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Author Topic: Bitcoin topic on Quora.com  (Read 6834 times)
matonis
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January 22, 2011, 03:13:51 PM
 #1

Posted by Sebastiano Scròfina, a decentral banker at kakigarden.com

Is Bitcoin doomed to fail ?
http://www.quora.com/Is-Bitcoin-doomed-to-fail?srid=uLs

He states:
"I love the concept of Bitcoin. I believe the Internet will redefine currency in the following years. But I've got 5 major concerns about Bitcoin's scalability (other than the block chain size)"..........

Founding Director, Bitcoin Foundation
I also cover the bitcoin economy for Forbes, American Banker, PaymentsSource, and CoinDesk.
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just a man
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January 22, 2011, 05:25:42 PM
 #2

Why is it nonesense?

I'm not worried about a competitor to bitcoin, provided the attack described in point number 1 can be resolved, trying to bring about a competing cryptocurrency like bitcoin would be like trying to reinvent the wheel.

Far better to start inventing new things to do with this new-fangled "wheel" thing, new bitcoin services and the like.

If the technical attack described in the link can be overcome then the other points are moot. Governments would have to abolish the internet or learn to live with it. If the internet is abolished or destroyed, then we'll probably have far more to worry about than being denied the use of cryptocurrency.

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my attempt to learn about bitcoin was an unmitigated and disaster. who knew magic beans would turn out to be such a big fucking deal. my regret is the cost to others, which has shamed me.
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January 22, 2011, 06:18:40 PM
 #3

It is utter nonsense.

It looks that the guy doesn't understand how the network works when he says about "stealing" BTC, and getting 5Million BTC... It is not possible in a reasonable amount of time.

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January 22, 2011, 06:27:23 PM
 #4

I'm sorry, but the article is silly.
The only considerable risk is the legal one (number 2). But then, fighting the current banking system isn't the whole purpose of this idea anyway? Does anyone expect it to be easy?

And about competition, that might represent a risk for someone that puts all his eggs on bitcoins, but in general, if something better come up, we should celebrate.

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January 22, 2011, 07:03:59 PM
 #5

I'm sorry, but the article is silly.
The only considerable risk is the legal one (number 2). But then, fighting the current banking system isn't the whole purpose of this idea anyway? Does anyone expect it to be easy?

And about competition, that might represent a risk for someone that puts all his eggs on bitcoins, but in general, if something better come up, we should celebrate.

Still strikes me as re-inventing the wheel, but what features would you say could make another cryptocurrency better than bitcoin?

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January 22, 2011, 07:08:10 PM
 #6

Still strikes me as re-inventing the wheel, but what features would you say could make another cryptocurrency better than bitcoin?

I don't know. If I knew, I'd be working on it. Wink

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January 22, 2011, 07:10:22 PM
 #7

And about competition, that might represent a risk for someone that puts all his eggs on bitcoins, but in general, if something better come up, we should celebrate.

That's quite a clever point of view.  Indeed, if something better than bitcoin comes up, it will be great news.
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January 22, 2011, 09:05:59 PM
 #8

Still strikes me as re-inventing the wheel, but what features would you say could make another cryptocurrency better than bitcoin?

I don't know. If I knew, I'd be working on it. Wink

Why d'ya think I was trying to get ya to spill?Cheesy

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January 22, 2011, 11:07:45 PM
 #9

I'ld like to create a community response to the post.

I set up a collaborative editing pad:
   http://meetingwords.com/GO5tVHslbz

Following is my stab at a response.  Anyone care to make it better?  I'll paste the community response on the Quora post at a later time.


Community response to:
  http://www.quora.com/Is-Bitcoin-doomed-to-fail


Is Bitcoin doomed to fail?

> 1.) Technical
> it would require ~2k CPUs for 1h to steal 5M BTC.

Let's do the math.
 - Amazon Quadruple Extra Large Cluster Compute Instance $2.10 per hour. http://aws.amazon.com/ec2/pricing/
 - That instance is 2 NVIDIA M2050s, or about 32 Mhash/s per https://www.bitcoin.org/smf/index.php?topic=1334.msg26185#msg26185

The currenty network is about 150 Ghash/s.  To get 50% of current network hashing, that means you'ld need to match that amount.
That's 4,688 of those XL Cluster instances.  Hey ... that's just under $10,000 for the hour.

Whether or not that amount of capacity is available to just spin up is unlikely however.  49.9% of the hashing strength won't be enough.

So if you take over the network, what does that let you do?

Yes, there are over 5 million bitcoins that exist, but they aren't yours to spend.  You can try to accumulate bitcoin and then double spend once you have control of the network.  Assuming you start sending those to Mt. Gox and other exchanges in hopes of double spending, its quite likely the combination of a ramp in the number of nodes plus an influx of bitcoin funding by the exchanges wouldn't go unnoticed.

Amazon is likely to be the only one likely to profit from such an attempt.

> 2.) Legal
> BTC will represent a deadly threat for a national state, and that they would react accordingly using their full moral, legal, judiciary, police, military, PR, press powers to shut down such a threat.

Governments could make trade using bitcoins difficult, that is true.  If they make it a crime to trade with bitcoins only criminals will trade bitcoins, or something to that effect is how the saying goes.

> 3) Competition
> the lock-in power of such network is extremely low, and the entry barrier for competitors is also very low

There already is competition.  Testnet Bitcoin is a live, functioning parallel currency.  Today you can mine for it, exchange it .. it even trades on Bitcoin-OTC!  But you might want to think twice.  Because it is not protected by 150 Ghash/s like Bitcoin currency is, it is rather vulnerable at this stage.  There will be competition at some point, certainly.

> 4) Community
> infiltrate the community of developers in order to push their own agendas

Bitcoin is open source and runs on open protocols.  Let the best fork win.

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January 22, 2011, 11:35:12 PM
 #10

We are trying to make an attempt to add a gpu cluster to the network 
http://bitcointalk.org/index.php?topic=2884.new#new

My thought is we need to do it before someone else does and while it is still early enough to make it viable.


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January 22, 2011, 11:46:47 PM
 #11

We should try to get some (many/most) people who into folding@home freerainbowtables.org etc... and other BOINC users to switch from mining for glory to mining for money. This would be a radical shift.


Another, perhaps wild idea: If we could convince a whole technology/software/hardware,etc. company (at least midsize) to do mining with their employee computers in non-working hours, this could also strengthen the network.

And on top, create some PR...

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riggasconi
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January 23, 2011, 12:51:04 AM
 #12

Hi guys, I'm glad you're taking time to answer my question on Quora. I just edited it and corrected some details such as the hypothesis of "stealing" BTCs with the hypothesis of double-spending BTCs. Still, I'm very curious about your answer on the first of 4 points, given it looks like the most controversial of all. The other 3 also do concern me, in terms of fluctuations in the value of BTC: how much value will evaporate with government regulation, better forking, community infiltration, etc ? 10%, 30%, 50% ?

Again, the question is here:
http://www.quora.com/Is-Bitcoin-doomed-to-fail
mndrix
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January 23, 2011, 01:42:29 AM
 #13

Quote from: From the Quora question
If Nakamoto is right, as the FRN/BTC exchange ratio (e.g. price) grows, it becomes more convenient to buy computing power with FRN and then use it to hack the block chain

It also becomes more profitable to buy computing power to support the blockchain.  When I first heard of Bitcoin a couple months ago a coin was worth about $0.25.  At that time, I calculated the return on investment for buying a Radeon 5870 and accompanying hardware was around 3% APY.  Similar calculations with current market prices suggest 38% APY.

The exact numbers don't matter much, but as coins become more valuable honest participants are encouraged strengthen the network further by increasing their mining activities.

Quote
2000 malicious CPUs would be, at a current price of $0.20/CPU/hour (EC2 simple instance), $19,200

As sgornick mentioned above, the calculations in the original question are incorrect.  It's also important to note that mining difficulty has been increasing exponentially for quite some time.  The longer an attacker waits, the more expensive it becomes to attack the network.
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January 23, 2011, 01:57:51 AM
 #14

I just edited it and corrected some details such as the hypothesis of "stealing" BTCs with the hypothesis of double-spending BTCs.

Heh, ... composing answers, collaborative / wiki style against questions that evolve based on the answers being composed.

caveden
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January 23, 2011, 02:05:28 AM
 #15

At the moment to mount a 50% attack on bitcoin using my 1Ghash/sec contract service (the lowest cost available commercially on the market AFAIK, and amazon is behind on the price like by and order of magnitude :-) ) and assuming 200Ghash/sec for it to be viable, it would cost 360 000£ upfront and than 40 000£ monthly. Quite viable for some individuals, let alone central banks.

....

Such attack would not be commercially viable, because it would be more profitable to spend such money on mining BTC instead of attacking it. However, if such attack mounted by a politically motivated opponent like FED, for example, it would be a very bad news for bitcoin.

Somebody correct me if I'm wrong, but all that can be done by outcoming the network computing power is double-spending, right? More precisely, rewriting recent blocks.

I think we all agree that there is no monetary incentive to do so... the costs clearly outweigh the benefits.

And even thinking on the possibility of a politically motivated action... what exactly could they accomplish with it? If they start double-spending, they would hardly remain anonymous for too long... their victims would eventually denounce it, and the sorcery would turn against the sorcerer. Besides double-spending, they could erase transactions... but still, is that worth such a big investment? Particularly in a post-wikileaks world where this action could eventually become public?

I really don't think this is the kind of thing we should worry about.

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January 23, 2011, 03:56:41 AM
 #16

I think we all agree that there is no monetary incentive to do so... the costs clearly outweigh the benefits.

It might be profitable if the $10,000/hour figure is correct. The attacker could clean out every Bitcoin-accepting site in existence, which is enough to make even several hours of attack time profitable.

Some obstacles, however:
- It is possible for the double-spends to be removed if the community can come to an agreement about which transactions were real.
- The attacker needs to actually own enough BTC in order to double-spend them.
- The attack will take a few hours, which is enough for many people to notice. Satoshi might broadcast an alert.
- The price will plummet after the attack, reducing the profit.

A more likely attack is one against sites that accept big payments with only one or two confirmations. This is both quicker and easier.

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January 23, 2011, 04:02:05 AM
 #17

I think we all agree that there is no monetary incentive to do so... the costs clearly outweigh the benefits.

- It is possible for the double-spends to be removed if the community can come to an agreement about which transactions were real.
 

Isn't the point that it doesn't matter once he's got what he 'bought'? If two people both give him USD for the coins which is the real spend? The first I suppose, but someone is still screwed and attacker still gets money.

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January 23, 2011, 04:14:16 AM
 #18

Isn't the point that it doesn't matter once he's got what he 'bought'? If two people both give him USD for the coins which is the real spend? The first I suppose, but someone is still screwed and attacker still gets money.

I was thinking he'd send one version to himself, since that is easier. If he buys two things, then you're right -- there is no "real" version.

It would be nice if Bitcoin could detect this case and treat it specially. If you see a transaction to you in a block, but it conflicts with a transaction in your memory pool, then you're getting a double-spend.

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Anonymous
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January 23, 2011, 04:17:21 AM
 #19

To limit this possibilty we can take action ourselves so by the time someone notices bitcoin it is incredibly expensive and/or difficult to accomplish.

 Smiley
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January 23, 2011, 09:30:14 AM
 #20

Hi guys,

Again, I love the spirit of Bitcoin and I hope the attack I'm outlining in public helps the Bitcoin project to better understand possible points of failure. Unfortunately, based on your answers I'm starting to believe that the attack outlined in my Quora question (please check the latest edit at http://www.quora.com/Is-Bitcoin-doomed-to-fail) is both technically feasible and economically profitable. This is scary. Correct me if I'm wrong, since I need to know this before deciding whether to invest some money to buy BTCs or not.

To theymos:
Quote
Some obstacles, however:
- It is possible for the double-spends to be removed if the community can come to an agreement about which transactions were real.

As noted by Freemoney, it's too late: goods and services are already in the hands of the attacker.

Quote
- The attacker needs to actually own enough BTC in order to double-spend them.

He should buy them before the attack.

Quote
- The attack will take a few hours, which is enough for many people to notice. Satoshi might broadcast an alert.

The attack should target less-sofisticated users who don't check all the forums at every given transaction. The transactions should be prepared before the attack, so that the provider is already ready to sell to the attacker before the attack starts.

Quote
- The price will plummet after the attack, reducing the profit.

Yes, it is reasonable to assume that the price of BTC will plummet. Unfortunately goods and services are already in the hands of the attacker. This means that the attacker looses nothing, while every BTC owner sees the value earned true labour or mining evaporate before his very eyes.
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