And if this works out, it pretty much solves the tragedy of the commons scenario for transaction fees. People with interest in not having their transactions double spent could buy such form of insurance.
The question that stays in the air is whether the risk of suffering a double-spend is high enough to motivate people to buy such insurances. But I guess that the answer to that is that, if the risk is not the high, maybe there's not so much need for mining power either. Safer is not always better, you have to take the costs into account.

Wow...

If that's the case, frankly, it's awful. How come people didn't think that they would run out of coins when they implemented this?
It seems like one of those "temporary fixes to be improved later", something that should not be present on important protocols...

If I understood correctly, namecoin inflation never stops. It's a constant, linear growth. So, there will always be new coins.

The greatest problem I see is that this way it seems the domain growth rate is also linear. If one day it gets popular and goes viral, exponential domain growth will not be possible. Namecoin domains will become too expensive, people will give up, and that will slow down adoption to a linear growth as well, what would be a pity.

On the other hand, making domain growth exponential might be too much.

I wonder how to match domain growth with the demand for new domain names...

PS: I don't understand much about namecoin, so I might be saying bullshit.

If he's mining his own "garbage blocks", adding mandatory transaction fees is pointless then, as he can always pay high fees to himself.

A miner producing garbage blocks is attempting to freeze the network. That's not a profitable attack, and difficult to perform (requires more processing power than the honest nodes). It's much more serious than spamming if done successfully though. Search for "unfreezable blockchain" if you want an interesting topic about this matter, with possible solutions on how to decrease the impact of such an attack.

If you have something important to say and you think it should be on another section, then you may request whitelisting.
Otherwise, yeah, you'll need to wait.

No, RPC is there to allow control of bitcoind by other programs. Like, imagine you have a website that needs to perform payments automatically. Your web server contacts bitcoind and requests the payment. If authorized, bitcoind performs the payment. It doesn't matter if the keys are encrypted or not, as it is the bitcoin software itself that's signing and sending the transaction. It can decrypt the keys if needed.
The hacker did not steal a private key. It managed to access bitcoind and control it, requesting the payment thought the RPC interface. Bitcoind treated it as a legitimate request.
Normally this control interface should not be publicly accessible, but in this particular case it was.

Do you see the difference?

No, he said on OP, open RPC (well, maybe the wallet was unencrypted too, but it doesn't matter, that's not how it was stolen). Summarizing, it is as if his bitcoind node was accessible by anyone on the internet that happened to know his password, and apparently the password wasn't that strong since it was bruteforced. The attacker just requested the victim's bitcoind to send him money, and it sent.

The interesting part is for such a theft to happen, the thief needed to know that there was an accessible bitcoind on that IP. So, either it is someone close to OP who's stealing him, or there are hackers with crawlers searching for such vulnerable nodes. The latter sounds quite possible, what would mean people using bitcoind RPC should really pay attention to their access rules.

Please, don't block spam with mandatory transaction fees, as it was done in bitcoin.

Nodes should not relay transactions from a peer that is sending spam. It shouldn't be too difficult to make some basic heuristics (anything above a certain rate gets tagged as spam).

Fee policies should be totally open for miners to implement them as they want.

Good summary.

DeathAndTaxes, understand that I don't mean that a double-spender with 51% would be something "easy to deal with". I just say that I find a complete freeze of all transactions a worse thing.
In your last post, you talk about using Bitcoinica and MtGox. Well, both services would be completely unavailable if the network is frozen. While in a double-spender case, they would be in danger, but they might remain operating, with much more care probably (asking identifications etc).

I know. I just said that it would be harder to remain anonymous after doing that many trades, in comparison to just spamming garbage blocks behind many proxies.


Only the attacker would have that ability. Today, everyone buying anything in the internet with a credit card has the ability to chargeback. People would have to deal in bitcoins as they deal with credit cards or paypal today, while the blacklist of the attacker's addresses grows and his incentive to keep the attack decreases.

Tor only grants you cyberspace anonymity. Again, never forget we are all bound to what happens in meatspace.

If the attacker is just freezing the network, than OK, his interaction with the physical world is minimum (although it would still be hard to hide such mining farm, the investment in creating it etc)
But if he's double-spending, he must be exchanging that stockpile of millions of bitcoins against something else. And that's lots of money and lots of "something else". That's why I believe it would be hard to remain anonymous (I didn't mean to say they would have a hard time to acquire a stockpile of coins, only that it would be hard to remain anonymous while doing it)


Possibly. That's why that thread is interesting. I've been reading it yesterday. If it really helps to counter the freezing attack, it could be useful as a partial protection against such "thermonuclear warfare".

Just imagine these two situations:

• Somebody strikes the greatest(s) theft(s) of dollars of all times, and may potentially repeat
• All dollar flow in the world is frozen. Everywhere, people just can't transact in dollars anymore.

You really think the first thing would be more catastrophic to the dollar?

Thefts happen all the time. A double-spender with 51% would be a very dangerous thief. But he would not be jamming the entire economy. A complete freeze is much worse.


Yes. By "just freezing", everyone invested in bitcoins would lose everything, not only the sellers of these items.
And there are many reactions people may attempt, from blacklisting the addresses of the attacker to using green or "whitelisted" addresses and trust networks. For the freezing attack, the only possible reaction I was aware of would involve a certain degree of centralization, what would create central points of failure precisely when you don't want them. (That's why I'm interested by this blocktree thing.)

Oh, and don't forget the attacker would first need to legitimately own those 100K BTCs before double-spending them. It's hard to remain anonymous after doing all these trades.


Granted, governments would probably attempt a typical ban before an attack of this kind, and that might have catastrophic effects as you note. I imagine such an attack would only be "propaganda-supportable" once bitcoin is used exclusively by informal markets.


Try to answer these same questions in a scenario where no transaction is possible at all.

Really... I can't imagine them being.
Let's not forget that ultimately we're all bound to what happens in meatspace.

If you just double-spend "a little" to avoid getting caught, then, is it really worth all you've invested, not to mention the risks? (also, if you double-spend just a little, the damage you cause is also little)
Now, if you double-spend a lot, then you'd better also hire a good mercenary army to protect you, otherwise those you traded with will get you!

Plus, in the case of an attacker double-spending, only those which are unlucky to exchange with him will lose. In a chain frozen for indefinite time, everybody loses everything.

And finally, you cannot double-spend something you never owned. The addresses of the attacker could eventually get blacklisted, if he hasn't being jailed or killed yet.


What if the attacker in question is a government that can confiscate money from its subject to invest in its operation? (not to mention trying to violently stop those who are honestly mining under their jurisdiction).
Imagine, USA, EU, China, Russia etc get together to "rid the world of this terrorist money threat!!". War on Bitcoins declared!

I find the freezing attack worse than double-spendings. The only "relief" in it is that it's not profitable, so we're not to expect somebody to do it with his own resources. But there are these huge institutions out there who don't give a fuck to losses...

What could be worse than that? Double-spends are not.

I guess I should read that topic with more care.

I imagined it. Thanks for confirming.

Yes, but normally the fee you pay is proportional to the transaction size anyway.

Actually, this leaves me with a doubt too. What is actually signed by the inputs of a transaction? Is it the entire output list, or a constant size hash of such output list? Because if it is the former, I guess you risk using more space with bundle transactions, since you'd have to sign every output with every input.

If everything you claim here really works, my sincere congratulations. This is impressive.

I'm definitely "still interested", but I still think Open Transactions+bitcoin is probably the way to go. It is as distributed as we need, and the technology is already there.
I don't think we need to create new chains for everything. The issuance of backed tokens is pretty much what OT is about.

Yes, thank you, that's what I was imagining that would happen, as soon as the losses "touch" the total balance (including fees and protections etc), they would force the liquidation of your position, even if it's not expired yet.
The thing is, if right after the liquidation, but still before the expiration of your order, the prices swing on the other direction, you're still screwed in spite of having been "right on your bet"...

Is that how leverage is done on conventional financial markets as well? You always have to provide some guarantees before hand? For example, if I write a call option to someone, must I always prove before hand that I actually have what I would need to sell in case that option is exercised? I imagined such requirements were laxer on "non-anonymous scenarios", and that eventually people who lose too much would go bankrupt, with police going after them to seize their belongings and all that thing. Anyway, I thought you could go really bankrupt and remain owing people money by playing wrongly in these markets, instead of "at most losing your reserves".

Interested newbie here...

Thank you for this topic, the "reserve problem" one was blowing my mind. I mean, I know what a call option or a put option is, but all that vocabulary of "covering his shorted coins slipping under his long leveraged position blablabla" is Greek to me.

If I understood correctly, the costumer always has to have a balance capable of paying off the risks he's running, is that it?
So, in the end, actual leverage (investing more money than you own) isn't yet possible in the bitcoin world, as I suspected?

And what changes if that 1:1 constant in your example isn't 1:1 anymore?

Thank you for the explanations.