Ruh Roh, bitcoin on the radar of the IMF?

[prof7bit]

To clarify: difficulty adjusts every 2016 blocks. There is no time limit on this. If 2016 blocks were mined in one minute - the difficulty will adjust such that the next 2016 will be mined roughly 10 minutes apart from each other.

but if they then switch off this monster miner again and hashing goes back to previous speed then difficulty will remain to be 20160 times too high, it will then take 201600 minutes to mine a block, this is 140 days per block or 2.3 years for 6 blocks. It will take 773 years until the next difficulty adjustment.

[Mageant]

To clarify: difficulty adjusts every 2016 blocks. There is no time limit on this. If 2016 blocks were mined in one minute - the difficulty will adjust such that the next 2016 will be mined roughly 10 minutes apart from each other.

but if they then switch off this monster miner again and hashing goes back to previous speed then difficulty will remain to be 20160 times too high, it will then take 201600 minutes to mine a block, this is 140 days per block or 2.3 years for 6 blocks. It will take 773 years until the next difficulty adjustment.

if that happens the software developers can always make a hard fork,
this kind of situation has already happened in alt-chains.

[jjdub7]

I took a few classes in money/banking and currencies for my upper-level electives and really, the best features (or worst, if you're a major govt or the IMF) of BTC is that it allows individuals to circumvent currency/capital controls, deepens economic sanctions in situations like US-Iran (Iran can't set up a currency price floor if unregulated trading is allowed via a floating rate like BTC via the internet), and also removes the ability of govts to tax any capital gains in related markets.

As for the UC prof's paper, any attempt on the IMF's part to take over BTC would easily be mitigated when everyone raises their ask prices to obscene amounts in response to the attack...everyone has their literal 'price' at which they'd sell out, but if you were to model the situation from a game theory perspective, the holders of BTC would still collectively see gains while the non-holders and the IMF would see heavy losses.  Essentially, what it would amount to would be another redistribution of wealth into the hands of BTC holders.  And even if the IMF did manage to buy out the required 51%, what's to stop the BTC community from just re-creating BTC, switching to LTC, or switching to another altcoin, etc?  As much as they hate to admit it, the IMF is pretty much up the creek without a paddle on this one...

[pimms4london]

I don't understand that either. Does anyone know why bitcoin would make such an attack more feasible? I guess maybe it's just that the IMF has plans in place to try to stop a traditional attack but hasn't spent much time thinking about bitcoin.

The only reason that Bitcoin would make an attack like this more feasible is because none of the IMF member countries own any BTC. To counter a "speculative attack," the country's commercial banks need to be able to sell their own country's currency for Bitcoin using a central bank. Solution: the central banks need to buy bitcoin (or mine their own).

[e4xit]

To clarify: difficulty adjusts every 2016 blocks. There is no time limit on this. If 2016 blocks were mined in one minute - the difficulty will adjust such that the next 2016 will be mined roughly 10 minutes apart from each other.

but if they then switch off this monster miner again and hashing goes back to previous speed then difficulty will remain to be 20160 times too high, it will then take 201600 minutes to mine a block, this is 140 days per block or 2.3 years for 6 blocks. It will take 773 years until the next difficulty adjustment.

I think a few people in here need to read this about how the target is drawn up:

For reasons of stability and low latency in transactions, the network tries to produce one block every 10 minutes. Every 2016 blocks (which should take two weeks if this goal is kept perfectly), every Bitcoin client compares the actual time it took to generate these blocks with the two week goal and modifies the target by the percentage difference. This makes the proof-of-work problem more or less difficult. A single retarget never changes the target by more than a factor of 4 either way to prevent large changes in difficulty.

Note that this shoudl be combined with this statement for full understanding:

The difficulty is adjusted every 2016 blocks based on the time it took to find the previous 2016 blocks. At the desired rate of one block each 10 minutes, 2016 blocks would take exactly two weeks to find. If the previous 2016 blocks took more than two weeks to find, the difficulty is reduced. If they took less than two weeks, the difficulty is increased. The change in difficulty is in proportion to the amount of time over or under two weeks the previous 2016 blocks took to find.

Taken from
https://en.bitcoin.it/wiki/Difficulty and
https://en.bitcoin.it/wiki/Target

Edit: This means, that no single entity can mess with the difficulty more than a single factor of 4 at a time. This would give people(devs) time to notice that something was up and code/propose a fork.
The attacker could, slowly (at each difficulty increase), bring their hardware online, increasing in hashing power multiples of 4. This would increase the difficulty by the maximum 4x every 3.5 days, up to the maximum achieveable level of their hardware hashrate. It would then be possible for them to perform the aforementioned switch-off, to leave the blocks unmined for (potentially) a long time, which again might require a hard fork of some kind to rectify.

[RoadToHell]

This means, that no single entity can mess with the difficulty more than a single factor of 4 at a time. This would give people(devs) time to notice that something was up and code/propose a fork.
The attacker could, slowly (at each difficulty increase), bring their hardware online, increasing in hashing power multiples of 4. This would increase the difficulty by the maximum 4x every 3.5 days, up to the maximum achieveable level of their hardware hashrate. It would then be possible for them to perform the aforementioned switch-off, to leave the blocks unmined for (potentially) a long time, which again might require a hard fork of some kind to rectify.

Actually, the factor of 4 limit means that the attacker can initially mine the crap out of coins unless there is a hard fork intervention.  But the factor of 4 takes a pretty quick toll on their advantage.

Given the loose parameters laid out previously in this thread, let's say the attacker starts in with hash power that is orders of magnitude above the rest of the network.  How long does it take the rest of the community to recognize the attack, alert developers, developers formulate plan, developers implement plan and fork code, and sufficient number of miners implement the hard fork? 2 days maybe?  So if the attackers equipment is powerful enough to mine one block in say 10 seconds at the current difficulty, then it will take 20160 seconds, or 5.6 hours to mine 2016 blocks.  After that the difficulty goes up by a factor of 4.  I haven't looked at the underlying math, so what follows is an assumption.  The assumption is that the same attacker would then need 22.4 hours to mine the next 2016 blocks.  Total time so far is 28 hours.  After that the difficulty goes up again by a factor of 4 so (using same assumption) it should take 89.6 hours for the attacker to mine the next 2016 blocks.  The hard fork would go into effect about 1/3 of the way through that.  So the attacker would mine about 5000 blocks in the 2 days required to implement a hard fork.

If we instead say the attacker can mine a block in 1 second, then the scenario does not get much worse.  The times for mining 2016 blocks for the attacker go in steps of 33.6 minutes (2016 seconds), 134.4 minutes, 8.96 hours, 35.84 hours, and 143.36 hours.  In this scenario the attacker would mine just under 8100 blocks before the hard fork could be implemented.

[crumbcake]

This means, that no single entity can mess with the difficulty more than a single factor of 4 at a time. This would give people(devs) time to notice that something was up and code/propose a fork.
The attacker could, slowly (at each difficulty increase), bring their hardware online, increasing in hashing power multiples of 4. This would increase the difficulty by the maximum 4x every 3.5 days, up to the maximum achieveable level of their hardware hashrate. It would then be possible for them to perform the aforementioned switch-off, to leave the blocks unmined for (potentially) a long time, which again might require a hard fork of some kind to rectify.

Actually, the factor of 4 limit means that the attacker can initially mine the crap out of coins unless there is a hard fork intervention.  But the factor of 4 takes a pretty quick toll on their advantage.

Given the loose parameters laid out previously in this thread, let's say the attacker starts in with hash power that is orders of magnitude above the rest of the network.  How long does it take the rest of the community to recognize the attack, alert developers, developers formulate plan, developers implement plan and fork code, and sufficient number of miners implement the hard fork? 2 days maybe?  So if the attackers equipment is powerful enough to mine one block in say 10 seconds at the current difficulty, then it will take 20160 seconds, or 5.6 hours to mine 2016 blocks.  After that the difficulty goes up by a factor of 4.  I haven't looked at the underlying math, so what follows is an assumption.  The assumption is that the same attacker would then need 22.4 hours to mine the next 2016 blocks.  Total time so far is 28 hours.  After that the difficulty goes up again by a factor of 4 so (using same assumption) it should take 89.6 hours for the attacker to mine the next 2016 blocks.  The hard fork would go into effect about 1/3 of the way through that.  So the attacker would mine about 5000 blocks in the 2 days required to implement a hard fork.

If we instead say the attacker can mine a block in 1 second, then the scenario does not get much worse.  The times for mining 2016 blocks for the attacker go in steps of 33.6 minutes (2016 seconds), 134.4 minutes, 8.96 hours, 35.84 hours, and 143.36 hours.  In this scenario the attacker would mine just under 8100 blocks before the hard fork could be implemented.

Sorry if the question is silly, but if the attacker has the great majority of hash power, what's to prevent him from updating his software & repeating the attack? 

[RoadToHell]

Sorry if the question is silly, but if the attacker has the great majority of hash power, what's to prevent him from updating his software & repeating the attack? 

Ya - that would be up to the nature of the code change in the magical hard fork.

Even with no hard fork, the difficulty quickly increases to a point where even their super hashing speed is limited to 2016 blocks in two weeks.  The 2nd scenario I laid out above (attacker starts out mining 1 block per second) has almost reached that point.  They would be back to 2 weeks by the next difficulty increase.

Of course, what's not covered is that even after that is restored, then the attacker would still win the lottery for most or all of the blocks going forward.  So maybe the hard fork is that you can't mine if your hashrate is too far out of line with the rest of the network.  "can't mine" means that such blocks are invalidated by the rest of the network.

[BCB]

highly recommend this webinar today and tomorrow to anyone serious about US virtual currency regulation.

http://www.comptegrity.com/

[crumbcake]

Sorry if the question is silly, but if the attacker has the great majority of hash power, what's to prevent him from updating his software & repeating the attack? 

Ya - that would be up to the nature of the code change in the magical hard fork.

Even with no hard fork, the difficulty quickly increases to a point where even their super hashing speed is limited to 2016 blocks in two weeks.  The 2nd scenario I laid out above (attacker starts out mining 1 block per second) has almost reached that point.  They would be back to 2 weeks by the next difficulty increase.

Of course, what's not covered is that even after that is restored, then the attacker would still win the lottery for most or all of the blocks going forward.  So maybe the hard fork is that you can't mine if your hashrate is too far out of line with the rest of the network.  "can't mine" means that such blocks are invalidated by the rest of the network.

Thanks, i'm just having a hard time picturing the logistics.  This megaminer is unlikely to be a single machine/single ip, so "hardcoded" banning seems at least difficult (picture something like a botnet being used as proxies -- err, something like that), so all this crunch power won't even look like one big lump?  What would the magic code look for?

[1krona]

The IMF couldn't take down Bitcoin if it tried. It's too late for that now. It will cost hundreds of millions of dollars to do such a feat, and they'd need to pay a developer that understands Bitcoin enough to write code that launches hostile blocks. Also, they will have essentially deflated the US Dollar by almost 1 Billion dollars because of the amount invested in Bitcoin. Don't worry about this.

Naah, it would at most cost a couple of tens of millions dollars. For example you could buy 350 tH/s hardware for 7 million USD from KNC and then perform a 51%-attack.
KNC/BFL could perform a 51%-attack themself if they want to when they have produced their hardware, but of course they wont do it, because they dont have any incentive to do it.

[bitzox]

The IMF couldn't take down Bitcoin if it tried. It's too late for that now. It will cost hundreds of millions of dollars to do such a feat, and they'd need to pay a developer that understands Bitcoin enough to write code that launches hostile blocks. Also, they will have essentially deflated the US Dollar by almost 1 Billion dollars because of the amount invested in Bitcoin. Don't worry about this.

Naah, it would at most cost a couple of tens of millions dollars. For example you could buy 350 tH/s hardware for 7 million USD from KNC and then perform a 51%-attack.
KNC/BFL could perform a 51%-attack themself if they want to when they have produced their hardware, but of course they wont do it, because they dont have any incentive to do it.

Realistically does KNC have $7 million worth of hardware to sell? How long would that take them to produce? While it was happening what do you think would happen to the price of bitcoin and/or the demand for hardware and rate of hardware added to the network? If some huge player were to enter the market all of a sudden mining rigs become a much more attractive investment.

[BTCLuke]

"As Bitcoin continues to grow in popularity and value, it poses an increasingly serious threat to the stability of the foreign currency exchange and, by extension, international commerce."

Can I haz T-shirt?

For an additional warm fuzzy: All the Austrians love bitcoin. Jeff Tucker has been absolutely elated by bitcoin. Anytime I feel down I check out Jeff's youtube or facebook. Charming example of what anarchy is all about.

Sadly, the oldschool Austrians, too set in their "money must be a commodity" ways, don't support bitcoin yet. Even Ron Paul said he doesn't understand how it can be money.

I wrote this blog post to rebut them:

Why Austrians are wrong about Bitcoin


This one directly confronts them too (From a Mises student):

Crypto-anarchy and libertarian entrepreneurship chapter 3 (I highly recommend all 4 parts in the series.)

But let's not forget there are *some* good folks at the IMF, let's try and win over 51%

There is no question that the IMF itself is evil to the core... Beyond evil, they are downright Diabolical!

Organizations like that would spit out a non-evil member so fast it'd look like a grasshopper flying out of the back of a lawnmower...

I am definitely concerned with the influence that something as powerful as the IMF can have on making day-to-day bitcoin usage nearly impossible for laypersons such as myself—by demonizing it globally, turning politicians and political/legal systems against it, polluting academia and media with anti-bitcoin propaganda, shutting down exchanges, etc. In my mind these are bitcoin's weak links and the idea that it's immune to such assaults is extremely naive.

This is the real thing to fear folks; not many on this thread seem to understand that the biggest weapon governments and huge organizations have against the masses is PROPAGANDA.

They won't use their printing presses to buy bitcoins with or even miners... The first play in their playbook is to buy PRESS on mainstream outlets to constantly attack bitcoin.

More "bitcoin finances terrorism" press in 3... 2... 1...

[BTCLuke]

What would happen on a war economy. We have been living a long period without wars but that won't continue for long (i hope that is not true). On a war economy and under war laws states could exert extreme violence to anyone using bitcoin or entire regions of countries could just shutdown the internet like north korea or lybia during revolts. What would happen?

What you don't seem to realize is that the world has lived under a "war economy" since WWII. Like president Eisenhower warned us, the Military Industrial Complex grew out of control and is not just an engine for US wars; but for worldwide wars, that will never be shut off again.

States already can and do confiscate anything they want. They don't need a backdrop of violence to steal your bitcoins; they have one already but never needed it in the first place.

What the states need to steal your coins is simply your lack of care. It's now a numbers game for them, and they're more likely to come after wallets by writing trojans and viruses like the theives that they are. So make a paper backup and use the long passcode on your main wallet... And certainly don't make any large buys from a place like Gox that has your ID on file.

What happens with bitcoin when there is no internet, when 3G lines are switched off and there are not even mobile lines for failing infrastructures or in zones with inhibitors? What would happen with Bitcoin?

We'll simply make our own internet. Meshnet isn't the only P2P internet replacement being built right now... I'm convinced well see the globe covered in many different flavors of wireless mesh in the next 10-15 years.

If you are on a civil war on Congo you probably would have problems using bitcoins.

Actually I believe that the Congo is one of the nations that falls within the 4 Billion cellphone users that now have the ability to use bitcoin but no ability to use internet currencies like paypal... So I'm actually expecting such places to outpace the USA in bitcoin adoption once they get started.

Now seriously on a war economy bitcoin wouldn't be allowed probably. There would be a fair suspicion of people using it to send anonimously funds to the other party. There would be barriers and firewalls bigger than those on china or north korea to block and filter internet connections. Only a few chosen could probably use internet during a serious war conflict (i mean an all out war effort, not just a war against a small country) Possible for them? maybe not but bitcoin would probably be a hidden economy (at national scale) then and there could be forks from parts of the world not connecting to the rest of the network?

Hopefully before anyone reading this gets in that kind of trouble, cryptocurrencies will have successfully starved the MIC engine of enough funding that the can no longer find such warfare profitable. (Because states can't gather enough tax money to pay for stealth bombers)

If you want to know more about the IMF, this is an interesting read: http://www.amazon.com/Confessions-Economic-Hit-John-Perkins/dp/0452287081

Quoted for Awesomeness.  Economic Hitman is an absolute, world-changing classic that every bitcoiner should read. (I'd prefer if every HUMAN read it, but I guess we can start with just the coiners...)

And even if the IMF did manage to buy out the required 51%, what's to stop the BTC community from just re-creating BTC, switching to LTC, or switching to another altcoin, etc?  As much as they hate to admit it, the IMF is pretty much up the creek without a paddle on this one...

Yeah, they're never going to win against cryptocurrencies taking any approach like that, and I'm sure they know this.

Sadly, nations and organizations like the UN or IMF don't play on your turf. They do really evil shit like turn the world's media against you and make people disappear without a trace. While I'm sure there is no one or even five people they could use the latter tactic on to hurt bitcoin, the former is still a good option for them, so I'd bet that is what they'll do.

Our challenge is now to get out ahead of them and introduce as many ppl to bitcoin as possible before they start that campaign.

[bitzox]

If you want to know more about the IMF, this is an interesting read: http://www.amazon.com/Confessions-Economic-Hit-John-Perkins/dp/0452287081

Quoted for Awesomeness.  Economic Hitman is an absolute, world-changing classic that every bitcoiner should read. (I'd prefer if every HUMAN read it, but I guess we can start with just the coiners...)

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