Bitcoin trades the inequity of dynastic power for the inequity of early adoption

[revans]

Seriously, revans. Don't be a hypocrite. You have a lot of coins and btcbug and I don't have very many. I think it would be in the best interests of all for you to carve up your stake a bit and spread it around so that you don't get tempted to become one of the new elite that you've been talking about. It is only fair.

I also ask others in this thread to quote me and my signature with its respective address so that we can get a time stamp and watch this address. I am curious to see how many donations are sent to that address by those who cry foul with regards to inequality and people not sharing what they have. I have yet to see any donation to that address by anyone. They want to talk the talk, but not walk the walk.

Love your new signature!  

I haven't received my share yet, have you?

As I said, you don't qualify as a good cause, merely a lost one.

[batcoin]

Seriously, revans. Don't be a hypocrite. You have a lot of coins and btcbug and I don't have very many. I think it would be in the best interests of all for you to carve up your stake a bit and spread it around so that you don't get tempted to become one of the new elite that you've been talking about. It is only fair.

I also ask others in this thread to quote me and my signature with its respective address so that we can get a time stamp and watch this address. I am curious to see how many donations are sent to that address by those who cry foul with regards to inequality and people not sharing what they have. I have yet to see any donation to that address by anyone. They want to talk the talk, but not walk the walk.

Love your new signature!  

I haven't received my share yet, have you?

As I said, you don't qualify as a good cause, merely a lost one.

What was that I was saying...? Oh right!

It's amazing how the commie types start backpedalling and find all sorts of justification not to even out the wealth disparity when it comes time for them to pony up their part.

I really can't believe you would say that about someone in his position. It's clear he is just down on his luck and you could help him out. You have the means.

[Red]

So in other words the client with the largest install base ultimately makes the rules. The  fact that source code is available is utterly irrelevant to the vast majority of users as they would not have the expertise to derive anything from it. So rather than having monetary policy dictated by the Fed, Bitcoin users may ultimately have it dictated by those responsible for the dominant client application.

Ironic isn't it. Given trust no one banter that goes on here.

But what I'm saying is really more basic than that. Bitcoin logic says [roughtly] the longest chain with the most computing power is always the valid one. That leads to what is called a "chain fork" attack.

So say yesterday the block chain looked like this:

[A-B-C-D-E-F-G-H-I-J-K-L-M]-N-O-P-Q-R
 confirmed blocks

Furthermore presume that every block up through and including M has been considered confirmed. That means that exchanges have taken in and payed out hard fiat currency based on these confirmations. Merchants have parted with goods based on these confirmations.

Now way today, out of the blue, the block chain starts to look like this:

[A-B-C-D-E-F-G-H-I≠T-U-V-W-X-Y-Z-a-b-c-d-e-f-g-h]-i-j-k-l-m-n
when it should look like this given the time that has passed.
[A-B-C-D-E-F-G-H-I=J-K-L-M-N-O-P-Q-R-S]-T-U-V-W-X

Now both are valid block chains and the new one is longer so clients PRESUME it to be the true chain and everyone switches over. But the exchanges and merchants have already payed out on confirmed blocks that have now disappeared. Their bitcoins were STOLEN.

Now the only way that can happen is for someone to have more than 51% of the computing power and plan this attack. But still that is NOT ENOUGH.

Because the exchanges and merchants CANNOT let this fork stand. Real life police can come and arrest them for fraud. So they HALT TRADING get on the telephone/IRC/email and start calling each other. Together they decide the last common confirmed block was "S". So each of them calls their respective programming team and says restore from backups and refuse to accept any block chain that does not contain "S". (That is called a Locking a block into the chain. Last I checked there were a half dozen or so blocks locked into the chain.)

At this point the all the exchanges can begin trading again on their agreed upon chain.

Now keep in mind all of the miners might still be extending the other chain but THEY HAVE TO CHANGE FORKS or their mining work will have no value on the exchanges.

Of course most of the conversion will happen on this sight so everyone knows what happened and can decide that following is their free will. But really, following is inevitable.

[myrkul]

So in other words the client with the largest install base ultimately makes the rules. The  fact that source code is available is utterly irrelevant to the vast majority of users as they would not have the expertise to derive anything from it. So rather than having monetary policy dictated by the Fed, Bitcoin users may ultimately have it dictated by those responsible for the dominant client application.

You're looking at it backwards. I'm beginning to think this is habitual with you. Bitcoin users decide (by using it) the dominant client application. If the one they're using implements rules they don't like, hey presto, they change clients, and it's not dominant any more.

But you're looking at thing as they stand. One assumes the goal is for bitcoin to become sufficiently ubiquitous such that less technically savvy users enter the fray. This type of users will use the client that is most popular, the one that they see first in Google, or the one used by their friends. In fact  there in a nutshell is how to subvert Bitcoin. Hire a whizz bang team of UI designers to make a really slick application for iPhone/Android and Web, throw a marketing budget at it, and watch your client become a de facto standard.

You're missing something. Who, exactly, controls the most computing power?

Oh, and Red, you need to read this:
https://en.bitcoin.it/wiki/Weaknesses#Attacker_has_a_lot_of_computing_power

[John Self]

Seriously, revans. Don't be a hypocrite. You have a lot of coins and btcbug and I don't have very many. I think it would be in the best interests of all for you to carve up your stake a bit and spread it around so that you don't get tempted to become one of the new elite that you've been talking about. It is only fair.

I also ask others in this thread to quote me and my signature with its respective address so that we can get a time stamp and watch this address. I am curious to see how many donations are sent to that address by those who cry foul with regards to inequality and people not sharing what they have. I have yet to see any donation to that address by anyone. They want to talk the talk, but not walk the walk.

Love your new signature!  

I haven't received my share yet, have you?

As I said, you don't qualify as a good cause, merely a lost one.

What was that I was saying...? Oh right!

It's amazing how the commie types start backpedalling and find all sorts of justification not to even out the wealth disparity when it comes time for them to pony up their part.

I really can't believe you would say that about someone in his position. It's clear he is just down on his luck and you could help him out. You have the means.

At least 80% of humanity lives on less than ten dollars a day. Begging is one thing, but acting like someone in the first world really deserves that money is absolutely disgusting, both of you make me sick. If I were revans I would invest my fortune in infrastructure for the developing world, not pathetic forum dwellers who feel sorry for themselves because they didn't achieve overnight wealth.

TLDR: you are a greedy waste of oxygen batcoin.

[Red]

Oh, and Red, you need to read this:
https://en.bitcoin.it/wiki/Weaknesses#Attacker_has_a_lot_of_computing_power

Gee thanks. I'm a noob... (sarcasm)

[Qoheleth]

You're missing something. Who, exactly, controls the most computing power?

Computing power only matters to the extent that the chains are otherwise compatible.

All current clients will choose a five-block-long chain that seems to be valid over a thousand-block-long chain with an invalid transaction in it.

The attack proposed here is to create a popular client with a subtle but intentional bug, and then expose the bug to force a network split between the users/miners who use your client and the users/miners who don't. 51% of the computing power is not required - otherwise the BerkeleyDB blockchain fork bug would never have occurred. By the time human pool operators and developers and so forth have figured out a solution, you can (theoretically) double-spend massively.

[ruski]

The attack proposed here is to create a popular client with a subtle but intentional bug, and then expose the bug to force a network split between the users/miners who use your client and the users/miners who don't. 51% of the computing power is not required - otherwise the BerkeleyDB blockchain fork bug would never have occurred. By the time human pool operators and developers and so forth have figured out a solution, you can (theoretically) double-spend massively.

And in the meantime, invalidate the last x days/weeks of transactions. That's a good idea. Better get started finding that bug.

[myrkul]

OK, I think I'm beginning to see the problem... or at least that there is one. Not the one in the OP, that's just whiny BS.

But this chain-forking attack is potentially an issue.

Anyone have an idea what to do about it? I mean, I'm not naive enough to think that the March 11th bug was the only one of it's kind. What do we do to prevent something like that?

[Red]

So the point of my ramblings is...

1) Given that the exchanges can never operate on different chains. And
2) They can't allow invalidation of confirmed transactions to ever occur. So
3) If the exchanges decide that a particular chain is the only chain they'll all trade on. THEN
4) The mining pools MUST follow their direction. and
5) So MUST everyone else.

So how can "Accumulated Hashing" protect the chain, if the exchanges can throw it out willy nilly and everyone else must accept their decision?

QED.

[rpietila]

So the point of my ramblings is...

1) Given that the exchanges can never operate on different chains. And
2) They can't allow invalidation of confirmed transactions to ever occur. So
3) If the exchanges decide that a particular chain is the only chain they'll all trade on. THEN
4) The mining pools MUST follow their direction. and
5) So MUST everyone else.

So how can "Accumulated Hashing" protect the chain, if the exchanges can throw it out willy nilly and everyone else must accept their decision?

QED.

What exactly is the problem then?

[revans]

So the point of my ramblings is...

1) Given that the exchanges can never operate on different chains. And
2) They can't allow invalidation of confirmed transactions to ever occur. So
3) If the exchanges decide that a particular chain is the only chain they'll all trade on. THEN
4) The mining pools MUST follow their direction. and
5) So MUST everyone else.

So how can "Accumulated Hashing" protect the chain, if the exchanges can throw it out willy nilly and everyone else must accept their decision?

QED.

Which makes MtGox's exchange market dominance an even greater threat, not least because this situation gives them the means to freeze out competitors and cement their control over the whole Bitcoin market.

[Richy_T]

So the point of my ramblings is...

1) Given that the exchanges can never operate on different chains. And
2) They can't allow invalidation of confirmed transactions to ever occur. So
3) If the exchanges decide that a particular chain is the only chain they'll all trade on. THEN
4) The mining pools MUST follow their direction. and
5) So MUST everyone else.

So how can "Accumulated Hashing" protect the chain, if the exchanges can throw it out willy nilly and everyone else must accept their decision?

QED.

Surely the other way around. If the exchanges don't follow the miners, the transactions don't get processed.

Especially when Bitcoin becomes to be used more as a currency. Exchanges (too few though they are) are over-represented in the Bitcoin arena right now.

[revans]

So the point of my ramblings is...

1) Given that the exchanges can never operate on different chains. And
2) They can't allow invalidation of confirmed transactions to ever occur. So
3) If the exchanges decide that a particular chain is the only chain they'll all trade on. THEN
4) The mining pools MUST follow their direction. and
5) So MUST everyone else.

So how can "Accumulated Hashing" protect the chain, if the exchanges can throw it out willy nilly and everyone else must accept their decision?

QED.

What exactly is the problem then?

So we are to believe you have hundreds of thousands of dollars tied up in Bitcoin but don't see the issue here?

[Qoheleth]

So the point of my ramblings is...

1) Given that the exchanges can never operate on different chains. And
2) They can't allow invalidation of confirmed transactions to ever occur. So
3) If the exchanges decide that a particular chain is the only chain they'll all trade on. THEN
4) The mining pools MUST follow their direction. and
5) So MUST everyone else.

So how can "Accumulated Hashing" protect the chain, if the exchanges can throw it out willy nilly and everyone else must accept their decision?

QED.

What exactly is the problem then?

Red's whole argument is that this interaction makes miners superfluous entirely - if, de facto, the exchanges have the power to dictate the "true" chain, regardless of number of confirmations, then what's the point of wasting all this electricity and silicon on terahashes per second of mining power? Just ask the exchanges for their opinion on a transaction, and if they say, "yup, I saw that", you're good to go.

So the point of my ramblings is...

1) Given that the exchanges can never operate on different chains. And
2) They can't allow invalidation of confirmed transactions to ever occur. So
3) If the exchanges decide that a particular chain is the only chain they'll all trade on. THEN
4) The mining pools MUST follow their direction. and
5) So MUST everyone else.

So how can "Accumulated Hashing" protect the chain, if the exchanges can throw it out willy nilly and everyone else must accept their decision?

I need to think about exactly how to answer this.

So it goes like this: if the exchanges ever disagree about which chain is correct, or if they ever reorg, it puts them in regulatory liability. So they're incentivized to stay on the chain from before the reorg, even though it's not longest and may never be longest. At which point, since the miners/users must at least in theory be able to exchange their BTC for money on an exchange, they will be forced to follow the exchanges' favored chain as well.

So, at its most basic, it's the conflict between centralized accounting and chain reorg.

If there was an improvement in the technology that eliminated the need for exchanges, would it be enough to eliminate the dictator from the algorithm?

[Red]

What exactly is the problem then?

There is no bitcoin problem. Just me pointing out that all the pooled hashing is just an elaborate way to:
1) Generate a random number.
The random number is used to arbitrarily decide whose transaction list to use as the system consensus for which transaction have actually taken place. (Random number between 1 and the number of validating peers)
2) Decide roughly when 10 minutes have passed.
It is basically a timer to help sync the global system consensus.

It no longer has anything to do with transactional security. The rest is pure marketing.

[rpietila]

So the point of my ramblings is...

1) Given that the exchanges can never operate on different chains. And
2) They can't allow invalidation of confirmed transactions to ever occur. So
3) If the exchanges decide that a particular chain is the only chain they'll all trade on. THEN
4) The mining pools MUST follow their direction. and
5) So MUST everyone else.

So how can "Accumulated Hashing" protect the chain, if the exchanges can throw it out willy nilly and everyone else must accept their decision?

QED.

What exactly is the problem then?

So we are to believe you have hundreds of thousands of dollars tied up in Bitcoin but don't see the issue here?

No I don't have nothing "tied" to it. I own euros, silver, gold, stocks, and bitcoins. I am not indebted to anyone.

If any of these goes to zero, I don't lose my sleep. So the issue again was..?

[Red]

If there was an improvement in the technology that eliminated the need for exchanges, would it be enough to eliminate the dictator from the algorithm?

Now you get it!

See, that's the problem I think I have a solution to! :-)
Better yet, it reenforces anonymity!

[rpietila]

If there was an improvement in the technology that eliminated the need for exchanges, would it be enough to eliminate the dictator from the algorithm?

Now you get it!

See, that's the problem I think I have a solution to! :-)
Better yet, it reenforces anonymity!

Physical silver market (coins, bars) works very well without a central exchange. Even now, all the products are sold out. 

[myrkul]

So the point of my ramblings is...

1) Given that the exchanges can never operate on different chains. And
2) They can't allow invalidation of confirmed transactions to ever occur. So
3) If the exchanges decide that a particular chain is the only chain they'll all trade on. THEN
4) The mining pools MUST follow their direction. and
5) So MUST everyone else.

So how can "Accumulated Hashing" protect the chain, if the exchanges can throw it out willy nilly and everyone else must accept their decision?

QED.

What exactly is the problem then?

MTGox determining monetary policy, essentially.

There's one problem with that: The miners don't HAVE to use the big exchanges. They don't HAVE to exchange their coins at all, in fact.