These are valued by participants in terms of security.
Mining protocol uses cryptographic hashing algorithm
to ensure that Bitcoin transaction is not fake.
This supports miners' trust,
in addition all miners working on the same blockchain
transparently to compete with each other.
Second, mining practice is mostly unregulated
and not considered illegal.
This limits the perceived risks of banks, governments
to control mining activities.
Finally, mining practice is also considered easy
as it does not require advanced technical skills.
Our findings indicate three types of mining practices
based on being performed individual or collectively,
and own or lease machines.
16 participants started mining in 2010 to 2012
using home solo method mining individually
on their computers at home.
At that time, the difficulty of mining
was not as high as today.
Later, due to the increase of competitiveness
miners needed to upgrade their machine while running
and maintenance costs are also increased.
Hence, four of our participants discontinued mining
and the rest moving towards collaborative minings
by joining home pools, while using their own machines.
But still using their own machines.
The profit was divided according to the amount of power
which each miner contributed to the pool.
Again, due to the fact of increase in cost,
in particular those for continual upgrading of the machine,
12 of our participants discontinued mining.
The remaining four moved towards
collective mining on leased machines.
One of them owned a data center
while the other three participants started mining
on leased machine in the data center for cloud mining.
Finding indicate three types of miners.
One is the mining pool administrator,
who facilitates miners' access to mining pool.
This type of miners has advanced skill to set up,
run and maintain the machine within the pools.
The other type of data center administrator
who provide end miners opportunity of leasing machine
hosted and maintain their data centers.
Finally, we have end miners
who can have limited skills,
even lower those required for home solos.
This is because they merely pay for leasing a machine
in larger pool.
Hence, we can see a serious continual deskilling
of miners as they move towards collective mining.
Also, in contrast with pool administrator,
end miners have limited power,
and in order to remain competitive,
they have to follow the trends
set by their pool administrator.
For example, continually increase the leasing fees
for demand upgrading machines to ensure the competitiveness.
There are several trust challenges of collaborative mining.
First, from the technical perspective we can see
there is a risk of mining protocol.
This relates time required for recording the new block.
This is because current practice is to wait
not three as before, but six confirmation
to register a block, which leads to delay.
This is also limiting block size,
as each block have to hold
up to one megabyte of transactions.
With larger volume of transactions,
the bottleneck issue contributes
to increased competitiveness and increased miners' fees.
From social perspective, collective miners leads
to centralization and issues to end miners' distrust
in mining administrators.
This are due to the lack of the audit
for distribution rewards in pool.
The invisibility of data centers,
some being exclusively in the cloud
with no information on their physical presence.
Findings indicates two strategies of end miners
mitigating challenges of collaborative mining.
Sorry.
Okay.
First is choosing a reputable pool so that,
most of participant join three to four largest major pool.
End miners also interested in building their own
decentralized pool, such as P2P pool
without need the pool administrators.
In order to reflect on the theoretical implications
of our findings, we apply
the Bitcoin transferring work consisting
three layers of trust and their stakeholders,
and refine them prospective of Bitcoin miners.
Thus, with respect to institutional trust,
miners distrust financial and government institution.
But, the unregulation of mining practices mitigates
their perceived risk of abuse of power.
With respect to social trust,
outcomes suggest that the main challenge
is not among the end miners due to the mining protocol,
but between the end miners and the dishonest pools
also the data center administrator.
This is the most problematic layers of trust.
Our finding also indicate that the purpose for design
decentralization unregulation features strengthen
the miners' technological trust in blockchain.
And this is the least problematic layers of trust.
Despite decentralization
being a key principal of blockchain,
findings show a strong tendency toward the centralization
of mining practices.
This paradox point to the need for solution
to minimize the monopoly of powers
such large pools can acquire.
While unregulation is another key principle
blockchain is valued, it's raised challenges
with respect to dishonest administrators.
Our design implication aim to address
both of these concerns.
Finally, in order to address the concern,
to address the risk of the decentralization of mining
we can think of authoring tools for supporting end miners'
development of decentralized pool
with no central administrators.
To address the social trust challenges
of dishonest administrators,
we can imagine a new tool for monitoring hash power,
and reward for distribution in the data center
and mining pools, as well as decentralized tool
for tracking data center's authorization and reputation.
We can think of developing fully decentralized pool
with no central administrators.
Alright, thank you.
(crowd applauds)
- [Woman] Thank you very much, is it working?
- Thank you.
- [Woman] Yeah, brilliant work.
Thank you very much.
So I have a question regarding
other kinds of blockchains.
It seems that there's a difference between,
well I'm always concerned that people
mislead blockchain for Bitcoin blockchain,
and other blockchains have different ways of operating.
I wonder if you have thought about
other blockchains as well,
or for instance, Hyperledger,
that tries to sort out the other layers of trust.
- Alright, okay, thank you.
Yeah, Bitcoin is the pioneer for blockchain
because blockchain is created
by Satoshi Nakamoto for Bitcoin cryptocurrency
but today blockchain has moved beyond Bitcoin.
It's more than Bitcoin.
So, in this research we are focusing on Bitcoin mining,
so we interviewed the Bitcoin miners.
Yeah, maybe in future there should be
other future works to explore other types
of mining in other kind of blockchain as well.
Thank you.
- [Megan] Megan Knittel, Michigan State University.
So in your study, you talked about how
some of your participants changed from
mining independently to mining in a pool
or in another collective manner.
I was wondering in your findings
if you noticed any differences
in motivations for using Bitcoin at all
between the people who moved from
independent mining to a pool, or stopped mining altogether.
- Alright.
So what I can see, the motivation of the miners
when they shift from
home or solo mining to the collaborative mining,
the issue is because of financial.
Because they need a lot of financial
to maintain their machine
in order for them to,
to continuously mine the Bitcoin.
So as the difficulty increase,
some of them are not capable to proceed with the mining,
so some drop off.
Maybe some of them with higher capital
proceed with the mining in the pool, and yeah.
Thank you.
- [Moderator] And I do have a question myself as well.
So I'm wondering, because one of the strategies
is to move the miners from actually monopolizing
the whole blockchain.
So how do you think miners can be encouraged,
how can miners be encouraged to not monopolize?
- Okay, so in our paper we have suggest
to create a platform for end miners
to create their own mining pool.
So in a way,
that is how they can encourage miners
to continuously mining, yeah.
- [Moderator] Awesome, thank you.
- Thank you. - I'd like to thank
Irni again please. - Thank you.
(audience applauds)