

Researchers Locate Flaw In Bitcoin Protocol - pwg
http://coderrr.wordpress.com/2011/11/13/simplified-summary-of-microsoft-researchs-bitcoin-paper-on-incentivizing-transaction-propagation/

======
dmk23
The bigger flaw is that there is lack of economic incentive to continue to
donate computing power to keep the network running. At the current exchange
rates and bitcoin mining yield it cannot even pay for the energy cost.

As it stands today just around $300K worth of hardware (I cannot quite recall
the reference off top of my head) is needed to be able to "out-compute" the
existing network and introduce a corrupted / compromised version of the block
that everyone will accept as real.

That's not to mention that the transactions are not anonymous and just
pseudonymous, which means if your identity is somehow disclosed (anytime in
the future) all your bitcoin dealings are going to be completely public for
anyone to see and use against you.

Distributed crypto-currencies may have a future, but it would require a lot of
work to make them viable.

~~~
weavejester
Bitcoin mining difficulty is automatically adjusted based on the capacity of
the network. If the cost outstrips the gains, then either people are content
to lose money on the network, or people will leave until the difficulty
becomes low enough to make mining profitable again.

You're probably correct that you'd only need $300K to purchase enough hardware
to double-spend, but any profit you could make off double-spending would be
offset by the cost of electricity. Also, an alternative compromised blockchain
would be really obvious, so you'd only have a limited window in which to scam
people. Maybe you could do something if you had a botnet (and thus didn't need
to pay for the hardware or electricity), but I can't help thinking that you
could probably be doing far more profitable things with that amount of
hardware.

~~~
patrickyeon
I don't think the root problem would be the money you directly scam from other
users. I think it would be the huge loss in trust in the network once it's
been seen to happen.

------
niklas_a
Glad to see that the researches also propose a solution - doesn't seem like
this is much of an issue. Not sure why it ended on the front page of YC.

~~~
mquander
I assume it's on the front page of YC because it's an good summary of an
interesting topic, which is more than you can say about most stories. I don't
use Bitcoin or care whether it succeeds but I upvoted the submission because
it got me to spend ten minutes thinking about this interesting problem with
the protocol.

