Hostile action against the bitcoin infrastracture

[MoonShadow]

Regardless if some people out there are willing to send cash in an envelope or give someone a copy of their ATM card, I don't think most of the general public will.

I think this is the biggest problem, in order for BTC to really succeed, it has to get in the hands of as many people as possible, and the current options are not good enough.

This should scream "profit opprotunity" to just about anyone.

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[abc123]

.000001 bitcoins is meaningless right now.  Change it when we need to.

I don't think it's meaningless, and it's missing a very important market that could provide a much needed protection against attack.

There are millions of transactions that go on, that are worth far less than $0.01 and are represented by difference payment schemes:
* money online games such as WOW use,
* file servers that make you wait 90 seconds before you download anything,
* message boards where there is very little signal-to-noise ratio you have to scour to gleen any useful information on them, because there is no one there to clean it up.

In each of these, you are paying in terms of grinding needed to do to have fun in a game, time spent waiting, aggravation grokking or doing busy work. If you can somehow get bitcoin to replace these annoyances, it would be a lot more valuable and harder to shutdown. If this could be translated into a few micro bit-cents made by running a javascript app for an hour or so, you would get many more people interested in keeping bitcoins alive.

As it is now, if the US government does go after it, and the only value is to people that are comfortable with sending cash through the mail, that could spell the end quite quickly.

[BitterTea]

Currently, I think the extra decimal places serve their purpose best as future-proofing. Allowing free transactions at such small amounts opens the door to denial-of-service type attacks, flooding the network with lots of small denomination, normal size transactions. Unless another deterrent is implemented, this will continue to be the case. Thus, I think the best way is to "unlock" smaller payments as the exchange rate increases and/or as applications for ultra-micro-payments develop. For instance, there is talk about decreasing the minimum payment required to qualify as a free transaction to .001 BTC.

There are other options, such as payment processors which do not broadcast all transactions on the network, only those entering and leaving their network (like MyBitcoin). These could accept and transmit payments smaller than those accepted by the Bitcoin network as a whole without the issues the distributed system has.

[Empire10]

I think the Achilles heel of Bitcoin is the wallet.dat file. Lets face it, not everyone is a computer scientist. Most people will be running Windows, will not encrypt their wallet file and will not realise that they will loose their money if this file is lost or stolen.

This mainly affects confidence in the system. If someone gets a virus and looses money, they are not going to use Bitcoin again. Likewise if they delete it by mistake, etc.

Why can't the client just automatically encrypt the wallet file and ask the user for a password?

[MoonShadow]

Why can't the client just automatically encrypt the wallet file and ask the user for a password?

It can, it just doesn't.  It's on the future features list.  Feel free to contribute a patch.

[andes]

Before discovering this thread, I posted an hypothetical attack against Bitcoin that is similar to one of the attacks described here (MIB attack). I not only think this attack is feasible, but unavoidable sooner or later for the reasons explained here https://forum.bitcoin.org/index.php?topic=12435.0

Will cross link from the other thread.

[defxor]

There are millions of transactions that go on, that are worth far less than $0.01 and are represented by difference payment schemes:
* money online games such as WOW use,
* file servers that make you wait 90 seconds before you download anything,
* message boards where there is very little signal-to-noise ratio you have to scour to gleen any useful information on them, because there is no one there to clean it up.

Seconded. If we're trying to bootstrap a completely new economy we should use our strength, which is "free" micro payments, something other forms of currency and value exchangers cannot do today.

It would open up new opportunities for Bitcoin immediately.

(On topic: I consider the US-government-will-take-control-over-more-than-50%-of-the-network scenario to not only be likely, I'm quite sure Homeland Security is already working on it)

[anderxander]

Manipulation of price for bitcoin is not the problem, but rather the ability for price information is the problem. Shutting down liberty reserve and other way to exchange currencies for bitcoin meant that people no longer have any way of price estimation for bitcoin.

Exactly.

Bitcoin needs to be removed from this dependency for valuation and find its price in terms of real goods and services. Not finding its price through the dollar or other currencies.

[Suggester]

"Military action" and "prosecution" isn't needed to ruin the project folks. Bitcoin is as strong as its users' collective computer power. In other words: NSA > Bitcoiners

Of course, this (unlikely) scenario is part of the motivation for regular blockchain benchmarks being encoded into the source code of new releases.  So your attacker would still have to come up with a fake blockchain that not only matched those benchmarks precisely without violating any of the other valid block rules on any of his fake blocks and have such a blockchain ready that was at least as long as the benchmark shipped in the latest version before the standing network would receive it.

I think we can all agree that the NSA already has its fake chain ready to launch at any moment if they deemed Bitcoin a serious danger to the US economy. They probably started working on it from day one, even. It would be identical to the real one except that it's a couple of blocks longer. Those couple of blocks rip everyone from their coins. End of story.

And if any copy of the real blockchain were to be reintroduced to the network before the fake one could develop a greater total proof-of-work, the real blockchain would force a network split that would eventually destroy the fake one.

Only if the real one posses more total computer power than the fake one, which is not the case with the NSA.

[benjamindees]

If we're trying to bootstrap a completely new economy we should use our strength, which is "free" micro payments, something other forms of currency and value exchangers cannot do today.

Just beware that Bitcoin can't actually do free micro payments, because that would open us up to a DOS attack.  We can do fairly cheap ones, though.

[tehcodez]

"Military action" and "prosecution" isn't needed to ruin the project folks. Bitcoin is as strong as its users' collective computer power. In other words: NSA > Bitcoiners

+1

[BitterTea]

I think we can all agree that the NSA already has its fake chain ready to launch at any moment if they deemed Bitcoin a serious danger to the US economy. They probably started working on it from day one, even. It would be identical to the real one except that it's a couple of blocks longer. Those couple of blocks rip everyone from their coins. End of story.

Hahaha... I think we can all agree that your predictions have not been all that accurate so far.

Is it the CIA or NSA that has this technology available? In another thread you claimed it was the CIA. Perhaps all of the TLAs are collaborating on this project?

Why would they duplicate the block chain? It makes no sense to do so, they would just dedicate all of their computing power to the NEXT block, and then the one after that, etc.

How would they transfer everyone's money to their account? That would require a break in ECDSA or at least secp256k1, which is possible but highly unlikely (IMO).

So, any more bullshit claims?

[rahl]

*facepalm* Why do I bother? Did you even read what I said? It's not that simple. How do I know where I copied it is safe? You are demanding that everyone who uses the currency be tech savvy. I don't care how reasonable you think that demand is because you happen to be tech savvy, it isn't.

Moving a file to a USB-stick is not difficult...

But yes the user friendliness of the client need to evolve a lot when it comes to managing the wallet data.

[rahl]

If we're trying to bootstrap a completely new economy we should use our strength, which is "free" micro payments, something other forms of currency and value exchangers cannot do today.

Just beware that Bitcoin can't actually do free micro payments, because that would open us up to a DOS attack.  We can do fairly cheap ones, though.

Micro-payments shouldn't really need the identity protect bitcoin offers anyway. No one cares about people trading in black markets for a couple of bucks here and there, everyone do it all the time and in many western countries it is even legal since the tax authorities don't want to audit that shit anyway they set a minimum level of trading that is allowed before you have to disclose the activity.

Also the loss is minimal if you loose an account you only use for micropayments. So we will probably do just fine with centralized authorities for micropayments backed by BitCoin. Where the BitCoin don't actually move until you choose to withdraw or deposit from the micropayment system. Think I have seen some service like this already?

[defxor]

If we're trying to bootstrap a completely new economy we should use our strength, which is "free" micro payments, something other forms of currency and value exchangers cannot do today.

Just beware that Bitcoin can't actually do free micro payments, because that would open us up to a DOS attack.  We can do fairly cheap ones, though.

Micro-payments shouldn't really need the identity protect bitcoin offers anyway.

My interest in Bitcoin has very little to do with identity protection and very much to do with the possibility to do "instant" regulation-less P2P transactions in all sorts of circumstances where our current economic systems makes it difficult.

I dislike carrying cash, and I feel sorry for merchants every time I pay for something worth only a few dollars with plastic since I know most of their profit is being eaten by banks claiming to perform a service I fail to see is needed.

"free" = micro enough
"instant" = small sums don't really need confirmation, large sums do

[cloud9]

If we're trying to bootstrap a completely new economy we should use our strength, which is "free" micro payments, something other forms of currency and value exchangers cannot do today.

Just beware that Bitcoin can't actually do free micro payments, because that would open us up to a DOS attack.  We can do fairly cheap ones, though.

Micro-payments shouldn't really need the identity protect bitcoin offers anyway.

My interest in Bitcoin has very little to do with identity protection and very much to do with the possibility to do "instant" regulation-less P2P transactions in all sorts of circumstances where our current economic systems makes it difficult.

I dislike carrying cash, and I feel sorry for merchants every time I pay for something worth only a few dollars with plastic since I know most of their profit is being eaten by banks claiming to perform a service I fail to see is needed.

"free" = micro enough
"instant" = small sums don't really need confirmation, large sums do

+1

Is this maybe the reason for hostility from the established businesses / political lobbying?  Wouldn't a lot of status quo transfer profits disappear if there is a more economical alternative on the market?

[BitterTea]

If you want to understand the hostility, I recommend watching this video. He gives some very concise answers to the questions...

What is the Federal Reserve?
How did it come to be?
What is it supposed to do?
Does it do what it is supposed to?
What does it actually do?

Answers to these questions may shed light on why there is a relatively small group of people in this country that control a vast amount of resources and will do nearly anything in order to maintain that control.

tl;dw version:

The "federal" "reserve" is banking cartel blessed by law and is neither "federal" nor "reserve". It is the result of a secret (at the time) meeting of bankers that represented a quarter of the world's wealth who found competition to be too difficult. The system they designed was created to benefit exactly two parties... members of the cartel and the government to which it was to be pitched. The mechanism for this is twofold...

1) The government receives free money from the federal reserve by honoring fake checks.
2) The federal reserve bolsters the practice of fractional reserve banking to allow banks to create money out of nothing and charge interest on it.

Who are the losers in all of this? Everyone else. This system is the cause of the dollar's 95% loss in spending power over the previous 100 years.

[rahl]

My interest in Bitcoin has very little to do with identity protection and very much to do with the possibility to do "instant" regulation-less P2P transactions in all sorts of circumstances where our current economic systems makes it difficult.

Why does it have to be P2P? A centralized service can do micro-transactions much faster and cheaper then any P2P network. It would be almost as anonymous as bitcoin anyway since you couldn't do anything with the services logs other then link the micro-transaction in account together and maybe see which bitcoin address was used to fund said account. You could just start multiple micro service accounts ... and it is all good.
The real downside to centralized service is if it gets seized or shut down. But it doesn't matter that much here since people will not have a balance higher then the smallest amount that is cost effective to transfer in the bitcoin protocol itself anyway.

Also it probably wouldn't be that hard to refund everyone before it gets shut down anyway. Bitcoin is somewhat easier to dump when the cops show up then say gold...

[defxor]

to do

regulation-less

Why does it have to be P2P?

this

The real downside to centralized service is if it gets seized or shut down

[MoonShadow]

Also it probably wouldn't be that hard to refund everyone before it gets shut down anyway. Bitcoin is somewhat easier to dump when the cops show up then say gold...

This could work.  A bitcoin bank intended for rapid, small transactions between users, wherein every user has a "panic" address that his balance can be dumped to if the feds show up with a warrant for the servers.  There could be a foot button under the attendent's desk to push when they walk up, and by the time they can walk over to unplug the router the entire value of the bank has been "withdrawn".