Transactions Withholding Attack

[AnonyMint]

No I don't think they will do it offchain. They will keep it onchain to maintain seamless interoperability while they attack.

I can see you are confused. Unfortunately I don't think you understand how Bitcoin works well enough for me to explain this attack to you. Maybe just let the experts debate me. I will try to reply to you, but seems you are really confused.

Great argument.

How about you explain how a central off chain system can be vulnerable to double spends.  Explain to me like I'm a child, I don't care.

If the cartel records your spends offchain, then you can spend them again onchain to non-cartel merchants. The Bitcoin money supply would be in effect doubled, tripled, quadrupled, depending how many separate cartels do this.

But then how do the cartels spend this offchain money? Receivers of this money would only be able to trust it has value within the cartel members. So which copy of the money would be worth more? Depends which network has more value.

So it just adds chaos and risk to the cartel's outcome. It might be a way to destabilize Bitcoin, but it looks like customers and members of the cartel would revolt. So I don't think this would be attempted.

Also, if they are not doing it off chain as you say, how on earth they are able to withhold a transaction I send from my non-cartel wallet.

I already explained this to you upthread.

I didn't say they can withhold what you send from a non-cartel wallet.

I said they can withhold only transactions that their customers send on the cartel's wallet. The cartel will not permanently withhold these from the blockchain. They only withhold them from non-cartel miners. Once a cartel miner adds a block, then all these transactions get added to the Bitcoin blockchain.

The transaction you send from a non-cartel wallet client is affected because the cartel miners may refuse to include your transaction in the blocks they win. So depending on what percentage of the total network hashrate the cartel has, your transactions might be delayed. Eventually the cartel gains so much mass and has bankrupted the non-cartel miners, so then when you send from non-cartel client, your transaction never gets added to a block or very delayed.

I'm still waiting...

Sorry for the delay but yours was the most difficult to explain because you were confusing some of the issues. So I responded to yours last.

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[Pente]

If I understand this right by 2033, the miner reward will drop to 0.78125 btc. If Bitcoin is as big of a success as the core believers expect, this may be in the neighborhood of a million dollars. I could imagine a lot of small timers taking a loss on mining just hoping to hit the jackpot. Even if Amazon holds transactions till they win a block reward, I think there will still be enough competition. Besides, if the world is headed towards decentralization, Amazon might be lucky to have 5% of the world ecommerce business.

It declines asymptotically to 0 BTC. Eventually there comes a time when you argument is false. We could debate over when that time is, but you can not argue it never comes.

Your point is incorrect for another reason too. The difficulty did not decrease because if it did, the cartel can much more easily dominate the mining any way. So you income decreased while the difficulty did not. Therefor you go bankrupt. Your lottery point is irrelevant, because that lottery win still comes after a very long time and you are bankrupt by that time. Some miner might win the lottery before going bankrupt then certainly would stop mining, because the probability of winning it again before going bankrupt is astronomically unlikely. This is all in the math of probability.

I have to concede that the mining reward will eventually drop to insignificant since I don't believe that Btc will double in value every four years once it reaches it's peak.

I have secretly wondered if maybe we should always reward at least 1 btc every block even though this would eventually lead to over 21M btc, but I won't say anything since I don't want to be stoned for blasphemy.

[AnonyMint]

I have secretly wondered if maybe we should always reward at least 1 btc every block even though this would eventually lead to over 21M btc, but I won't say anything since I don't want to be stoned for blasphemy.

Eventually the 1 BTC would become too small as the 21M would become 42M, 84M, etc.. Yet that would help.

I am getting stoned (not the maryjane type) but still alive.

I think an altcoin is a more viable solution.

This issue isn't going to affect Bitcoin until most of you have long since made your fortunes and exited.

[Chaz]

If the cartel records your spends offchain, then you can spend them again onchain to non-cartel merchants. The Bitcoin money supply would be in effect doubled, tripled, quadrupled, depending how many separate cartels do this.

I'm not sure you understand off-chain transactions. 

Lets interperate your sentence using what we have today:

1) I have bitcoins on MtGox.
2) I spend these bitcoins by sending them to another MtGox user or to MtGox themselves.  Lets say to buy a MtGox T-Shirt.  This transaction is recorded centrally on their systems.
3) I now send these bitcoins again (wat), but now using the blockchain.  I send them to Bitstamp.

How?

[AnonyMint]

If the cartel records your spends offchain, then you can spend them again onchain to non-cartel merchants. The Bitcoin money supply would be in effect doubled, tripled, quadrupled, depending how many separate cartels do this.

I'm not sure you understand off-chain transactions.  

Lets interperate your sentence using what we have today:

1) I have bitcoins on MtGox.
2) I spend these bitcoins by sending them to another MtGox user or to MtGox themselves.  Lets say to buy a MtGox T-Shirt.  This transaction is recorded centrally on their systems.
3) I now send these bitcoins again (wat), but now using the blockchain.  I send them to Bitstamp.

How?

You can't because #1 was recorded onchain, not offchain.

[Chaz]

You can't because #1 was recorded onchain, not offchain.

They sure were, but now my balance is with MtGox, not the blockchain.  Your argument is that MtGox's systems are so inept that I can buy something off them and then send those bitcoins somewhere else (non-cartel).  I'm pretty sure those programmers would be fired.

[AnonyMint]

I have secretly wondered if maybe we should always reward at least 1 btc every block even though this would eventually lead to over 21M btc, but I won't say anything since I don't want to be stoned for blasphemy.

Eventually the 1 BTC would become too small as the 21M would become 42M, 84M, etc.. Yet that would help.

I am getting stoned (not the maryjane type) but still alive.

I think an altcoin is a more viable solution.

This issue isn't going to affect Bitcoin until most of you have long since made your fortunes and exited.

The other reason I think it would be better implemented in an altcoin, is because there are differences of opinion as to whether this attack will really occur or be successful. Because this attack involves economics on a wide-scale, not just a localized protocol game theory.

I am of course fairly worried that cartels will be the natural mode of outcome for commerce if they are not prevented from it with the protocol. Yet some of the others here in this thread think it is not likely. I disagree of course.

So I am thinking it is better to let people vote on their opinion of this issue by buying the altcoin or not.

And because I thus think you can't make this fix in Bitcoin without pissing off too many people. Which would hurt Bitcoin more in the short-term, which is what matters most to your investments.

However the argument against an altcoin would be that the cartels won't use it if Bitcoin is vulnerable to the attack they will prefer Bitcoin.

But personally I am fine with that. I just want something I can use that isn't cartelized for the non-cartel merchants. I just want freedom-of-choice when I am 70 years old.

[AnonyMint]

You can't because #1 was recorded onchain, not offchain.

They sure were, but now my balance is with MtGox, not the blockchain.  Your argument is that MtGox's systems are so inept that I can buy something off them and then send those bitcoins somewhere else (non-cartel).  I'm pretty sure those programmers would be fired.

I was expecting you to say that

You are confused.

And I know exactly what your confusion is, because I used to do techsupport.

Listen up. When the customer spends on the cartel, the offchain transaction would happen at that point. So the Bitcoin blockchain still shows the customer owning the coins. Whereas for your MtGox example, the Bitcoin blockchain shows MtGox owning the coins. So you are comparing two different things, apples-to-oranges.

It has nothing to do with ineptness once the coins are inside the cartel or MtGox. Both are managed correctly and no double-spends. The double-spend is due to the Bitcoin chain showing the customer still owns the coins in the cartel case, so customer can issue a Bitcoin chain spend again even while spending the coins in the cartel chain simultaneously. Whereas for your MtGox example, the Bitcoin chain shows MtGox owns the coins, so the customer can not issue a Bitcoin chain spend again.

Let me remind readers that this offchain discussion has nothing to do with my OP and the attack I described. It a unnecessary tangent we are discussing here.

[Chaz]

Listen up. When the customer spends on the cartel, the offchain transaction would happen at that point. So the Bitcoin blockchain still shows the customer owning the coins.

Why do I still own these coins if I have spent them?

[AnonyMint]

Listen up. When the customer spends on the cartel, the offchain transaction would happen at that point. So the Bitcoin blockchain still shows the customer owning the coins.

Why do I still own these coins if I have spent them?

JoelKatz implied or asked if cartels might prefer to not send the transaction to the Bitcoin blockchain ever. And keep them offchain. Did you get it now?

P.S. I don't think they would choose that strategy, so please stop cluttering this thread with this off-topic discussion on not understanding the Bitcoin technology and terminology (e.g. offchain). If you still don't understand, please send me a PM and I will explain there. I am not angry, I appreciate your posts, but please in PM so I can explain without burdening the thread okay.

[Chaz]

JoelKatz implied or asked if cartels might prefer to not send the transaction to the Bitcoin blockchain ever. And keep them offchain.

P.S. I don't think they would choose that strategy, so please stop cluttering this thread with this off-topic discussion on not understanding the Bitcoin technology. If you still don't understand, please send me a PM and I will explain there. I am not angry, I appreciate your posts, but please in PM so I can explain without burdening the thread okay.

If we aren't sending them to the blockchain ever then we are using Cartel-Coins, not bitcoins.

Look, you don't make any sense.  If I send bitcoins to my cartel wallet, I don't control those bitcoins anymore.  What I have now is a claim for those bitcoins from the cartel.

P.S I'm not cluttering this thread, your theoretical attack is baseless at best.  You proclaim to be the expert and look down upon other people, yet you can't even understand off-chain transactions.

[AnonyMint]

JoelKatz implied or asked if cartels might prefer to not send the transaction to the Bitcoin blockchain ever. And keep them offchain.

P.S. I don't think they would choose that strategy, so please stop cluttering this thread with this off-topic discussion on not understanding the Bitcoin technology. If you still don't understand, please send me a PM and I will explain there. I am not angry, I appreciate your posts, but please in PM so I can explain without burdening the thread okay.

If we aren't sending them to the blockchain ever then we are using Cartel-Coins, not bitcoins.

Exactly. That is what JoelKatz suggested. I never suggested that attack. It has nothing to do with my attack. You are conflating what JoelKatz wrote with the attack I have described. Please stop doing that.

Look, you don't make any sense.

You don't have sufficient understanding. The others here understand that I do make sense. They may disagree with whether the attack I described is likely or not, but they don't say I make no sense.

JoelKatz's attack is not likely in my opinion, so I don't know why you continue to discuss it in my thread.

If I send bitcoins to my cartel wallet, I don't control those bitcoins anymore.  What I have now is a claim for those bitcoins from the cartel.

Agreed in JoelKatz's attack. But that is not the attack I described in my OP. Go talk to JoelKatz about his attack in another thread. That is not the attack I described.

P.S I'm not cluttering this thread, your theoretical attack is baseless at best.  You proclaim to be the expert and look down upon other people, yet you can't even understand off-chain transactions.

Trust me, there are many people here reading and they understand you don't understand. It is very obvious you don't understand. You think JoelKatz's attack is my attack.

[Chaz]

You missed my point entirely. 

My off-chain transaction debate has nothing to do with your theoretical attack.

I'm calling you out on how the hell I can double double spend bitcoins off-chain as you said here:

Because offchain would not be protected against double-spend.

[AnonyMint]

You missed my point entirely.  

My off-chain transaction debate has nothing to do with your theoretical attack.

I'm calling you out on how the hell I can double double spend bitcoins off-chain as you said here:

Because offchain would not be protected against double-spend.

I never wrote that Bitcoins could be double-spent off-chain. Can't you read above what I wrote?

I said that the offchain coins would not be protected against a double-spend, meaning that the Bitcoin chain could still spend the coin again, which was also "spent" into the offchain.

The double-spend notion comes from the fact that the customer has gained double value from one original Bitcoin, the offchain coin and the Bitcoin coin.

If you still don't get this, please give up. It would mean you are hopelessly retarded. I tried to be nice to you for a few posts, but you just go on and on with your inability to grasp a simple concept.

Again readers, the above is JoelKatz's suggested attack, not the attack I described in my OP.

[Chaz]

I never wrote that Bitcoins could be double-spent off-chain.

Excellent, at least we agree that bitcoins cannot be double spent off-chain, unless the system has a grave error.

I said that the offchain coins would not be protected against a double-spend, meaning that the Bitcoin chain could still spend the coin again, which was also "spent" into the offchain.

Which party is spending the coin again?

MtGox has a pool of coins, the coins aren't linked to any customers.  When I send those coins to my MtGox wallet, MtGox now control them.  They could spend them straight away, do whatever they want, it has no effect on the customer.

[AnonyMint]

If you still don't get this, please give up.

Which word of "give up" do you not understand?

You've forgotten what I already explained to you upthread. You will get no more hand-holding from me. Sorry. I like to help people, but you have to be willing to not forget what you've already been told.

[Chaz]

lolz  , I am getting quite bored of this as well, we are going around in circles.

I will concede that you can't explain to me how a customer can double spend or benefit from sending coins to MtGox.

Done.

[AnonyMint]

Retail cartel != MtGox

MtGox owns the Bitcoin on the Bitcoin chain

Retail cartel owns nothing on the Bitcoin chain, instead has issued the customer a Cartelcoin in exchange for the Bitcoin which was never received.

JoelKatz proposed that, not me.

Actually he may not have even proposed that. He may have implied that cartel issues Cartelcoins in exchange for Bitcoin which was received but never uses Bitcoins again after that.

Sigh.

[AnonyMint]

Constant money supply is bad for crypto-currencies for more than one reason:

https://bitcointalk.org/index.php?topic=222998.msg3615848#msg3615848

[JoelKatz]

Because offchain would not be protected against double-spend.

You can't have it both ways. If you need protection from double spends on the regular block chain, then you need to get your transactions mined as soon as possible. If you don't need protection from double spends, then you can conduct your transactions off-chain. This "attack" just doesn't make any sense.