Bitcoin Forum

Well. Here is an interesting article I just saw in one of the tweets.....

http://www.pds.ewi.tudelft.nl/~victor/bitcoin.html

I would be happy if this article is discussed in detail before anyone tries to take Bitcoin seriously.


The authors profile is interesting.....

yes, this is a good, balanced analysis. he outlines several denial-of-service attacks that sensitive bitcoin developers have been aware of for some time. for example, it is easy to tie up a node with incorrectly signed transactions, and it takes about ten lines of code to mount that 'attack'.

he is also right about the asymmetry of various attack vectors (though the reward for mining attempts to counteract this, albeit in a somewhat self-fulfilling way that may not be self-sustaining). and he's correct about the opportunity to aid a dos attack by forcing block-chain reorganizations strategically rather than just in the 'dumb' way to which many people casually assume an attacker will be limited.

his social point is murkier, and many here will disagree with it, but i tend to be sympathetic to it. another way to say it is that for people who don't already ideologically oppose governments (and seriously, how many people has anyone in this forum ever persuaded with his or her rhetoric?), bitcoin has to compete on fees and features. it can compete on features, but i am not sure in the end that it can compete on fees without substantial modification.

I second unk. This article is a balanced analysis and it highlights the need for a  really secure virtual currency system and I am convinced that the current system is far from being secure enough to make real transactions and there is a lot of scope for improvement.

I would encourage similar balanced technical analysis to happen by experts in Systems Security research.

Bitcoin is peer-to-peer in the same way as Usenet or the Internet itself. Anyone can be a peer -- most people just aren't.

Anonymity can be perfect if you take the necessary precautions. It's just difficult right now.


It isn't possible to do this indefinitely unless you have more than 50% of the network's CPU power. If you've got that much CPU power, there are more damaging things you can do.

As I see it, his claims are basically true, except for his assumptions that Bitcoin is somehow inefficient.  He claims that current systems are without fees, and provide high levels of "security", "privacy" and "liquidity".  And from a typical consumerist perspective, this may seem to be the case.  Really the fees are just hidden.  I think that if he looked into it further he would find huge costs, quite a bit of insecurity, forced-liquidity, and very little actual privacy.  Let's put it this way:  I might concede that Bitcoin is an inefficient way of solving the technical problem of facilitating trade;  but it is an extremely efficient way of solving the political problems of facilitating trade.

nikileshsa, i wouldn't go quite that far. the system is likely secure enough make payments and similar transactions. it is severely questionable as a way to make investments or savings, at present.

i've linked to it before, but the analysis on fatwallet got this right: http://www.fatwallet.com/forums/finance/1090435/?start=192

i strongly agree with you, however, that bitcoin needs more of a systems-security analysis. it is still a very young project and ought to be conceived as less ossified than many people in the forum currently conceive it. the software is very definitely still 'beta'. developers, users, and speculators would do well to remember that.

i honestly say that only for their own sake. it's not like i'm betting against bitcoins in the main block chain. indeed, i own quite a few through mining. i am concerned, however, when i see people speak of waking up as millionaires or planning for their retirement based on similar positions. moreover, that runaway enthusiasm can very possibly end poorly for bitcoin as a technology, and the technology deserves a better chance.

The way you make millions is to literally build a business in the bitcoin economy and finding niches that are profitable. That's the probably the best way to give bitcoin a fighting chance.

Really?  What other method of online exchange system are you are off that can transfer an arbitrary amount of value for seven cents?

I read the article.  I can't say I was impressed by his grasp of the concepts.

@creighto, that's not how people will look at it unless bitcoin becomes their operational currency, and that's a pipe dream at present. even the wildest bitcoin optimist doesn't think it will happen soon, if ever.

in the meantime, people get paid in dollars, euros, pounds, and similar currencies, and they want to buy stuff in those currencies. for them, bitcoin is a very expensive and unreliable way to do that. they face large exchange fees, unregulated and probably illegal currency exchanges like mt gox, and value that fluctuates as the result of speculation.

moreover, much analysis in the forum suffers from a us-centric view. american banks are particularly inefficient, corrupt, and old-fashioned. americans come to europe and offer magnetic-stripe cards for payments, and grocery clerks laugh at them because it reminds them of the 90s. if you're not familiar with european banking, as this dutch author is describing it, imagine that you had free american-style 'ach' push and pull payments available to you from all of your bank accounts. the average european can presently make payments online for free, in a trusted environment backed by law, to anyone, for any reasonable amount of money, very easily. (very large amounts are typically paid through swift rather than such ach-style payments, at a slightly greater, but still relatively small, cost to the consumer.) that's what most of them want to do.

similarly, the average person concerned about the inflation of their currency doesn't become an activist and try to stop all inflation. people instead simply diversify away from their currencies in their long-term portfolios, which is very easy and cheap to do. even americans have very good instruments available for this through etfs listed on the nyse.

Europeans, particularly Western Europeans, have a trust of government and government regulated institutions that Americans do not tend to share.  I think that this faith in such social constructs is going to be tested over the next several years.  And although you may not be directly charged for these transfers, there is a cost.  Someone is paying for it.  If it's not you, then it's likely the online vender; which is the Paypal/Credit Card model.  If not, it's your government paying the costs; which means it's still you indirectly.  But what is the catch?  You may feel that your private business is still private because the government doesn't share it, but it's not private from your government.  There may yet come a day when you regret that.


The inflation issue is a red herring.  Bitcoin inflates, and currently does so at a rather high rate.  The only reason that the relative value of a bitcoin continues to rise is because the size of the economy is rising at a substantially higher rate.

Honestly, I couldn't care less if Europeans use Bitcoin or not.  If Bitcoin needs my advocacy to succeed, then it's already doomed to failure.  There are always going to be those who disagree on anything.

It's decentralized in that there is no single authority determining which transactions are valid or not.


In the British Peerage system, not just anyone can declare themselves a "lord". That's the exact opposite of Bitcoin where anyone can become a "lord" by simply downloading the entire block chain.


That's not an argument against anonymity. That's an argument against usability which wasn't on his list of things he was going to argue against. I would say he's moving goalposts.


Just to keep the system afloat? No, that's a side effect. The reason why honest nodes are consuming resources is so they can make money, either through finding blocks and gaining a bounty or eventually, transaction fees.


What deeds? What do you think can be accomplished by controlling the network for a short amount of time? I admit that I don't know but do you? I'm not sure how fearful, uncertain or doubtful I should be without any specifics. Though, I admit "deeds" doesn't sound very pleasant.


The key phrase is "sufficiently CPU-rich attacker" which eventually would be infeasible for just a DDoS by a single attacker. Any attack has to include some kind of discussion about incentives. If I can make 2 billion by spending 1 billion then it makes sense. If I can piss the world off by spending 1 billion, there might be better ways to spend that money from the perspective of an attacker. Otherwise, if no profit is being made, we can just wait for the attacker to run out of money and resume business as usual.


That's a fairly huge claim with nothing to back it up. Is he saying that the same attacker able to bring down a decentralized system somehow can't bring down a centralized one? That seems implausible especially considering that he can't even audit the code he's depending on for his alleged security. He just has to take someones word for it! Either way, a data center full of GPU miners costs orders of magnitudes higher than a few exploding yellow vans. Also, if he's not paying any fees, who is paying for the infrastructure? Most likely, he is, with his tax money or if the fees are charged to the merchants then he's paying for it through higher prices for goods and services. Few things in this world are free. Of course, "privacy-preserving" has to be false or at least qualified. Privacy from whom? If it's just from the other end of the transaction, I can do that too. I'd like privacy from everyone, including the government and all their contracting middlemen.

the fatwallet link does exactly this sort of analysis. it would cost on the order of $700,000 for a competitor with a vested interest in the block chain's failure, or someone intending to profit from manipulating the exchange rate for coins in the current block chain, to launch a dos attack. that also suggests that a government - any government - could very easily stop bitcoin if it wanted to.

I assume that's right now. Is there any way to extrapolate to when we're at the point that he's talking about, when typical clients can't even be bothered to listen for all transactions or scan the entire block chain?

the cost of the attack grows linearly with mining capacity, no more. so whether it's asymmetric to value doesn't change.

That tells me little about how much mining capacity there will be in the future and therefore how much it will cost to disrupt the network.

The European banking system is a lot better than the American one, but that is because the EU government forces banks to be more costumer friendly, not because it's a competitive market.

This heavy regulation simply forces banks to find different, sometimes hiddens ways to cover their costs. Regulation cannot change the fundamental inefficiencies of the present banking system.  

For example: bank transfers may be free in the Eurozone, but opening a bank account with any kind of extra functionality can easily incur charges of EUR 200 per year in some European countries.

Also, bank transfers are horribly slow. A bitcoin transaction takes an hour to confirm at most, an IBAN transfer can take several days. (This might change soon though because there is no technical reason transfers should take this long)

Needless to say, bank accounts can be frozen, IBAN transfers are reversible, and third parties can access information about your balance. This is just a lot harder to do than with paypal.

I can't say I'm impressed by your refute of his arguments.

Super-peers are fine when all you need is about $1000 worth of hardware (that many IT guys might have access to anyway) to be a super-peer. Anonymity is doable, just not 100% built in. I'm satisfied that the security wait time is true, but it's bulletproof as far as we know today, providing sufficient people are mining.

No, Bitcoin is not perfectly democratic but it doesn't need to be. In fact, that would be detrimental because casual users are more vulnerable to being tricked into using a fraudulent client than expert miners.

No, Bitcoin is not perfectly anonymous but most users don't need perfect anonymity.  The few ones that do can approach perfect anonymity arbitrarily at a relatively low cost.

No, Bitcoin is not perfectly secure but nothing in this world is. On top of its technical security, Bitcoin is also secured by the social aspect. Above all, Bitcoin is a social convention, not just a piece of software.

No, Bitcoin is not safe against every conceivable DoS attack but neither is the internet itself. 



Conclusion: Bitcoin is far from perfect but it still beats any money that was ever invented, by far.

No. The system is decentralized in that the latest produced block is verified by every node by computing the hash themselves with the received nonce. It get exponentially harder to try and modify transactions that are deeper in the block chain. The concept of decentralization is that no node accepts any new data from the network as a given. It will verify the hash and react independently of other nodes. Previously network wide accepted blocks are considered valid by default since the computing power needed to change them quickly becomes astronomical.

Partial knowledge can easily work. Only propagate up to the last back up block to the light weight clients.


Once again no, each client reacts independently to the data newly propagated. Data deeper in the block chain is valid by that same process.


Yeah like someone obsessed with anonymity won't come up with an automated software to do that... There's barely any extra weight on the system. Block hashing is independent of transaction size. The space required to store those extra bits of data is perfectly in line with the network capitalization.

There are transaction fees. Those who truly want to become anonymous by splitting down their transactions have to pay higher fees. It is only fair and sensible.


Silly argument proven wrong 20 times over. Move on, nothing to see.


I'd like to understand who would bother buying up 50% of the network hashrate, getting that steady BTC daily reward, to then shoot himself in the foot by forking the chain in order to "make a profit out of double spending". That's nonsensical. The system is built so that rewards for trying to cheat the system provide less return than simply contributing to it.

The only valid motive for an attack on Bitcoin is to outright hurt or attempt to take down the system. The defense against that is that the network is maintained by mining, and as it grows mining gets more profitable, effectively increasing by leaps and bounds the amount of wealth a single individual has to invest to take it over. That's like one guy trying to stop the rest of the planet from switching to gold. As the group of adopters is small, he can bully it with an AK. But that's the only time he can hope to attack it. By the time Bitcoin gets big enough that haters will want to target, it'll take them the equivalent of an H bomb to do it on their own. Of course if the whole government wants to go after Bitcoin, that's another story. But still I'd like to understand how people can use gold if the gov sends out the military to kill on sight whoever uses it.


Yeah while you shit your pants hoping that guy who payed you with his credit card isn't going to charge you back in the span of the whole WEEK after the payment. Gimme a break.


Not exactly. The block header is built off of the hash of the previous block. For that attack to work you need to propagate that "held" block from the opposite end of the network.


Coins don't disappear, period. The fact that the network maintains the fork until one of the branches is proven valid is so that no valid transaction is lost. If the attacker includes fake transactions, those will go away as the block is turned down by the network. He can mix up those with some valid transactions to have these bounced back too, sure. What we are looking at here is a huge amount of dedicated power for the sole purpose of being a b**** to the network. The only effect will be to slow down the network.


Rofl.


How many http servers do you know with terabytes worth of copyright infringing content on it that is free to access anywhere in the world while providing top speed to all its users? Please name one... And despite all the efforts of the music, movie, gaming industry AND the US government, BitTorrent is still out there, working flawlessly.

Also, where's the DoS argument in this piece?

 

I'd say that it's the claims laid by the author that are dubious.  Does he really think that nobody, not even the government, can determine the balance in his account or to whom payments were made?  That's quite a nice system those Netherlanders have!   ::)

It's not accurate because the author doesn't know about the TFTP.

If he did he would not state that his banking system is private, as it's not possible to do electronic payments (of any form) today without the US government finding out about it. This is true for Europeans as well. I don't know anyone who would consider such a payment system to be private.

Yeah, because we all know that none of us West-Europeans are using bitcoin at all :P A lot of us would also like for the world of banking to be disrupted. Especially for doing business internationally it's way too complicated right now to take payments. For me, it has little to do with trusting or not trusting the government... Today's more and more globalized world needs something better than the current patchwork of toll-taking banks.

I said, in general.  There are statist Americans and there are classicly liberal Europeans.  In the present state of things, however, Europeans tend to trust their governments.  That's just the cycle of things.  60 years ago Americans tended to have the trust of government intentions and Europeans didn't.  This is reasonable considering that the US had just recently won a World War that was started by European governments screwing with each other.

I also noted when he mentioned that "I enjoy an instant, secure, privacy-preserving payment system" that he was oblivious to privacy issues. I didn't bother reading the article after catching that quote on this topic.

Is it true that he believes when he connects to a SSL payment processing site, makes a phone call or appears in person to initiate a payment/transfer that he hasn't leaked any private data? If so, well...good luck with that.

It's a tough one to get at. People are culturally used to debt based economies, which would suffer horribly from deflation. There's just no way around it, some people won't admit to it until Bitcoins are worth $1000, and even then some will oppose it. You should have noticed that most of the hate for Bitcoin has poured in since its exponential growth triggered around early April. That's people downtalking the feasibility of the Bitcoin projec after it successfully took its first step. This kind of response is emotional.

I'd be surprised if Europeans didn't have more trust in their governments even 60 years ago.

Part of it is cultural - if you have a pretty consistent culture over a long period of time with not a lot of mixing, conformist tendencies tend to be greater.

The type of person who came to the US as an immigrant (from anywhere) is someone who is not content with their lifestyle and is willing to actually do something about it.  People who moved west to a new area where there was uncertainty took a lot of risk and only is going to be popular among certain personality traits.

He has a point. It is simply taboo to root for reduced government power in France. The first reaction people have to any kind of issue is "what is the government doing about it?"

I concede a cultural aspect.

That's not terribly different than 90% Americans today.

technically bitcoin may not be perfect. who ever said it was. ill take it over fiat trash.

You just pulled that number from your anal regions.  I doubt that it's anywhere near that high.  The Advocates for Self-Government says that their "World's Smallest Political Quiz" implies that libertarians are roughly 30% of the tested population.  If that is remotely representative, it's not even possible for more than 70% of Americans to default to "what is the government going to do about it".

Think you posted on the wrong thread tom :P

You want this one:
http://forum.bitcoin.org/index.php?topic=8720.0

Amen.

I had a much different impression. The Tea Party push during last elections was big enough that every French channel talk about it at least once. Compared to this, the most extreme rightist French economists could be considered communists.

That's because the most extreme "rightist" economists from France are communists.

The Tea Party was originally formed as an anti-government group, but was quickly corrupted by mainstream politicians to advance anti-Democrat position.  It went from a "small government" group to a "we hate Barack Obama" group very quickly.  A huge number of Tea Party supporters now also think George W. Bush was a good president.  They like the wars in Iraq and Afghanistan, love Social Security and Medicare, and want the government to make sure people live upstanding lifestyles.  That is far from what it's original principles were.



That quiz is biased to get a lot of people identified as libertarians.  It's by design that it's high.  That doesn't mean they are actually libertarian.

You came up with the perfect analogy! We're currently riding the "backbone" of bitcoin right now, but in the future it's entirely likely that we'll be abstracted some layers from this. It's the whole "supernodes" thing again with processing transactions: the point isn't that everyone can do everything, but that no-one actually controls everything!

This thread would be much better if there was less political posts to wade through looking for the actual rebuttals. Bitcoin is very good tech, all the wanky political assertions and theories and sweeping statements should get out and leave the way clear for the technical and economical talk.

However I beleive there is an Off Topic forum...

Do you have references for this position, or is it just your opinion?  From what I understand, that quiz was well vetted for neutrality, and has been around under one name or another since the 1970's.  It's possible that it's biased, but I've given out dozens of those cards and found a fair distribution of Repubs & Dems that seems to match reality fairly well, with the majority of independents ringing in as libs, but certainly not all of them.  I've had true statists.

All life is politics, and Bitcoin is no exception.  We may attribute whatever leaning we desire to the project itself, but he political motivations of the founders are not in doubt.  They are alluded to in the genesis block.

Sorry to interject in this fascinating discussion with my limited 2 cents worth of info, but you bring up a very good point. In today's financial system you never know how many intermediary banks along the way your payment will go through. Each one may have a commission that they'll take. Thus what the other person (or you) end up at the end of the transaction is not always 100% known. Toll-taking banks indeed!

The quote from a newspaper? That only seems to imply that Nakamoto Satoshi does not approve of quantative easing or other expansive monetary policy. If more people will look into bitcoin they will not need all the time to think it is a project for people with perculiar political views and nothing more. It would be as to say "let's make a form of money to be used only by right wing conservatives, we will insult, bore, and accuse of corruption, idiocy and badness everyone else". This is below the standard necessary for a widely adopted technology. Bitcoins political effects can emerge for itself.

Are you saying that wouldn't be a political opinion?


I think that I'm actually insulted.  Did you just call me a "right wing conservative"?

These forums are a terrible place to talk or learn about bitcoin.

It's more of a den of "isms," whichever you want to pick out - I'd say libertarian fantasist, but that's just me. I've taken to reading the blog posts and associated comments if I want to follow current arguments, especially technical ones. Too much cruft around here.


It's not hate. It's not emotional. 90% of these critiques express admiration for specific aspects of the bitcoin implementation, and sometimes even the ideologies that are associated with it.

Nobody talked about it because nobody knew about it.

What worries me about bitcoin is the number of people who are so emotionally involved in this.

If someone comes along and makes a good critique of bitcoin, the last way to respond is to just insult him or call him names.  I know people have invested in Bitcoin and so they probably do feel pretty passionate about it but for the sake of the community we do need to try and stop all this insulting/name calling.

Yes I believe Bitcoin is vulnerable to DOS attacks. So is Google, Yahoo, Microsoft or any big website. But it seems (and I have to admit at this point although I am a computer science grad, I have not read and understood all of Satoshi's paper or the Bitcoin source code) from what I understand that whether a DOS attack will suceed or not depends on the size of the Bitcoin network.

At the moment, as sourced from the fatwallet.com post, it apparently would cost about $700k to build a network the size of the current bitcoin mining network. (I assume this value is true, but the actual post does not contain any mathematics or data to back up that claim).

How likely is it that an attacker will have access to a network that big and be smart & motivated enough to use it to attack Bitcoin. And how long would it take an attacker to do that? Because the longer it takes him to do that, the more difficult it becomes to outcompete the Bitcoin network, due to the fact that more mining nodes are being added every day.

As time increases, more people use Bitcoin, the value of Bitcoins increase and so the financial incentive for mining increases, so the number of miners increase. As the number of miners increase, this leads to a network that is more secure from DOS attacks.

Thus whilst there is a theoretical security risk embedded in Bitcoin, practically it seems to be a different question as to whether the network would actually be compromised. I do not know the size of the current network or how easy/difficult it would be for an attacker at the current stage, but as every day passes the network becomes more difficult for a DOS attacker to compromise. Because I do not know the size of the network it is difficult to pass judgement on how easy/difficult it would be for an attacker to compromise it at present. If anybody has that data, then it would be useful to share it.

Btw, in response to some earlier post that said "who has access to a $700k network", the answer is someone who has access to a botnet, the kinds of people who are able to perform high profile DOS attacks on websites. (like paradoxically the guys who took down MtGox the other day). Whether they are able to take down the much larger Bitcoin network is a different question.

The emotional response is regarding deflationary economy in itself, not Bitcoin specifically.


I doubt the honesty of such admiration. Considering the content that follow such comments, it sounds more like an argumentative concession than anything else.


Maybe. This also happens to be the only place where people will defend Bitcoins, and provide proper arguments in the process. So far what I have seen outside of these forums is on one end tech savvy people bashing the tech without bothering to research their own misconceptions and providing some crap shoot argument about the economic side. On the other end of the spectrum, you have economic savvy crowds that bash the deflationary part while crap shooting on the tech arguments. In the middle you have that blogger, that understands neither and crap shoots both.

I liked the sarcastic optimism in the last line of the article.

I don't think the DOS attack argument has any strength to it. Out of all the possible attacks on the network, it seems to be one type that involves the most resources for the least amount of disruption in return, if any.

I think it is not required to digress further when we examine again the title of this thread:
"Bitcoin concept is groundless TECHNICALLY".

TECHNICALLY the author of this piece never once mentions the TECHNICAL problem which Bitcoin was created to solve.  And the entire point is that it doesn't have to be TECHNICALLY perfect in order to do so.  That's the difference between an economic system and a mathematical system.  The best economic system in the world doesn't have to be mathematically correct, because people are far from perfect and the alternative is basically trading with each other using scraps of paper, shiny rocks, or groundless faith in far-off bureaucrats.

Let's put it this way, my house doesn't have to be able to withstand a nuclear attack in order for it to be an economical way to protect myself against thieves.

I read the points raised and felt that the author is not correct, particularly as I also think that bitcoin is good enough at what it is. I don't feel inclined to go back and address the article point by point, suffice to say that bitcoin is useful for what it can be used for, and that it will so be used.

he basicly right[esp because he focus on theoritizing and thats worx magically for/against outsiders ;], but similar flaws was shared by "traditional" systems.
there hardly much "freedom" in common sense in nowdays BTC reality.

I just learned about bitcoin a few days ago, but really find it fascinating.  I read OP's linked article, but I fail to be dissuaded of bitcoins potential, usefulness and security. Here is why:

Peer to Peer?
The author points out that its impractical to keep record of every transaction ever done on every single node, a point which the creators of bitcoin acknowledge.   The author fails to point out that bitcoin uses a merkle tree to essentially compress transaction data while maintaining security, making it possible to avoid nodes having to contain every transaction. He does note that scalability would probably lead to a tiered system, in which there are supernodes that do have the capacity to maintain all transactions, while other nodes would not.   The author likens it to "commoners" and "lords" in a british peerage system.  This is not an accurate analogy, since the barrier for entry to become a "supernode" equivalent or "lord" in the system he describes is very high or impossible for most, while in bitcoin that barrier would remain relatively low. See bitcoin wiki on "scalability".

Anonymous?
The author points out that bitcoin is not perfectly anonymous. I don't feel this is a requirement for a useful currency, but regardless, bitcoin has very good anonymity compared to anything else. I wouldn't discount its usefulness simply because someone set the bar at perfect anonymity.

Secure?
security and reliability is probably the primary concern of some new form of currency, but i dont feel the author, nor do i have a good grasp of how bitcoin achieves its level of security. I think his claims here are a bit overblown. He talks about block forking attacks and how they have the potential to disrupt transactions and accounts, but does not acknowledge the scaling difficulty of the encryption required to find blocks, or how that relates to processing capacity of the entire network. With out understanding the rules nodes abide by when addressing forks either, its hard to make conclusions as to how the entire network will behave in these instances.  See bitcoin wiki entry on "how bitcoin works" for more information.

He has an interesting point about asymmetry of good nodes vs bad nodes.  Good nodes must be constantly on(using power and money) as a majority of a network to maintain security, while bad nodes can enter at any instant to disrupt things, implying that a cost benefit analysis would favor bad nodes. I feel this is addressed not only by coin generation in block finding but also by transaction fees, which again the author does not mention. These two ideas have the potential to put cost benefit in favor of the good nodes, if necessary at all.  

While interesting, i dont think the authors points are very good or informed, i much preferred "Computer Scientist" on the fatwallet forums counter arguments to bitcoins here:
http://www.fatwallet.com/forums/finance/1090435/?start=192