

Bitcoin War: The First Real Threat to Bitcoin? - rasengan
https://www.privateinternetaccess.com/blog/2012/03/bitcoin-war-the-first-real-threat-to-bitcoin/

======
vessenes
This article is silly and wrong.

Probably those blocks are mined by a new mining pool, one that someone hasn't
implemented transaction handling into.

There is a free market for transaction fees built into Bitcoin, and any miner
is free to ignore transactions as they will, it's always been that way. It's
not an 'attack', it's just an economic system built in.

Miners will almost certainly demand more bitcoin for their work in the future
than they do now; the way I think of it, the network itself is pre-emptively
fronting a baseline transaction value to miners right now. Eventually that
will be phased out, and people who wish to transact will pay the burden of
getting their transactions secured. C'est la vie.

Until then, move along, the article does not, in any way, detail a 'real
threat' to bitcoin.

It is annoying (in that it slows transaction acceptance and validation) that
someone doesn't wish to mine transactions, but if it ever became a large
threat, clients could adjust to ignore blocks from known bad-behavior miners,
bringing them into line. Or, I suppose, miners could value same-height blocks
with more transaction fees in them. I'm not sure if this would impact other
attack vectors, though.

------
skrebbel
And there was me thinking that the first real threat to bitcoin was already
back when everybody lost interest.

~~~
SkyMarshal
For certain definitions of 'everybody'. ;)

Relevant:

<https://en.wikipedia.org/wiki/Hype_cycle>

<https://en.wikipedia.org/wiki/Technology_adoption_lifecycle>

------
mmaunder
85.214.124.168 is in Berlin and belongs to a german hosting company, Strato
Rechenzentrum, Berlin. The website <http://www.jas-transport.com/> is hosted
there. It's a trucking company, so guessing the server might be hacked.

~~~
hughes
I'm not sure if you're aware of the scale of computing that would require. A
lone server contributing 15% of the network would have to have the equivalent
power of about 6,000 high-end GPUs.

~~~
Dylan16807
This server is just the connection to the bitcoin network, not the calculation
point.

------
speedracr
I felt like I knew a little about Bitcoin, but I fail to grasp whatever this
article is saying. Can anyone translate the "empty blocks" and 15 vs. 51% part
and its implications? Also, wouldn't 15% of the network computing power
require more than a simple webserver? Thanks.

~~~
palish
This is my rough understanding:

As you're aware, Bitcoin uses certain cryptographic guarantees in order to
publish a public and immutable "block chain", which is essentially a public
list of all Bitcoin transactions since the beginning of time.

Each block in the block chain is essentially a list of transactions which
occurred between the time frame "after the previous block was discovered, but
before this block was discovered".

(A block is 'discovered' by searching the hash space brute-force, searching
for a valid code.)

When a new transaction is initiated, it is an interesting situation because it
needs to be done in a way where neither party can somehow cheat the system. I
believe this is accomplished by sending the transaction to many Bitcoin peers
simultaneously. When, say, 5 or more peers have "acknowledged" this
transaction, then you can be fairly confident (>99.9%) that your transaction
will be encoded into the next block in the block chain.

The only reason this works is because it's assumed that each peer in the
Bitcoin network is following the protocol in an unbiased way. E.g. it's
assumed that peers aren't "going out of their way to do shady things". What
kind of things? One example: acknowledge a transaction, but then
discard/ignore that transaction, thereby attempting to trick you into thinking
your transaction was processed when it wasn't.

Right now it doesn't matter if only a few people are doing shady things. This
is because the majority of people are known to not be cheaters. Therefore, by
the law of large numbers, you can assume that by waiting for N
acknowledgements then you can become exponentially more confident that your
transaction will be encoded into the public block chain, rather than
maliciously ignored. _The only reason this works_ is because less than 50% of
the Bitcoin peers are attempting to cheat. If more than 50% were cheaters,
then you'd have no way to "verify that your transaction _will definitely_ make
it into the public block chain". Thus, the system would cease to be useful.

Now, notice I'm talking in terms of "more than 50% _of peers_ ", but the
article is talking about "more than 50% of _processing power_ ". I _think_ the
argument for "why 50% of the computation power needs to be non-malicious" is
the same or very similar to my argument which I presented above. But I'm not
positive on that.

(Essentially, if you control more than 50% of your "new block-finding
capability", then you would have control over which transactions will/will not
make it into the public block chain. Thus, we would lose our cryptographic
guarantee that "if my transaction was acknowledged by at least N peers, then
it will definitely be entered into the public block chain un-tampered.")

~~~
runn1ng
Also, the computing power is computed from the percentage of successful
transaction blocks. Noone knows how much computers you had or anything, they
just saw that 15% of the blocks were confirmed by the same PC.

The confirmation task can be easily paralelised - therefore, what is usually
done is creating a whole pool of computers that together work on the
transaction confirmation task, then the main computer announces the
confirmation and is remembered in the blockchain. That's what these so-called
mining pools do.

You can browse the blockchain by yourself here <http://blockexplorer.com/>

There is always at least 1 transaction in the block with the amount 50 -
that's the "new" bitcoins that the person "mined" - those weren't previously
in the system, you got them for the confirmation. Someone is cheating the
system by creating empty blocks with only this transaction.

~~~
palish
Whoa, that's bizarre: <http://screencast.com/t/TA5fF8CDf3>

And look at the timestamp on #171618: <http://screencast.com/t/Kzzwiyi9Mz> ...
The timestamp reads "21:35:01". But the timestamp of the previous block is
"21:35:35". So it's "in the past, by half a minute". What's up with that? I
mean, I could understand a timestamp uncertainty of a few seconds when
discovering new blocks ... but that's a discrepency of over half a minute.
(Maybe this is a totally insignificant observation -- I have no idea. I'm just
pointing it out.)

Bigger question: what's up with those "1-transaction blocks"? Could you talk a
little bit more about that / why that's an indication that someone is
cheating? Also, do you have any idea why they're doing this / what the benefit
is?

~~~
runn1ng
I don't understand that much about it, but I believe that's partly what the
original article talks about.

------
tobiasSoftware
Upon opening it up, I am shown the only picture in the article: a computer
with a photoshopped on scumbag hat and a caption - Scumbag Bitcoin Miner.
While I understand the use of this on Reddit, in an article it seriously makes
me question the quality, some sort of diagram explaining what is actually
going on would be so much better.

~~~
SquareWheel
I have to agree, and I see it as a trend that's continuing.

[http://www.seomoz.org/blog/how-to-use-memes-to-build-easy-
ba...](http://www.seomoz.org/blog/how-to-use-memes-to-build-easy-backlinks-
traffic)

~~~
runn1ng
I am a heavy 4chan user, and this physically hurts to read.

------
a3_nm
An interesting idea. Bitcoin seemed secure at first because it seemed silly to
think that an individual user could hold >50% of the total processing power of
the network, but now that miners are assembling in mining pools, the risk of a
pool achieving >50% of the processing power is much higher.

------
stevear
The threat to Bitcoin is it's adoption by nefarious entities-- money
laundering, paying for drugs, DDOS extortion, etc. This creates an incentive
for the government to step in and disrupt the Bitcoin system.

I would not be surprised to hear that a government project is in place to shut
down or otherwise reduce the effectiveness of it.

Bitcoin could have dilluted this problem by really running with the unique
strength Bitcoin has: micro-transactions. All of the sudden it was conceivable
and somewhat simple to send someone $.05. Instead of focusing on this the
Bitcoin community was more interested in creating an anarchic currency that
was anonymous and beholden to no-one. I personally like to believe that if
they had instead focused on ease of use, wide spread adoption through micro-
transactions (tip jars, content that costs less than $0.75, etc) that it would
have really gotten a lot more traction with the mainstream.

~~~
runn1ng
You can use bitcoin for any amount you want. And yet, except for the drug
sellers on silkroad, almost no one does.

I, personally, see the biggest disadvantage of bitcoin (1) the price
unstability - it jumps up and down like crazy, and (2) the still unclear
legality - from the tax endpoint, and the like. And (3) - also its biggest
strength - it's as safe as your PC is safe. When someone steals your Microsoft
Word documents or your Excel tables, who cares. If someone steals your
wallet.dat, you are screwed. Period.

It may seem like a moot point, but both Mt.Gox - the largest exchange of
bitcoins - and Slush - second largest miner - has had its servers compromised.
And those are the highest end-points. Now think of all the users - the lowest
end-points, who have "password" as their PC password. You want THEM to have
all their money on their wallet.dat files, on their disks?

Now, drug sellers on silkroad really don't care about the second point, but
much of the regular businesses do. On the other hands, the regular users have
their lowly secured PCs as the only gateway to their money.

I am not sure if Bitcoin will ever get off, given all these circumstances.

~~~
epscylonb
1) with enough widespread adoption this would be smoothed out, after all the
value of the dollar against other currencies is not static either.

2) yup, this is a problem, though I believe technically it should be a capital
gain in most countries.

3) This is also clearly a problem though not an unsurmountable one. The cool
thing about bitcoin is that you don't have to run the wallet locally, but you
have the choice of doing so if you want to. With widespread adoption I believe
you would see banks who host wallets, this is how your average person would
interact with bitcoin. The final piece of the puzzle is bitcoin insurance to
guard against a nefarious wallet hoster, we don't have this yet but there is
no reason why it can't be done.

------
ericb
Bitcoin could be viewed as an elegant system to transfer wealth to botnet
owners.

------
rdssassin
Perhaps if the fees were higher, they would want them.

------
Devilboy
Would it be possible to hire a large number of servers just for a short time
and take control of the whole chain? Is it just a matter of time before this
happens? You could combine various cloud providers' servers and black market
zombie machines.

If Bitcoin continues to grow in popularity at a sufficient pace it should be
safe, but the minute it becomes cost-effective to attack it, it will fall.

~~~
vessenes
So, the network has generally become much more expensive to fail. It currently
employs something like 10x the K computer (Top 1 in the Top 500) worth of
compute. There are probably a few organizations that could get that compute
power together for a while, but you'd have to ask 'why?' and 'for what
reason?'

If you want to send a lot of money through Bitcoin transactions, I suggest you
estimate expected compute cost of subverting the number of validating
transactions you are going to wait to secure it, and using that as a baseline.

E.g. subverting 10 transactions in a row with > 50% likelihood (but doing so
without anyone noticing, that is, timed appropriately) would take something
like 10x the current compute power for about an hour, = close to a million
dollars? hundreds of thousands certainly.

Ergo, wait a day for a $1mm bitcoin transaction to clear, and similarly, don't
worry about a $500 transaction at all.

~~~
Devilboy
Only a million dollars? That means the government can shut down Bitcoin any
time it wants.

~~~
erikpukinskis
Except that forensics will allow us to identify the fraudulent block chain,
and ban all the relate computers. "Shut it down" really just means "force the
Bitcoin community to step it up".

~~~
rmc
You can't easily "ban" these things, since it's a decentralised P2P system.
The whole point is to prevent _anyone_ (original creators, banks, a
government, etc.) from being able to interfer with it. It does mean the system
fails like that.

~~~
erikpukinskis
Everyone is free to ignore whatever block chains they want to. I can refuse to
honor blocks built off what I consider fraudulent block chains.

~~~
rmc
Would you able to trade with people who hadn't ignored those bloc chains?

