Finney Attack against SatoshiDice or how to get 250 BTC per solved block.

[Luke-Jr]

You do understand that Bitcoin either suffers from higher fees at some point or weakens and dies completely?

Yes. "At some point" needs to be after Bitcoin has attained critical mass of adoption.

The only question with option 1 is how much the fees will rise, not if they will rise.

And when they rise. Timing is everything.

[Technomage]

True enough. And enough of this OT.

[Monster Tent]

Those transactions are insanely inefficient— half of them are pure messaging and not really a monetary transaction— they make it much more costly to run a Bitcoin node— they're burning up our technical startup capital without adding new users to the bitcoin economy (or at least not many). The bitdust outputs they create will likely never be rational to spend and are rapidly inflating the UTXO set— unprunable data. Across the board they're bad they're bad for the ecosystem... and they're ever so easily blocked, basically a one line patch.  So, even if it wasn't net-profitable to block them I'm sure some would.

SatoshiDice is "burning up your technical startup capital without adding new users to the bitcoin economy?"  Are you serious?

First, SD has paid more mining fees than everyone else in the world, combined.

Second, I'll just leave these here...

http://calvinayre.com/2013/02/01/business/why-bitcoin-can-no-longer-be-ignored/
http://www.businessweek.com/articles/2013-01-03/bitcoin-making-online-gambling-legal-in-the-u-dot-s-dot
http://www.npr.org/blogs/alltechconsidered/2013/02/06/171182974/is-online-gambling-legal-if-bitcoins-not-dollars-are-at-stake (was on national radio)
http://www.forbes.com/sites/jonmatonis/2013/01/22/bitcoin-casinos-release-2012-earnings/
http://www.wired.co.uk/news/archive/2013-01/23/bitcoin
http://arstechnica.com/business/2013/01/bitcoin-based-casino-rakes-in-over-500000-profit-in-six-months/
http://www.gambling911.com/gambling-news/bitcoin-casino-satoshidice-results-raise-eyebrows-online-gambling-sector-012313.html
http://techcrunch.com/2013/01/23/online-casino-makes-over-500k-skirting-laws-with-legally-gray-digital-currency-bitcoin/

SatoshiDice achieves all this publicity, demonstrates the power of Bitcoin and provably fair gaming to the masses, and brings Bitcoin to the attention of casino operators around the world, and yet still people complain because it "makes too many transactions" and for their antagonism decide to block SD transactions from their mining pools 

As I understand it there are ways to do the same things SD does but with less harm to the network. The fact you refuse to implement them makes people question what your motives are. The fees you pay dont adequately cover the cost of the damage you do to the network which is ironically one of the major problems with capitalism today. That is to privatise profits and make the public foot the costs. Ive got no doubt if fees got raised to cover the true cost you would start screaming about needing a "bailout" because you "deserve it".

[justusranvier]

I think Satoshi Dice should mine its own transactions instead of paying fees.

[Monster Tent]

I think Satoshi Dice should mine its own transactions instead of paying fees.

That would require them actually investing in hardware and not sponging off all the other miners.

[dree12]

I think Satoshi Dice should mine its own transactions instead of paying fees.

That would require them actually investing in hardware and not sponging off all the other miners.

They could hire a pool to allocate some percentage of blockspace to free SatoshiDICE transactions.

[Monster Tent]

I think Satoshi Dice should mine its own transactions instead of paying fees.

That would require them actually investing in hardware and not sponging off all the other miners.

They could hire a pool to allocate some percentage of blockspace to free SatoshiDICE transactions.

Or they could improve their efficiency by doing things in a different way. You shouldnt change the underlying protocol just because they are "lazy"

Im just glad they cant lobby a politician to get them to change it 

[Technomage]

What some people here do not understand that it's not SatoshiDice that is to blame for the inefficiencies of the blockchain. That service is completely following the rules of Bitcoin. It's a fee-paying, fair service, I see no problem with that. The problem is with Bitcoin, not with S.DICE. That should be very clear.

[Luke-Jr]

What some people here do not understand that it's not SatoshiDice that is to blame for the inefficiencies of the blockchain. That service is completely following the rules of Bitcoin. It's a fee-paying, fair service, I see no problem with that. The problem is with Bitcoin, not with S.DICE. That should be very clear.

No. SatoshiDice violates the "no flooding" and "financial transactions only, no information" rules. Bitcoin's solution is to block flooders. Miners filtering out floods is part of the system.

[justusranvier]

If Satoshi Dice really is profitable on its own merits then they could afford to mine their own transactions instead of paying other miners to do it via transaction fees. If they could do that and still remain profitable then nobody could rightly complain that they were leeching off of the network.

In the long term when medium and large companies are using bitcoin that's what I expect to happen anyway - the companies doing the most transactions have the largest incentive to make sure those transactions get included in the blockchain so they mine themselves or band together with other companies to form a merchant pool.

[Technomage]

What some people here do not understand that it's not SatoshiDice that is to blame for the inefficiencies of the blockchain. That service is completely following the rules of Bitcoin. It's a fee-paying, fair service, I see no problem with that. The problem is with Bitcoin, not with S.DICE. That should be very clear.

No. SatoshiDice violates the "no flooding" and "financial transactions only, no information" rules. Bitcoin's solution is to block flooders. Miners filtering out floods is part of the system.

This is a valid point and I do get it. Not sure what I think about the whole thing, but I do get this.

[Herbert]

SatoshiDice violates the "no flooding" and "financial transactions only, no information" rules. Bitcoin's solution is to block flooders. Miners filtering out floods is part of the system.

I fully agree on this! But for me it seems more like rulea of conduct which *should* be followed by consensus, but are not enforced in any way (unless miners really start skipping sdice transactions). Or is this somewhere defined in the protocol?

[interlagos]

While Bitcoin software is still in development, SatoshiDice provides an invaluable service to the network by stressing those attributes of the system that would become a larger problem in the future when adoption grows.

It does it in a very careful and controlled way (centralized, easy to shut down) thus providing an incentive for developers to prototype solutions that would deal with an ever increasing volume of transactions gracefully and ahead of time.

We probably wouldn't have performance improvements that we do (in bitcoin-qt 0.8.0) if it wasn't for SatoshiDice. So it seems like a natural component of the ecosystem at this point which might get less popular as the network rebalances and changes some of its characteristics that make SD viable right now.

[Luke-Jr]

While Bitcoin software is still in development, SatoshiDice provides an invaluable service to the network by stressing those attributes of the system that would become a larger problem in the future when adoption grows.

No. Bitcoin is not meant to scale to SD's abuse.
Also, while adoption grows, so does the overall network capacity to cope with higher (reasonable!) use.
Finally, we already know Bitcoin is harmed by SD's abuse in practice. Continuing to "stress" something after you know it harms it, is clearly hostile.

We probably wouldn't have performance improvements that we do (in bitcoin-qt 0.8.0) if it wasn't for SatoshiDice. So it seems like a natural component of the ecosystem at this point which might get less popular as the network rebalances and changes some of its characteristics that make SD viable right now.

What-ifs are kinda pointless to argue, so I won't try.
But even if SD is to credit for bringing attention to some performance problems, it does not justify their continued attacking.

[Sukrim]

With the approach taken here, it might be possible to not only passively act, but actively fight SD spam by shifting the odds in your favour if you really don't want to see them continue with their business.

Edit: Since blocks are anyways small, it might even be possible to just mine "normal sized" blocks as well, to not be too obvious.

[Come-from-Beyond]

SD does very good job - It stress-tests the system. The Bitcoin programmers ought to thank instead of blaming... and do their best to resolve technical issues.

[evoorhees]

Sure, that's fine with me (though I bet not the State of New York)

What does the State of New York have to do with anything?

No. SatoshiDice violates the "no flooding" and "financial transactions only, no information" rules. Bitcoin's solution is to block flooders. Miners filtering out floods is part of the system.

Roughly 3/4 of SD transactions are financial transactions, and 1/4 is "information".  Every inbound bet is a financial transaction, and roughly half of the outbound transactions are winnings going back to the user. When a user loses a bet, the response is indeed an "information transaction" and this seems to be what you are so upset about.

So if SD played by the rules you wish to enforce upon it, 75% of the transactions would still be there.

Also, where is this "no information" rule listed??? I was not aware that Bitcoin had a Terms of Service contract.

But there is a far more important point to all this. Every transaction that occurs on the BTC network causes data to be stored in the blockchain. You, Luke-Jr, have sent transactions which cause blockchain bloat, you just haven't sent as many as SD. And if your transactions are "well and good" then how many do you need to send before you are considered "spamming"? Can SD only send 10 transactions a day before you get angry with it? Or 100? Or 10,000?  Is it because they are "evil gambling transactions" which makes them less worthy than your own?

I'm of the opinion that Bitcoin should be used as much as possible. It should be the monetary system of the world. And if the blockchain can't handle it, then the system needs to be upgraded or is doomed to failure because guess what, as Bitcoin grows, hundreds of creative systems are going to come out which use the blockchain in all sorts of strange ways. SD is but the tip of the iceberg.

[Sukrim]

Well, Satoshi's Dice seems to me like going to a casino, exchanging one USD in chips, playing a round of a game, changing back to USD, changing another USD to chips etc.

This described attack might also work with p2pool by the way, then you only attack with your own hash rate though. Still useful for people with ASICs at their hands and you can also mine a bit larger blocks there, as you will relay blocks at a lot of different places in the network as a bonus.

[2112]

Is it because they are "evil gambling transactions" which makes them less worthy than your own?

I think of SatoshiDice as a proof by reductio-ad-absurdum that the Bitcoin needs to be continue to evolve to be really useable, lest it turns into a permanent worldwide register of dropped pennies.

Many developers associated with the core development team have lots of self-worth staked on the assumption that the Bitcoin is already perfect.

Your business is showing them that they were wrong. This is no longer a technical/scientific/business issue, it is now an issue of respect and/or self-respect.

I remember a comment from one of the professors in my university:

Q: Why are the panel discussions in this school are always turning so nasty?
A: Because the stakes are so low.

[jgarzik]

I'm of the opinion that Bitcoin should be used as much as possible. It should be the monetary system of the world. And if the blockchain can't handle it, then the system needs to be upgraded or is doomed to failure because guess what,

Logical fallacy.  That logic precludes incentives that encourage block chain efficiency.

You cannot simply get stuck in the loop

     spam system -> demand system upgrades -> go to step 1

as that clearly lacks any amount of self-examination or dynamic feedback.