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Sorry to burst your ehm... bubble... but what he's actually saying is this:
"This technology is getting allot of hype and it's a direct competitor to our business model. So while our current strategy is to kill it with fire and freeze any and all accounts that touch bitcoin, we need to show preparedness. In the hype materializes and we need to move towards cryptocurrency, I don't want to be remembered as that guy who said 640K should be enough for everyone. We stay on top of things and if need may arise we are ready to build our own cryptocurrency".
An acknowledgement at this level is indeed bullish and can only mean that cryptos are a hot issue for venture capitalists in Silicon Valley at the moment. That doesn't mean the Bitcoin speculative bubble isn't as ridiculous as ever; it means the XRP guys have basically hit the gravy mother lode.
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30 (pessimist) to 60 (optimist) is what I expect too, long term. The buying sentiment is simply fading away: https://www.google.com/trends/explore?hl=en#q=btc-e%2C%20bitstamp&date=today%201-m&cmpt=qDitto for mtgox, but I think these smaller exchanges are more relevant for buying sentiment because they are less likely to be searched by someone who simply wants to know the "price" of bitcoins. Plotting the exchanges also addresses the "people don't search for bitcoin anymore because they know what it is" argument. This current dead cat is caused by people who were incentivized by the first run-up, sent their money to the exchanges, but the ddos and the attacks popped the bubble prematurely, before they could buy in. So they are seeing this as a chance to buy cheap, and the positive evolution confirms their expectation and fuels the greed. Trouble is, there are no greater fools filling the ranks from behind, people who were not caught in the initial whirlpool have seen the risk and will simply stay away. |
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I've actually made an offer of 10.000$ for less than 100$ @3month, see my posting history.
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I see no reason for Mark to make this up. No sir, no reason at all. It's not like in the last two weeks mtgox made more money than in it's entire history. It's not like rapid appreciation and volatility is making him richer than Satoshi Nakamoto. Cmmon guys, is there was really a bubble that burst, would he be lying us ?
Let's not forget about the people trapped in MtGox waiting to be verified. Another one of mark's bedtime stories. People, you are grasping at straws and you are sheep. Regardless of this here dead cat and "return to normal", the bubble is done and price will succumb to less than 50$ in less then 3 months.
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People seem to think that having a faster block finding time is better [...] Obviously there aren't any nodes in space, but the point is that "Satoshi Nakamoto" thought ahead enough to foresee potential distance or connection problems.
Oh brother. The great and wise Satoshi did not extract the 10 minutes interval basically out of his ass for what was intended to be a proof of concept cryptocurrency experiment. No, he envisioned this experiment will grow to the point where the whole universe would use bitcoins, turning the early adopters into filthy rich Jabba the Hutts. Give it a rest already. A smaller interval can be unstable and reduce the security because of increased forks and orphans, so altcoins are a good experiment to see how low can it go. The 10 minute interval is a nice round number that errs on the side of caution. It has nothing to do with you greed induced fantasies of interplanetary wealth and the dancing princess Leia on a chain. |
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vim, zim, xim (at the same time a valid ISO 4217 code, XIM)
The backronim could be "Virtual Money", "Zerotrust Internet money", "X-Internet-Money"
"Yo dog, drop me some of 'dem zims..."
ping - to underscore it's Internet nature. "Ping me man !"
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I think if the market actors generally understood and accepted the theory that i put forward in my original comment than the market could (mostly) price all of this in and bitcoin would experience steady growth that corresponded to the average mans time value of money. The problem is that we have never had a deflationary currency and most people dont think in abstract logical terms they tend to rely on empirical data (if they are rational at all) of which we have very little.
While this is plausible in a steady state, it is not possible during rapid economic expansion, like the early adopter phase. The only way to have bitcoin stability now is to convincingly convey gradual higher targets for the eventual size of the bitcoin economy. Price will immediately jump to that value, with a small time preference discount and a large internet-funny-money-better-go-to-the-bank risk discount. If there is room for economic growth, and the market sees it, it will internalize it as deflation, preventing growth. So for this reason im not prepared to say that deflationary currency is a bad thing per-se, mostly because the inflationary currency that could theoretically solve this problem would be unlikely to ever be adopted because it would be rational for the collective to use an inflationary currency but irrational for the individual It's unlikely to follow the same adoption paradigm as Bitcoin, people won't hoard it because it loses value and can't use it yet because there's no market for it. So Bitcoin is a great forerunner, creating the infrastructure and the market for cryptocurrency. If at a later stage a stable and slightly inflationary currency appears, the community would be all over it because it's a better currency. The marginal cost of extending mtgox, bitpay, silkroad etc. to support this new bitcoin-like currency is negligible. You could incentivize them by giving away lots of the initial batch of currency to prospective customers and make the market for a limited time to give it value. So with a little help from a centralized pusher in the bootstrap phase, decentralized inflatacoin could survive and disrupt bitcoin. |
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Processor cycles are not "useless in themselves." The computing power/energy can be put to other uses. That's the point.
Do Koomey normalized hashes really jump a whole order of magnitude (i.e. 10x) during a year or two? Source?
Processor cycles are not useless but hash collisions are. So while it's easy to produce more hashcoins when they are valuable, nobody gives a damn that your hashcoin took 10x more cycles to produce a year ago than they do today. You can't recoup those cycles and put them to other uses. So unlike bricks, there's no built-in inflation protection. For the hash energy cost variation, just look at the Bitcoin mining market during the ASIC and GPU revolutions. We should not expect each new incremental technological improvement to affect the mining market. It's a small market where a single product can change the game. If 120nm ASICs are available today, we should not expect a 90nm ASIC a few months from now because of fixed development costs, economies of scale for the incumbents, etc.. If mining stays profitable a few years from now someone will introduce a 22nm chip which will have a rapid impact. Maybe not 10x, but even a 2x efficiency improvement (or rumors thereof) will be highly disruptive for the hashcoin currency market and it's users. |
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So you are trying to build a table of peer IPs and geolocate them to their local electricity price ? You should really read Douceur's sybil attack paper and let it sink in for a few days, then take another stab at this.
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Yes, but you aren't a criminal and your bitcoins are legal, that's why you have no problem giving an address to receive cash. A drug distributor would not sell his drug earned bitcoins for cash, especially if bitcoin trade is illegal too. Double whammy in the slammer.
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Very high probability that this prohibition could start civil war! We're talking about the leeway government has in this problem and the whole "Bitcoin is indestructible" mantra. So if for the sake of argument the law is presumed passed , it's irrelevant if people at large see you as bad as a pedophile, the penalty is the same and that's what the SWAT team and the judge care about. As to how such a law against cryptocurrency could came to pass, let me just say your internet money is very low on the priority list of the vast majority of citizens. The law would be written by lobbyists, passed by a large majority, and wouldn't make it even on the evening's news. No civil war will ensue, I can assure you of that; I lost all hope in humanity after CISPA. Sell Bitcoins on SR = get cash. That's like saying Silkroad could work even without bitcoins, people could mail each other cash and the site would keep track of the accounts. That won't work because if I'm a drug dealer with a stash of 10 pounds, I will never ever type my address anywhere in order to receive a cash envelope. If the whole bitcoin seller's market is composed of criminals I can't blend among regular people and a sting operation when selling my bitcoins will lead straight to my stash. |
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A new bubble can happen now (next weeks) or after a few more years. Not in July. Once the euphoria and the media frenzy dies off, there are no more dumb money entering the system, so a long term bear market will follow. For self-sustained 500$ you really need massive visibility, greed and willful ignorance from many people; so something massive must happen now to reignite the bubble, or never. |
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Silkroad works because of bitcoins. So you can do the cash or bank transfer legally, and receive the illegal goods. If Bitcoin in itself is deemed illegal, you need a legal "bitcoin2" to purchase bitcoins. Get it ? But of course they will ban all distributed online currencies in one swift blow.
They can do much more than close exchanges and local business. They can ban you to connect to the bitcoin network, just like they will SWAT your home if you share childporn on P2P. Tor, Truecrypt and paranoia for everybody, yay. They can put you in jail for meeting someone to trade bitcoins for cash, just like trading stolen creditcards numbers for cash is illegal. They can monitor your bank account and convict you of money-laundering if you send money to an entity abroad connected to the bitcoin trade; just like you can't wire money into PLO's account. They can tap you phone and convict you upon mentioning a bitcoin transfer.
In short, a prohibition like this would put an end to Bitcoin's use as a currency. Narco mafia doesn't need something that only the mafia uses, they want clean legal cash like everybody else, that's the whole point in money laundering. If all users of Bitcoins are criminals then you need another way to launder them. Bitcoin might survive prohibition as a mafia only currency, but that's hardly a reason to "invest" in it; especially given it's vulnerability to the "10$ wrench attack" when you try to sell it to these guys.
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Money laundering is already illegal. So they need to expand it's definition to include "participate in an distributed internet money laundery activity". It doesn't matter if your bitcoins are legally acquired and used. Some people use Bitcoin for money laundering, that is obscuring the proceeds of crime and by participating in the bitcoin network you are a contributory. Just like every bit that you send online is legal but participating in a torrent swarm is illegal. There is no constitutional right to financial privacy and if the law does not already cover Bitcoin they will expand it to cover it.
This means that you can't run an exchange, you can't wire money to an exchange abroad, you can't meet in a dark alley to trade bits for cash and you can't connect to the Bitcoin p2p internet network. All punishable by 2 to 5 in the fuck-me-in-the-ass prison.
Can they ban Bitcoin ? No, just as they can't ban drugs. People can still grow weed at home. It's just that no sane people will do business in that particular field of activity. We're just under the radar right now, that's all. They will come down on it like a ton of bricks when Bitcoin becomes more than a nuisance.
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I'm ready to bet 10.000$ that 3 months from now the average price for all BTCs sold on mtgox during a week is under 100$. So we pull the order list from mtgox, multiply quantity with price, add and divide by total sold. If it's under 100$ you give me 20.000$ back, if it's over you keep the original 10.000$. I don't care what happens to the $ in the meantime as long as you have liquid assets to cover the 20.000$, and by 'liquid' I mean anything other than bitcoins.
Easy money, this is as good as shorts get; unfortunately you can't convince me that I can do this safely without exposing myself to BTC volatility and without trusting a random guy on a forum...
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So, some nodes then have the transactions [A+B], [A+C], and [D] but will never know about [A+D]. If a merchant relies on this node and accepts [D], that merchant loses if [A-D] gets included in a block.
So this doesn't really eliminate the risk, it just makes the attack a little more complex.
Ok, so my implementation was naive too. The object here is to avoid opening a new DDoS avenue other than multiple small transactions each with it's own fee, which is already possible. Without putting to much thought in it it seems possible to make at least one alert reach the merchant without flooding everybody with double spends. How about forwarding whenever, from our perspective, a new input is used ? |
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Seems like a nice way to artificially reduce the network hashing rate / temporarily split the network.
I use a number of nodes to send 2 transactions spending the same input to the network, but I make sure to send them as close as possible to the same time. Thus, the rest of the network see that there is a double spend, but there isn't a strong consensus as to which order the transactions arrived, so half the network mine a fork with one transaction and the other half mine a fork with the other. At some point in the future, one side decides it must have been wrong and one of the forks wins. Up until that time, each fork has been competing possibly with many reorgs.
That's for a single double spend. Now think about a collection of nodes which continuously pump out double spends. Each split halves the hashing power if perfectly timed, it doesn't take much to bring the network to its knees.
Great attack. One solution, as others have suggested, is to make the penalty time dependent. You apply no penalty when the race took a few seconds, than gradually diminish the Finney block's difficulty for higher delays as you are more and more sure most of the network agrees with your order. So rapid double spends will not halve the hashing rate (but will be detected at the store) while delayed broadcasts will shave <1% of the hashing power (the poorest connected miners, who will tend to be the same regardless on where you inject subsequent double spends). This makes sense from a rationality perspective: it's irrational to extend a shorter chain if you don't know the ratio of altruistic nodes that share your view. For higher broadcast delays, when are you are sure altruistic nodes have detected the correct order, it's profitable for you to follow their penalty scheme, for fear they will tend not to extend your work otherwise. But what happens if the Attacker Mines a Block at T=12 that contains Transaction 2?
In this case Miner group A will not accept this Block, but Miner group B will continue on the Block and the chain will Fork.
If both Mining Groups have the same Hashing power the fork can last for a longer Time. It's not a good solution to put a discrete limit, like 10 seconds, after which penalty jumps, because you invite races against that limit. I propose a gradual penalty proportional with the delay. So that your scenario reduces to the classic Finney attack with a slight dispersion in penalty across the network, not enough to split the hashing power but enough to incentivize miners you not to attempt it and thus increase the cost of zero-conf double spends. The correct Penalty[delay] function to achieve this needs to be experimentally or mathematically explored, as well as the resulting zero-confirmation payment you can "safely" accept. It's more than a tweak tho, it's a major modification to the blockchain extension rules... |
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You can never be guaranteed a notification of a double spend.
The classic example is where you broadcast transaction A, and then quietly mine transaction B.
This is the point of the Tweak 1, guaranteed notification. You either get: - instant (<10s) notification that a race has happened and the state of the network is undetermined, so you can fail payment - delayed (>10s) notification that a double spend was attempted, but the state of the network is in your advantage - delayed notification (minutes) that a double spend was attempted when the Finney block is broadcast So the attacker is forced to go Finney, raising the bar for the attack. It's not about absolute security, it's about opportunity cost and making instant transactions "safe enough" for a Bitcoin vending machine. Now they are not because race attacks are trivial without Finney. Something like this has been suggested a while ago. But how does it help with the problem at hand? A pool can still replace the first tx if the second tx has a higher fee. It helps with altruistic pools and miners, who will respect the wire order. For rational, profit maximizing miners we need to create incentives as in Tweak 2. |
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You still need some way to define which one is correct. Presumably, the merchant asks the customer to take a seat and wait for 6 confirms of the original transaction. No. If both transaction arrive while the customer is at the checkout, it's cryptographic and legal proof he (or his software/hardware) attempted a double spend. You simply don't deliver the goods. It's irrelevant if you still get the attacker's money; he needs to explain to the police how he attempted to hack the store, failed, and now they won't give him his money back. All nodes on the network would have both transactions, but may not agree which is first. Of course, but what Tweak 1 ensures is that the merchant simply knows there are two competing transactions during the listen period. If a second one does not appear in 10 seconds on the wire, he's fairly certain all honest nodes agree with him on which is the first transaction, even if the double spend should later arrive. The current rules make it that if the merchant's neighbors hear the first transaction, they will never forward the double spend to him, while in other parts of the network the double spend transaction is really the first and the legitimate transaction does not propagate. A dangerous race is going on about which the merchant has no idea. He needs to pay observers with thousands of peer connections to watch the network and report back anything suspicious. Tweak 2. Don't obliviously extend blocks containing a double spend. When selecting the longest subchain to extend, blocks containing a known double spend should be assigned a zero or negative difficulty. All other things being equal, a miner would chose to extend a 2 blocks subchain rather than a 3 block subchain the first of which contains what he can recognize as a double spend.
I assume you mean don't extend a block which the 2nd transaction from a double spend? Not forever, that would fork the chain after a double spend race. Just slightly penalize the chain that you believe contains a double spend. And if everybody does it, it's rational for you to do it too, even if you are not sure how many other miners share your oppinion on which is the double spend. This is what I mean by saying the strategy is stable in the Byzantine-Altruistic-Rational sense. **) What about a large negative penalty, worth one or more blocks average difficulty ? It would make double spends attacks even harder requiring private mining of 3 or more chained blocks; but at some point reorgs are slower and deeper with many orphans, negating the benefits.
That seems unfair to miners who included the transaction in good faith. On the other hand, it creates an incentive for the miner to have maximum connectivity. Exactly. If you have connection problems and extend the doublespend because you haven't heard about the first spend, then you will penalized by the altruistic nodes who are have good connectivity for the sake of the network. So it makes sense for you to have good connectivity, at least to the point that you can receive two transactions broadcasted 10 seconds apart in the correct order they were broadcasted. If the attacker shortens this delay, he's risking detection at the point of sale. |
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