I think it is a little worse than that. An effective Sybil attack is necessary to make the attack viable for a small pool, but the larger the pool is,  the less effective the Sybil attack needs to be. For a pool larger than 33% of the network, no Sybil attack is required.

On the other hand, one mitigating factor that is not mentioned in the paper is that the attack buys you more revenue long term, but in the short term you will see a loss of revenue. You are not finding more blocks than before (in fact you are losing some of your blocks) so your income within a difficulty adjustment period will actually drop (but so will everyone else's). The increase in revenue comes later due to the fact that you caused others to lose blocks which makes the difficulty drop (or just rise less than it would have) which then nets you more blocks in the long run.

However, since
 a) The attack can easily be detected (sudden increase in orphaned blocks)
 b) The attack will negatively affect the bitcoin price.
the revenue impact of performing the attack is probably negative even in the long run.

I think this is brilliant. You probably also need to specify that balance checks on the address should be done using a copy of the blockchain, not more than X days old (30?) and that the trusted entity keeps the physical bill in their possession until >X days after they have redeemed it.

This might mean that for certain use cases bills that are being removed from circulation, but are still legal tender might be preferred, since the trusted entity can go deposit them at a bank immediately upon receipt and they should subsequently be destroyed. However when a given bill is being removed from circulation, it is usually because counterfeiters have become too good at producing good forgeries of that design and new security features are being introduced.

This stuff is messing with my head.

Apparently I don't understand it either  .

Despite my ignorance, I want to make the following suggestion. Perhaps, if you could point out the weakness in this scheme it would help me see what I missed.

I think Alice's cost in producing the query can be made independent of the tree size. Simply require Bob to fill a table with the values of
H(seed + index) where index ranges from 0 to N and H is a hash function (preferably a memory hard one). He can then sort these results as before.
 
Alice can easily choose a random index i and compute H(seed+i) for a constant cost and then challenge Bob to produce i given H(seed+i). If Bob stored the sorted table a binary search allows him to find the correct entry in O(log N) time. If not he needs to compute at O(N) cost.

As far as I can see, the Bloom Filter Tree optimization that cryddit described will still work against this, but perhaps the fact that Alice's cost is now O(1) means that we can simply assume that legitimate clients all use this optimization and demand 100GB of nominal storage knowing that only ~1GB of actual storage (or whatever the true ratio is) needs to be consumed in order to be able to respond to her queries in a timely manner.

Secondly, I'm not convinced that the query forwarding attack that Sergio describes is actually an attack. If it costs me 1 GB of storage to be able to connect to X and Y wants to connect to me at a cost of 1 GB, why shouldn't I be able to offload the cost? If we don't setup in a secure manner as outlined by Sergio, a timely response to a Proof of storage query essentially proves either that I have stored the data OR that I am maintaining an open connection to someone else that has. Both of these are costly. So, if I want to open 5000 connections using this attack, I first need to convince 5000 clients to connect to me and I have to maintain those connections.

Same here. Had a few more withdrawal go through without problems. I am glad that I am no longer dealing with gox. There's a long list of mysterious events at that site that they really should explain. These double spends not the least of them.

Update. I sent three payments. One for 1BTC, one for 4BTC and one for 95BTC. The 4BTC payment was double-spent as shown in my earlier post. The 1 BTC payment eventually arrived. The 95 BTC payment did not show up on the API for a long time, and when it did eventually show up, I could see that it has also been double-spent. I include the tx here as documentary proof:

{"hash":"42c12ac94b36ef9df1df3bc455d1a12ace6ac77ce7b0911801bd825ed836e537","tx":"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"}

Anyone who wishes to can see this tx for themselves on the gox API and also verify that it has been double spent, by submitting it at https://blockchain.info/pushtx . To see the details of the tx one can submit it at https://coinb.in/decode-raw-transaction.html. Both of these pages expect the tx in hex format though, so here is the tx as a hex string :

0100000003a5f76c3f4fadda29cb112e3804a5fb123c6b32a447c4ee9091fc982ce72ec0c100000 0008a47304402200edee7fc22e56bfb396e3c229d4402284f98f475c2cdf3f09b2a93f9e18ebb37 02200cd352b2a0c40ced79cbb3fef14727b87ead89fcb6697a56fc9ebafda1314974014104c7029 11acc09ea653b770dcbe366cafdc4a4ee932ae3c6c7de45ff3f9c07e214e226089c7ae414681483 99d27e11280fed3f7344cc48b2d215f42d92c6be083dffffffff1f1cbf70e73c55a7f54420b29c3 be1c5f5edeb2987ce42e6e58b793b62d3e906210000008c49304602210088421bb4940411e58060 530094eabf46f5c6afcec8acacd8547ff3b1109940a50221009195d62dc0b232e69b9b1398401f0 e362e05db59907d0ef5be56d0a4b56f3dfb01410496700ea9647517d5e208c7693ad717370074b5 50b78fea5bed670f2028fe0ae418e57abda866b59a3b2ec7b74b7b248c698dab770aff2ad9f2a0d d31ed00e735ffffffff9b716bdadf7e44e303cb3938f5ced991fd92c7b89daa578c99053f65a70a aedc010000008b48304502205e8f66c655dfd119840959ee4f5a72514faf0a4f817ceafc32f3d48 77e8995b3022100c767dcb9a66b1993842c473daf695b5124ea650be8898902fea094230fdb40ef 01410401be39b85637bcdc87fbc25ebca5bb468c9787b55fc2f914874876adcb5e77bd8ca945b11 7a47a845520d1a0eb009799dfee1169cdf41fc90d8cc504fc95a153ffffffff02007f3e36020000 001976a9142474aa4a25b54d26b0ffb87bc46d4bbc1be7478688acf486ba17000000001976a914b 6e4c6e2857ded85e449a77a0676ae94e1c59aa388ac00000000

same problem here. 

The same thing just happened to me. Here is the transaction from https://data.mtgox.com/api/0/bitcoin_tx.php

{"hash":"0f5295851dc64a16c0821bbc7519481b440fc7ed03079202e38e969bfb7bf42b","tx":"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"},

I tried to rebroadcast, but the tx gets rejected. Decoding this shows that this is because the second input has just been double spent in this transaction.
https://blockchain.info/tx-index/94395264

I find this extremely disturbing.

This was one of three payments sent this morning. I have yet to decode the oother two, but I expect to see more of the same.

Same story. I've tried with several different  addresses and amounts now. No luck

Never in my life have I experienced such poor customer support. My account was one of those attacked on the 13th July with a password reset request. See
https://bitcointalk.org/index.php?topic=255630.0;all and http://www.reddit.com/r/Bitcoin/comments/1i7ydk/psa_reminder_do_not_store_anything_of_value_at_a/
for other reports of this attack. Incidentally I have yet to hear an explanation from mtgox of how the usernames of a large number of gox users leaked and how the attacker managed to request password resets even without the yubikey (in my case) which is supposedly required.

Anyhow, that is not even my complaint. Fact is, after picking up on the attack on the very same day it happened. I have still not been able to get access to my account to this day, more than 4 weeks later. When I enter my details in the password reset form I inevitably end up with a message "You have made too many recovery attempts, your IP has been blocked. Please click the help icon at the top of the page for assistance." This is  untrue and happens even when I attempt the reset from a different PC with a different IP. I have contacted gox support 15 times and counting. I have identified myself to their satisfaction, I have sent screenshots illustrating the problem, I have asked nicely, I have begged and ultimately I have lost my temper. All with the same result. Zero.

I have been told that the issue has been referred to the dev team and I waited more than a week before contacting them again after that. No progress whatsoever. On more than one occasion I have been told that the problem has been resolved, only to find that nothing has chhanged on my end. I have dealt with Danny, Dennis, Patrick and Linda. They have varying degrees of ineptitude and their first suggestion is inevitably that I go reset my password. Yeah dude, after four weeks of being locked out of my account do you seriously think that I have not tried that yet.

After giving them detailed information on the nature of my problem and identifying myself to their satisfaction and voicing my concern over whether my money is safe I got the reply:"
Hello Hennes,(sic)

We have increased the withdrawal limits for the account..."

Because when a hacker is attacking your account and you cannot even get access to tell if your money is still there, nothing sets your mind at ease like knowing that your withdrawal limits have been increased. 

In my latest contact with them I insisted that the developer which is supposedly working on this just drop me  an e-mail. Request denied. After repeatedly inquiring why this should be so vehemently opposed I was treated to the following "gem"

"As advised earlier developer do not communicate with users directly and they do not have email access and probably they are not even good at language so that is why we are there here to communicate issues to them."

So apparently the gox devs don't have email access. Starting to see why it might be tricky for them to debug password reset email sending functionality. Just how stupid do they think we are??

It is seriously time for these clowns to just go out of business.

Yeah sure, I'll take that bet at even odds. If at any point in the future, the price drops below $115 you pay me 1000 BTC. If not, I pay you 1000 BTC. 

And record levels of fiat on the orderbook

Yep, co-worker signed up with gox on friday. Was number 25,XXX on the queue. Now down to 20XXX. It will be a while. The fiat arriving now was sent before the crash and the owners of said fiat took their place in the queue well before the crash. It will be interesting to what they do. I suspect most of us are playing wait-and-see.

I've been looking at downloads of the satoshi client as a proxy for new interest in bitcoin after the crash. The sourceforge page automatically starts aggregating downloads into weekly or montly buckets as one increases the time over which the downloads are tracked however, so I used the API to get at the raw data and created my own graph in matlab. This shows the number of downloads per day since the beginning of the year. The red line indicates Wednesday the 10th of April.



The number of downloads peaked on the 10th with the second highest volume day being the day after. Something the  complicates interpretation of  this  graph is the fact that there is a weekly oscillation (with a peak on wednesdays and a trough on sundays) overlaid on the underlying trend. To show the underlying pattern more clearly, I sorted the data into seperate bins for each weekday and graphed them as separate graphs.



On this graph it is clear that interest in bitcoin appears to grow unabated. The past sunday had the highest download volume of any sunday this year exceeding the previous peak by more than 20%. Similarly for saturday, friday and thursday. The google trends data for "buy bitcoin", "buy bitcoins" and mtgox tell very much the same story, but unfortunately no API is available to get at the raw data.

http://www.google.com/trends/explore#q=%22buy%20bitcoin%22%2C%20%22buy%20bitcoins%22%2C%20mtgox&date=today%201-m&cmpt=q

It's fine to ask many questions. Just don't expect any authoritative answers. The only person who knows the logic behind the wall is the one who put it up. That person is unlikely to be present on this board, and even if  he/she was here, is unlikely to  tell  you the truth until after the trade is  complete. You will hear lots of theories here, but the fact of the matter is: nobody knows.  
 

Thanks a mil man. We really should have a strictly moderated thread or some other central location where this kind of information can be caught up on at a glance. Facts only, no interpretations or predictions. Maybe something like this exists already?

Two things. I went to bed last night shortly after the weird low trading levels lag on mtgox started. As expected I woke up this morning to see a moderate dip and recovery. I don't feel like trawling through pages and pages of this thread, but from what little I've checked I deduced that we had (several?) market cooldowns during the past 24h. Have we heard any explanation from gox? Anything else I missed?

Secondly, take a look at this graph.
http://www.google.com/trends/explore#q=%22buy%20bitcoins%22%2C%20%22buy%20bitcoin%22&date=today%203-m&cmpt=q
The queries for both "buy bitcoin" and "buy bitcoins" peaked on Thursday the 11th, the day after the crash. The volume was also high on the day of the crash, but it is difficult to tell how many of these queries were from people who had not yet heard about the crash. These two days saw an almost 40% higher query volume than the previous peak on April the 3rd. This suggests that the anecdotes we've had on here about people who previously thought they had missed the boat rushing to get in after the crash are not isolated incidents. I expect we'll be seeing record levels of fiat on the order book  in the next week.
 

M-pesa is a ripoff. The fact that it is as popular as it is, just goes to show how atrocious the other money transfer options are. Also, I am quite amused by the discussion the kinds of phones in darkest africa and how one would charge them. I can't speak for the rest of Africa, but i can  assure you that here in South Africa just about everyone has a mobile phone, including kids and shack dwellers.

But I have to log off now. I have to go pedal my exercise bike to charge my laptop battery  

Two of my co-workers who hold no coins have been following the bitcoin market since I first told them about it in 2011. Both asked me today for advice on opening & funding exchange accounts and upon hearing about the typical delay involved in getting funds to an account enquired whether I would sell them some of my coins for cash.

Do not underestimate the number of interested parties who have been sitting on the sidelines thinking they have missed the boat and are now chomping at the bit to get in. The difference between now and 2011 is that btc has already demonstrated that it can rise from the ashes once. That is a very important difference.

not funny man.

Some bull talk from earlier:


How quickly we adapt.

I don't want to spoil the vibe guys, but I'm getting a bit nervous. It's been a while since proudhon called the top.