Transactions Withholding Attack

[MoonShadow]

MoonShadow is the type of person who is too stupid to understand (or too stubborn, I am not sure which) when he has been refuted. He will go on and on ad nauseum with noise, even after his points are clearly refuted.

I don't want to feed him, because he will never stop. He will try to bury the thread in noise.

The whole point of cartel is they won't let you in if you don't follow the rules. That is all I need to say to refute all that noise in his latest post above.

My point is that you have to actually show how a rise of a single cartel can happen in the first place.  You have not shown this.  As I have already pointed out, the rise of competing cartels was expected, and planned for, from the early days.  Simply saying that Amazon can control the transactions within it's own payment system is one thing, but saying that they can progressively take over all mining by this does not follow.  There are simply too many counter incentives to presume this.

P.S. Besides any one who has been to amazon.com knows that amazon.com processes the payment for the order, not the vendors. But that isn't necessary to make my point above. Maybe he is thinking instead of Amazon payments, not Amazon vendors.

Anyone who deals with online vending knows that Amazon's payment system is preferred by vendors because it's cheap and effective, but it's not the only way these same vendors sell products.  Almost all of them have their own websites, and can take payments outside of the Amazon ecosystem.  If Amazon were to turn hostile to those vendor's own interests, it's relatively easy for those vendors to abandon Amazon.  The same is true with any aggragate commerce site.

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[AnonyMint]

However, proof of stake doesn't really alter his theory much, and might actually make it more likely if implimented poorly. 

I haven't analyzed that, and you may be correct the PoS doesn't eliminate the postulated attack.

[MoonShadow]

I thought miners were to be funded by the theoretical rise in value over time.

That doesn't make any sense. The miners have to earn something on each block they solve, else why would they continue to expend electricity and hardware ongoing.

To protect their prior blocks from being 51% attacked would be one reason.

If you can't be paid anything, you can't pay your electricity. Then you can't continue mining.

Sure I can.  I'm doing it right now.  It's 33 degrees outside, my electric rate is 7.5 cents per KWH, and my basement needs supplemental heat anyway.  I also mine solo, and haven't caught a block in over a year, but so what?  If I ever catch another, that's just free money.  The need for heat pays for my electric consumption, and my mining rig is already a sunk cost.  If you think I'm unique, you're deluding yourself.

That coinbase transaction can't be spent for 120 blocks.

You missed the point that this entire thread is about when coin rewards diminish to near 0.

Please do not post in this thread again. You don't have the knowledge to post in this technical thread. Please. You are making noise.

If you continue to post batshit nonsense, I will raise this with the moderator. I want high quality rebuttals in this thread.

Go ahead and raise anything you like with moderators.  It's yourself who seems immune to reason.

BTW, coinbase rewards don't diminsh to near zero until around 2130.  So I doubt that either of us will live to see resolution here.

[AnonyMint]

Now you raised the level of your dialogue and logic to something worth discussing. Thanks.

My point is that you have to actually show how a rise of a single cartel can happen in the first place.  You have not shown this.

History has shown this. Yet you are correct I can not prove that cartels will or won't continue to occur as they have throughout history.

Thus you can't prove they won't either.

It is a stalemate, but I have history of my side.

Normally the market will take advantage of any profit opportunity if it is overall more efficient. So your job if you want to prove it won't happen, is to prove it won't be overall more efficient. This is probably impossible to prove one way or the other since there are too many potential exogenous factors.

I have history of my side as to the real risk of this attack. I also know the government and banks feel threatened by bitcoin (or at least feign concern, if they realize they can take it over). So there is a lot of motivation to make a cartel.

As I have already pointed out, the rise of competing cartels was expected, and planned for, from the early days.

Not my attack. It was never discussed. I've read everything from the early days with Satoshi. They assumed the corporations would be benign.

Simply saying that Amazon can control the transactions within it's own payment system is one thing, but saying that they can progressively take over all mining by this does not follow.  There are simply too many counter incentives to presume this.

Sorry but the logic is clear. If they can withhold a percentage of funding from the network, they gain a parasitic and spiraling advantage over the network hashrate power.

The only way to argue against this is to explain how someone can afford to lose money on mining. Two or more competing cartels? Still not a good outcome.

P.S. Besides any one who has been to amazon.com knows that amazon.com processes the payment for the order, not the vendors. But that isn't necessary to make my point above. Maybe he is thinking instead of Amazon payments, not Amazon vendors.

Anyone who deals with online vending knows that Amazon's payment system is preferred by vendors because it's cheap and effective, but it's not the only way these same vendors sell products.  Almost all of them have their own websites, and can take payments outside of the Amazon ecosystem.  If Amazon were to turn hostile to those vendor's own interests, it's relatively easy for those vendors to abandon Amazon.  The same is true with any aggragate commerce site.

It is not easy for them to turn away. They get an ever increasing percentage of their sales from Amazon, because it is more efficient for both the customer and the vendor.

And many vendors are ready to take the place of those who leave.

Efficiency is always the reasons cartels win. This is how Rockfeller justified what he did with Standard Oil, including all the dirty tricks. He said he detested waste.

[AnonyMint]

If you can't be paid anything, you can't pay your electricity. Then you can't continue mining.

That coinbase transaction can't be spent for 120 blocks.

You missed the point that this entire thread is about when coin rewards diminish to near 0.

Please do not post in this thread again. You don't have the knowledge to post in this technical thread. Please. You are making noise.

If you continue to post batshit nonsense, I will raise this with the moderator. I want high quality rebuttals in this thread.

You do realize the coinbase transaction contains the transaction fees, right?  

Correct but irrelevant because in my attack the transaction fees are withheld, so what is your point about fees can't be spent for some delay? How is that relevant my attack?

[MoonShadow]

However, proof of stake doesn't really alter his theory much, and might actually make it more likely if implimented poorly.  

I haven't analyzed that, and you may be correct the PoS doesn't eliminate the postulated attack.

Generally speaking, POS implies that the higher the number of coins that any particular miner has in savings, and is willing to 'stake' (i.e. freeze for a term, in order to gain a mining advantage without interest paid) than that miner can gain a bias advantage towards either mining in general, or towards special numbered blocks.  So Amazon, under your theory, would be able to magnify their advantage somewhat by staking their bitcoin earnings, and make their odds of finding the next block even higher.  POS throws the 51% mining rule off a bit, making it more into a 66%/33% rule (lessor versus major stakers).  However, POS in practice means different things to different people, so it also matters in detail how it might be implimented.  POS has been attempted by several alt-coins in different fashions, but none have amounted to much as of yet.  So far, the market doesn't put as much faith into POS as do the founders of these alt-coins.  I contributed to the destruction of one such alt-coin, because the particular version of POS permitted an attack wherein a trusted node turns malicious. (pure POW such as Bitcoin uses doesn't have trusted nodes, all nodes are untrustworthy)  I just framed how such an attack could occur, and someone else actually performed said attack about a month later.  Now I can't even remember what it was called.

[AnonyMint]

You don't have an attack. Read the responses to you in this thread.

I've reported this to the moderator. I will not tolerate posts intended to deceive that have no information in them. This is a serious thread.

[AnonyMint]

MoonShadow thank you for your contribution on PoS. I can't judge it to be correct or not at this time, so it will stand on its merits with no opinion from me. I do also have my doubts about PoS.

[AnonyMint]

This is a serious thread.

Miners are going to collude to offer free transactions? That's a serious thread?

That isn't the attack described in this thread.

The OP is about a cartel (or cartels) withholding their customers' transactions from the other miners.

[AnonyMint]

This is a serious thread.

Miners are going to collude to offer free transactions? That's a serious thread?

That isn't the attack described in this thread.

The OP is about a cartel (or cartels) withholding their customers' transactions from the other miners.

From the OP: "They could even offer 0% transaction fees (even refund mandatory tx fees) to entice more of the masses to process through their servers."

That is an optional mode of doing the attack. It is not required for the attack. It may help them accelerate the attack by drawing more customers to the cartel.

1) Why bother withholding the transactions if they're free?

The other miners wouldn't process them any way (when coin rewards are near 0). The effect is still to withhold fees and revenue from the other miners.

2) What are "mandatory tx fees"? Are you confusing the behavior of the clients with the protocol?

I said the attack would still be possible for a coin that decided to make transactions fees mandatory. In bitcoin transaction fees are voluntary and variable, but I was just preempting the incorrect argument that mandatory and/or fixed-rate transaction fees would be a fix.

[MoonShadow]

Now you raised the level of your dialogue and logic to something worth discussing. Thanks.

My point is that you have to actually show how a rise of a single cartel can happen in the first place.  You have not shown this.

History has shown this. Yet you are correct I can not prove that cartels will or won't continue to occur as they have throughout history.

Historicly, cartels rise as a form of regulatory capture.  Said another way, cartels form functional monopolies in a regulated industry, within a country, because governments exist.  What influence any particular govenrment, or all of them together (unlikley), can have upon the bitcoin economy remains to be seen.  However, it cannot rationally be assumed that cartels will rise in an unregulated environment.  They never have before today.

And before you start spouting about Railroad Robber Barons or Standard Oil; the railroads were a government project from the start and Standard Oil was no more of a monopoly than Microsoft was during the 1990's.  They were simply market dominators who had not yet been out innovated by new competitors.

Thus you can't prove they won't either.

It is a stalemate, but I have history of my side.

I could prove it, with great effort, but (once again) I don't need to do any such thing.  It's your theory.  In the long run, you could make a fortune betting your side of the theory if you are correct.  I'll stick with my side, and we will see who goes broke first.

Normally the market will take advantage of any profit opportunity if it is overall more efficient. So your job if you want to prove it won't happen, is to prove it won't be overall more efficient. This is probably impossible to prove one way or the other since there are too many potential exogenous factors.

You just talked yourself into a circle.  I can easily prove that a mining cartel cannot be the most efficient.  I can prove it with existing examples, and have literally done this more than once over the past three years with nearly identical claims of cartel/monopoly based theories.  The key you're missing is that the protocol doesn't require that miners be paid within the system itself, or even at all.  Fee less transactions exist, and they can be paid for out-of-network.  Beyond that, off-network transactions are not only possible, they already occur quite regularly; even if they remain a small minority of the total economy.  On-network transactions are the high-mark of trustless security, but Satoshi undrstood that not everyone would really require such a high degree of security, nor trustless interactions.  In fact, he was counting on parrallel networks (such as Stratum) to develop without his own help that would handle less perfect transactions among parties that trust one another well enough, and thus remove a significant amount of network traffic from the main bitcoin network.  By the time your attack could even be tested, the majority of transactions wouldn't even be using the bitcoin network at all, and the main network would be more akin to the ATM network banks use today.  More of a backbone of the most risky or sensitive international transactions than what Joe Six Pack uses to order an ebook for his kindle.

I have history of my side as to the real risk of this attack. I also know the government and banks feel threatened by bitcoin (or at least feign concern, if they realize they can take it over). So there is a lot of motivation to make a cartel.

Motivation alone is not enough.  There also must be a credible regulatory path.  I don't see one.  If there is one, than government regulation is a greater risk than the rise of a single mining cartel.

As I have already pointed out, the rise of competing cartels was expected, and planned for, from the early days.

Not my attack. It was never discussed. I've read everything from the early days with Satoshi. They assumed the corporations would be benign.

Dude, that's not even possible.  Reading all of that, I mean.

Simply saying that Amazon can control the transactions within it's own payment system is one thing, but saying that they can progressively take over all mining by this does not follow.  There are simply too many counter incentives to presume this.

Sorry but the logic is clear. If they can withhold a percentage of funding from the network, they gain a parasitic and spiraling advantage over the network hashrate power.

I might be clear to you, but you don't understand the system yet.  Amazon can't withhold funding from the network.  They can only delay processing of their own transactions.  Time is definately money, and there is a hidden cost to Amazon to do this under any conditions.  They also open themselves up to a double spend attack if they do this in any significant capacity, and someone is going to use that against them eventually.  If you think that Amazon holding their own transactions so that other miners can't get their transaction fees is a problem, why not just issue fee-less transactions?  The fees would just be going back to Amazon otherwise.  You have not discovered something new here, AnonyMint.  Just because Amazon might refuse to pay other miners a mining fee, doesn't mean that they are denying funding for the network.  Other miners are just as able to ignore Amazon's transactions, and just as able to refuse to forward transactions to them.  In fact, I'm fairly sure that games like this already occur.  I'd be surprised to discover that no miners refuse to process free transactions, except for those who are on some kind of whitelist.  Miner favoritism is expected, but in the aggregate, has zero effect upon the network as a whole.  On the aggregate, the network is, and will remain, impartial towards fee paying transactions.  And fee-less transactions are expected to be ignored by a large portion of the professional mining class.  Why would it be any other way?  

The only way to argue against this is to explain how someone can afford to lose money on mining. Two or more competing cartels? Still not a good outcome.

I've already explained two conditions wherein miners can literally "afford" to lose money on mining.  You didn't even bother to respond to them.

Two or more competing cartels is an outcome that functionally prohibits the complete takeover of the currency, which was the endgame of your attack theory.  I can't think of one reason that a consumer should care about any cartels, if the currency continues to function as far as he is concerned.  Cartels aren't the risk, a monopoly is the risk, and that is impossible.

P.S. Besides any one who has been to amazon.com knows that amazon.com processes the payment for the order, not the vendors. But that isn't necessary to make my point above. Maybe he is thinking instead of Amazon payments, not Amazon vendors.

Anyone who deals with online vending knows that Amazon's payment system is preferred by vendors because it's cheap and effective, but it's not the only way these same vendors sell products.  Almost all of them have their own websites, and can take payments outside of the Amazon ecosystem.  If Amazon were to turn hostile to those vendor's own interests, it's relatively easy for those vendors to abandon Amazon.  The same is true with any aggragate commerce site.

It is not easy for them to turn away. They get an ever increasing percentage of their sales from Amazon, because it is more efficient for both the customer and the vendor.

What do you think they will do if it's no longer efficient?  Do you think they will just sit back and take it?  Or do you think that they will contrive to come up with other solutions, with or without Amazon's explict permission?

And many vendors are ready to take the place of those who leave.

So?

Efficiency is always the reasons cartels win. This is how Rockfeller justified what he did with Standard Oil, including all the dirty tricks. He said he detested waste.

Ha!  I knew we'd get here eventually.  

Again, Standard Oil was not a monopoly, or even a cartel.  Standard Oil was a temporary market dominator, and could only remain such as long as it was the most efficient provider of services.  As for the dirty tricks, Microsoft, Coca-Cola and Ford have all been caught playing dirty trying to maintain a dominate market position that would eventually fall anyway.  No one still considers Coca-Cola to be a monopoly on soft drinks, if they ever did.  I don't know anyone who still buys the meme that Microsoft is, or ever really was, a monopoly for operating system software.

[AnonyMint]

1) Why bother withholding the transactions if they're free?

The other miners wouldn't process them any way (when coin rewards are near 0).

Maybe they would and maybe they wouldn't. Miners currently process zero fee transactions. Why would they stop just because "coin rewards" are near zero?

"there will probably always be nodes willing to process transactions for free" - Satoshi Nakamoto

Whether they accept them or not is irrelevant. The relevant point is they won't receive any fees for those transactions. As the cartel grows, then more and more of the transactions will either be withheld from the other miners or sent to them with 0 fees offered.

At some level, those other miners go bankrupt. The cartel starving them of a portion of their revenue yet they still need to produce the ENTIRE difficulty of hashrate because the cartel is paying their own miners from either the non-free transaction fees and/or from profits of being a cartel. Cartels gain more size and thus economies-of-scale efficiency as well they can charge higher prices once they have eliminated the competition.

The effect is still to withhold fees and revenue from the other miners.

And to greatly delay your transactions.

I refuted that already upthread. Why can't you read the thread carefully?

The cartel can give 0-confirmation transactions to its customers, because these are going to be repeat customers because the cartel covers so much commerce.

Only the non-cartel transactions get delayed, because the cartels miners won't include them when they win the blocks sometimes.

2) What are "mandatory tx fees"? Are you confusing the behavior of the clients with the protocol?

I said the attack would still be possible for a coin that decided to make transactions fees mandatory. In bitcoin they are not, but I was just preempting the incorrect argument that mandatory transaction fees would be a fix.

The correct argument is that there's nothing that needs to be fixed in the first place. When miners fight over who can provide the cheapest transactions, the people making the transactions win.

The market rate for transaction fees has nothing to do with my attack.

I only said that alternate coin designs would still be subject to the attack.

You waste my time here.

[AnonyMint]

Now you raised the level of your dialogue and logic to something worth discussing. Thanks.

My point is that you have to actually show how a rise of a single cartel can happen in the first place.  You have not shown this.

History has shown this. Yet you are correct I can not prove that cartels will or won't continue to occur as they have throughout history.

Historicly, cartels rise as a form of regulatory capture.  Said another way, cartels form functional monopolies in a regulated industry, within a country, because governments exist.  What influence any particular govenrment, or all of them together (unlikley), can have upon the bitcoin economy remains to be seen.  However, it cannot rationally be assumed that cartels will rise in an unregulated environment.  They never have before today.

Incorrect. You will find that for example in the case of Standard Oil that the initial stage of the cartel was to be more efficient. The regulatory capture came later once it was such a huge operation that they could do regulatory capture and then later to protect against smaller paradigm shifts. So by the end, Rockefeller was a liar about efficiency. But in the start, he was more efficient for example by moving rails closer to farms (the cost from the farm to the rail was often higher than the long-distance rail shipping rate) and consolidating inefficient managements, etc..

And before you start spouting about Railroad Robber Barons or Standard Oil; the railroads were a government project from the start and Standard Oil was no more of a monopoly than Microsoft was during the 1990's.  They were simply market dominators who had not yet been out innovated by new competitors.

hahaha you argue Microsoft didn't have a monopoly with Windows for decades.

Normally the market will take advantage of any profit opportunity if it is overall more efficient. So your job if you want to prove it won't happen, is to prove it won't be overall more efficient. This is probably impossible to prove one way or the other since there are too many potential exogenous factors.

You just talked yourself into a circle.  I can easily prove that a mining cartel cannot be the most efficient.  I can prove it with existing examples, and have literally done this more than once over the past three years with nearly identical claims of cartel/monopoly based theories.  The key you're missing is that the protocol doesn't require that miners be paid within the system itself, or even at all.  Fee less transactions exist, and they can be paid for out-of-network.  Beyond that, off-network transactions are not only possible, they already occur quite regularly; even if they remain a small minority of the total economy.  On-network transactions are the high-mark of trustless security, but Satoshi undrstood that not everyone would really require such a high degree of security, nor trustless interactions.  In fact, he was counting on parrallel networks (such as Stratum) to develop without his own help that would handle less perfect transactions among parties that trust one another well enough, and thus remove a significant amount of network traffic from the main bitcoin network.  By the time your attack could even be tested, the majority of transactions wouldn't even be using the bitcoin network at all, and the main network would be more akin to the ATM network banks use today.  More of a backbone of the most risky or sensitive international transactions than what Joe Six Pack uses to order an ebook for his kindle.

Moving most transactions off the blockchain would indeed be a possible fix to my attack. It doesn't however make my attack wrong, because that is not the case today and no one can guarantee it will be so.

I have history of my side as to the real risk of this attack. I also know the government and banks feel threatened by bitcoin (or at least feign concern, if they realize they can take it over). So there is a lot of motivation to make a cartel.

Motivation alone is not enough.  There also must be a credible regulatory path.  I don't see one.  If there is one, than government regulation is a greater risk than the rise of a single mining cartel.

You haven't see the new laws that you can't root your cell phone in the USA?

Don't be too naive okay.

As I have already pointed out, the rise of competing cartels was expected, and planned for, from the early days.

Not my attack. It was never discussed. I've read everything from the early days with Satoshi. They assumed the corporations would be benign.

Dude, that's not even possible.  Reading all of that, I mean.

I do my research. And no better place to start, than at the beginning.

Simply saying that Amazon can control the transactions within it's own payment system is one thing, but saying that they can progressively take over all mining by this does not follow.  There are simply too many counter incentives to presume this.

Sorry but the logic is clear. If they can withhold a percentage of funding from the network, they gain a parasitic and spiraling advantage over the network hashrate power.

I might be clear to you, but you don't understand the system yet.  Amazon can't withhold funding from the network.  They can only delay processing of their own transactions.

I have refuted this same point 2X already upthread. See my latest reply to anth0ny.

The only way to argue against this is to explain how someone can afford to lose money on mining. Two or more competing cartels? Still not a good outcome.

I've already explained two conditions wherein miners can literally "afford" to lose money on mining.  You didn't even bother to respond to them.

Sorry I must have missed that. You can reiterate.

Two or more competing cartels is an outcome that functionally prohibits the complete takeover of the currency, which was the endgame of your attack theory.  I can't think of one reason that a consumer should care about any cartels, if the currency continues to function as far as he is concerned.  Cartels aren't the risk, a monopoly is the risk, and that is impossible.

Cartels always functionally merge because it is more profitable, i.e. they can charge higher prices with less competition.

That is monopoly.

Customers do buy from monopolies. They bought Windows like hotcakes up until Linux started to compete effectively recently.

Microsoft was not able to attain regulatory capture to prevent Linux, so monopoly was eroded and now dying.

P.S. Besides any one who has been to amazon.com knows that amazon.com processes the payment for the order, not the vendors. But that isn't necessary to make my point above. Maybe he is thinking instead of Amazon payments, not Amazon vendors.

Anyone who deals with online vending knows that Amazon's payment system is preferred by vendors because it's cheap and effective, but it's not the only way these same vendors sell products.  Almost all of them have their own websites, and can take payments outside of the Amazon ecosystem.  If Amazon were to turn hostile to those vendor's own interests, it's relatively easy for those vendors to abandon Amazon.  The same is true with any aggragate commerce site.

It is not easy for them to turn away. They get an ever increasing percentage of their sales from Amazon, because it is more efficient for both the customer and the vendor.

What do you think they will do if it's no longer efficient?  Do you think they will just sit back and take it?  Or do you think that they will contrive to come up with other solutions, with or without Amazon's explict permission?

You may not like it, but they stick with the monopoly. That is the way monopolies work out, unless there is an alternative. Cartels are good at regulatory capture.

And the government and banks have every incentive to go along with it in this case.

[MoonShadow]

1) Why bother withholding the transactions if they're free?

The other miners wouldn't process them any way (when coin rewards are near 0).

Maybe they would and maybe they wouldn't. Miners currently process zero fee transactions. Why would they stop just because "coin rewards" are near zero?

"there will probably always be nodes willing to process transactions for free" - Satoshi Nakamoto

Whether they accept them or not is irrelevant. The relevant point is they won't receive any fees for those transactions. As the cartel grows, then more and more of the transactions will either be withheld from the other miners or sent to them with 0 fees offered.

At some level, those other miners go bankrupt. The cartel starving them of a portion of their revenue yet they still need to produce the ENTIRE difficulty of hashrate because the cartel is paying their own miners from either the non-free transaction fees and/or from profits of being a cartel. Cartels gain more size and thus economies-of-scale efficiency as well they can charge higher prices once they have eliminated the competition.

Nope.  This is where your theory falls apart.  Out-of-band transactions exist, and they exist because fee-less transactions are permitted.  The cartel can't grow, because it needs to have a dominate position among miners to start with.  It can't happen.  Currently, the bitcoin network is more than a 1000 times faster than the fastest unclassified supercomputer on Earth.  It would take nation-state level resources for Amazon to even match one of the top 10 mining pools, and they would have to commit those resources to this end for an indefinate period of time.  Even the NSA couldn't pull this one off, and they tried it more than a year ago.  You can't bankrupt the independent miners, there is simply no way to undercut the guy who's mining rig heats his flat.

The effect is still to withhold fees and revenue from the other miners.

And to greatly delay your transactions.

I refuted that already upthread. Why can't you read the thread carefully?

You refuted nothing of the sort.  What you are describing is an intentional network split, although asyncronous.  The small side of the split always loses, there is no exceptions.  No cartel would be willing to commit the resources to acheive this end, because it would be a money pit until they hit 51% of the hashing.  Over 58,000 Petaflops.  The fastest supercomputer on Earth is 33 Petaflops.  And that is now, what will it be in 20 years?

The cartel can give 0-confirmation transactions to its customers, because these are going to be repeat customers because the cartel covers so much commerce.

Everyone can give 0-confirm transactions to their customers.  That's a question of business risk, not capacity.  It happens now.  Please search for the fast-transaction problem and/or the vending machine problem.

Only the non-cartel transactions get delayed, because the cartels miners won't include them when they win the blocks sometimes.

That happens now.  No mystery there either.

[daviducsb]

Anthony- Your argument reminds me of inane theorizing done in grad school with game system models that seldom work in the real world.

This supposed attack would not work for as many psychological/behavioral reasons as technical ones. Among them:

People want authenticity and will avoid cartels that disrupt the authenticity of bitcoin. Especially given the premise of bitcoin.

Over time, a body of law may come about making the Amazon-type activity you postulate illegal. Even if that does not happen, there will be cooperation by miners, users, and others to have the end result of such a cartel be the same. Failure.

Your theory is seriously lacking in common sense, and your attention to technical detail and pronouncements re. your IQ indicate that, like your theory, your ideas are not informed by any insight into real human behavior.

Fail.

[AnonyMint]

1) Why bother withholding the transactions if they're free?

The other miners wouldn't process them any way (when coin rewards are near 0).

Maybe they would and maybe they wouldn't. Miners currently process zero fee transactions. Why would they stop just because "coin rewards" are near zero?

"there will probably always be nodes willing to process transactions for free" - Satoshi Nakamoto

Whether they accept them or not is irrelevant. The relevant point is they won't receive any fees for those transactions. As the cartel grows, then more and more of the transactions will either be withheld from the other miners or sent to them with 0 fees offered.

At some level, those other miners go bankrupt. The cartel starving them of a portion of their revenue yet they still need to produce the ENTIRE difficulty of hashrate because the cartel is paying their own miners from either the non-free transaction fees and/or from profits of being a cartel. Cartels gain more size and thus economies-of-scale efficiency as well they can charge higher prices once they have eliminated the competition.

Nope.  This is where your theory falls apart.  Out-of-band transactions exist, and they exist because fee-less transactions are permitted.

Offchain activity is irrelevant to my attack. You can't predict the future. If offchain becomes the dominant mode of commerce, then my attack will be less useful. But it doesn't make my attack not exist for as long as onchain activity is the norm. You can speculate all you want about the future being not on the blockchain, but I deal with the reality as it stands today. Please don't argue this point further because I will ignore it as it is not relevant. It is a strawman.

Stay on topic please if you want me to discuss.

The cartel can't grow, because it needs to have a dominate position among miners to start with.  It can't happen.  Currently, the bitcoin network is more than a 1000 times faster than the fastest unclassified supercomputer on Earth.  It would take nation-state level resources for Amazon to even match one of the top 10 mining pools, and they would have to commit those resources to this end for an indefinate period of time.

Nonsense. Amazon controls more servers than the largest mining pools today.

Besides that is irrelevant and shows you don't understand this attack well.

Amazon controls a significant AND GROWING percentage of global commerce (heck I even order from them from Asia), plus there are other large outfits they can merge with in other countries, and thus they can starve the network of transaction fees when the coin rewards are insufficient.

Thus they can shrink the hashrate that they have to compete against by starving the pools of income.

Please don't make me repeat this again. I've stated it too many times already upthread.

You refuted nothing of the sort.  What you are describing is an intentional network split, although asyncronous.  The small side of the split always loses, there is no exceptions.  No cartel would be willing to commit the resources to acheive this end, because it would be a money pit until they hit 51% of the hashing.  Over 58,000 Petaflops.  The fastest supercomputer on Earth is 33 Petaflops.  And that is now, what will it be in 20 years?

Incorrect. I will let you figure out why that is nonsense.

The cartel can give 0-confirmation transactions to its customers, because these are going to be repeat customers because the cartel covers so much commerce.

Everyone can give 0-confirm transactions to their customers.  That's a question of business risk, not capacity.  It happens now.  Please search for the fast-transaction problem and/or the vending machine problem.

Don't play dumb just to obfuscate the point.

The point is the cartel doesn't have delay transactions for its customers when it withholds them from the other miners.

Only the non-cartel transactions get delayed, because the cartels miners won't include them when they win the blocks sometimes.

That happens now.  No mystery there either.

It does not if the non-cartel includes a fee to pay miners!

You are just going around in circles in your arguments and forgetting the points of the attack.

If you intentionally waste my time again, I will ignore you. I don't have time for nonsense posts. Please try to think before you post. I know you are not stupid now.

[AnonyMint]

Anthony-

This is not anth0ny's attack. He is arguing against this attack of mine. You must be confused or was that a typo?

Your argument reminds me of inane theorizing done in grad school with game system models that seldom work in the real world.

Cartels happen often in the real world.

This supposed attack would not work for as many psychological/behavioral reasons as technical ones. Among them:

People want authenticity and will avoid cartels that disrupt the authenticity of bitcoin. Especially given the premise of bitcoin.

I already refuted this upthread in the early pages of the thread! Dam it read the thread before you post!

The customers of Amazon don't give a rat's ass about your ideological goals. They want their damn goods and click a button and are done with it. They follow what the website dictates.

Over time, a body of law may come about making the Amazon-type activity you postulate illegal.

The government (elite) power comes from control over fiat and you assume they will outlaw the way to take over Bitcoin and capture it?

Sorry you speak nonsense to me.

Fail.

[MoonShadow]

Now you raised the level of your dialogue and logic to something worth discussing. Thanks.

My point is that you have to actually show how a rise of a single cartel can happen in the first place.  You have not shown this.

History has shown this. Yet you are correct I can not prove that cartels will or won't continue to occur as they have throughout history.

Historicly, cartels rise as a form of regulatory capture.  Said another way, cartels form functional monopolies in a regulated industry, within a country, because governments exist.  What influence any particular govenrment, or all of them together (unlikley), can have upon the bitcoin economy remains to be seen.  However, it cannot rationally be assumed that cartels will rise in an unregulated environment.  They never have before today.

Incorrect. You will find that for example in the case of Standard Oil that the initial stage of the cartel was to be more efficient. The regulatory capture came later once it was such a huge operation that they could do regulatory capture and then later to protect against smaller paradigm shifts. So by the end, Rockefeller was a liar about efficiency. But in the start, he was more efficient for example by moving rails closer to farms (the cost from the farm to the rail was often higher than the long-distance rail shipping rate) and consolidating inefficient managements, etc..

You have just verified my point.  Standard Oil wasn't a cartel/monopoly to start with, they were the market dominator due to efficiency.  So they were the market dominator before they changed their methods to dirty tricks, in order to maintain an untenuable market position.  The regulatory capture was critical to maintaining that position.  Regulatory capture is (probably) impossible within bitcoin, since bitcoin is, itself, resistant to regulation.

And before you start spouting about Railroad Robber Barons or Standard Oil; the railroads were a government project from the start and Standard Oil was no more of a monopoly than Microsoft was during the 1990's.  They were simply market dominators who had not yet been out innovated by new competitors.

hahaha you argue Microsoft didn't have a monopoly with Windows for decades.

They didn't.  They had a dominate market position, as I stated.  During the 90's they used copyright law and dirty tricks of their own to maintain that market position, but in hindsight, we know that it was already be eroded by GNU/Linux.  You're using linux right now, and you do it everytime you do just about anything on the Internet.  More than half of all servers are some flavor of unix successor, that was already true when the US Department of Justice was sueing Microsoft for anti-trust (monopoly) violations.  It just took a while for the rest of the market to notice the quiet changes underway.

If you disagree, make an argument; rather than just a childish remark.

Normally the market will take advantage of any profit opportunity if it is overall more efficient. So your job if you want to prove it won't happen, is to prove it won't be overall more efficient. This is probably impossible to prove one way or the other since there are too many potential exogenous factors.

You just talked yourself into a circle.  I can easily prove that a mining cartel cannot be the most efficient.  I can prove it with existing examples, and have literally done this more than once over the past three years with nearly identical claims of cartel/monopoly based theories.  The key you're missing is that the protocol doesn't require that miners be paid within the system itself, or even at all.  Fee less transactions exist, and they can be paid for out-of-network.  Beyond that, off-network transactions are not only possible, they already occur quite regularly; even if they remain a small minority of the total economy.  On-network transactions are the high-mark of trustless security, but Satoshi undrstood that not everyone would really require such a high degree of security, nor trustless interactions.  In fact, he was counting on parrallel networks (such as Stratum) to develop without his own help that would handle less perfect transactions among parties that trust one another well enough, and thus remove a significant amount of network traffic from the main bitcoin network.  By the time your attack could even be tested, the majority of transactions wouldn't even be using the bitcoin network at all, and the main network would be more akin to the ATM network banks use today.  More of a backbone of the most risky or sensitive international transactions than what Joe Six Pack uses to order an ebook for his kindle.

Moving most transactions off the blockchain would indeed be a possible fix to my attack. It doesn't however make my attack wrong, because that is not the case today and no one can guarantee it will be so.

Again, I don't need to disprove your theory.  I only need to point out objections.  If you can't defend your theory, then you don't have one.  I can prove that off-network transactions exist today, if I desire. I can tell you how to do some with a MtGox account, and I've done it many times before the Silk Road was brought down.  Coin-mixers do them as a matter of their primary function.  All that is required for them to grow in scope is for a market force to require them.  Something as simple as a percentage rise in the transaction fee would be enough.  A government crackdown would certainly do it.

I have history of my side as to the real risk of this attack. I also know the government and banks feel threatened by bitcoin (or at least feign concern, if they realize they can take it over). So there is a lot of motivation to make a cartel.

Motivation alone is not enough.  There also must be a credible regulatory path.  I don't see one.  If there is one, than government regulation is a greater risk than the rise of a single mining cartel.

You haven't see the new laws that you can't root your cell phone in the USA?

I have seen that news.  Strangely, my phone is still rooted.  If the simple fact that a law against it existed really worked, then the US doesn't have a drug war going on anymore either.

Don't be too naive okay.

I'm the naive one?

As I have already pointed out, the rise of competing cartels was expected, and planned for, from the early days.

Not my attack. It was never discussed. I've read everything from the early days with Satoshi. They assumed the corporations would be benign.

Dude, that's not even possible.  Reading all of that, I mean.

I do my research. And no better place to start, than at the beginning.

You still haven't read all there is to read on this topic.  You probably haven't even read all that I've personally written on this topic.  I wouldn't want to read all that myself.

Simply saying that Amazon can control the transactions within it's own payment system is one thing, but saying that they can progressively take over all mining by this does not follow.  There are simply too many counter incentives to presume this.

Sorry but the logic is clear. If they can withhold a percentage of funding from the network, they gain a parasitic and spiraling advantage over the network hashrate power.

I might be clear to you, but you don't understand the system yet.  Amazon can't withhold funding from the network.  They can only delay processing of their own transactions.

I have refuted this same point 2X already upthread. See my latest reply to anth0ny.

Just because you say it, does not make it so.

The only way to argue against this is to explain how someone can afford to lose money on mining. Two or more competing cartels? Still not a good outcome.

I've already explained two conditions wherein miners can literally "afford" to lose money on mining.  You didn't even bother to respond to them.

Sorry I must have missed that. You can reiterate.

One.  Mining as a secondary effect to electro-resistive heating.  I.e. you can't undercut the miner who's rig heats his flat.  There is also whole threads regarding using asics embeddeding into heat cable to warm pipes.

Two.  The Wal-mart|McDonalds|Sears alliance versus the Target|BurgerKind|JCPenny union.  Competing cartels can mine at a negative profit, because they're primary business is selling retail products, not mining for bitcoins. 

Two or more competing cartels is an outcome that functionally prohibits the complete takeover of the currency, which was the endgame of your attack theory.  I can't think of one reason that a consumer should care about any cartels, if the currency continues to function as far as he is concerned.  Cartels aren't the risk, a monopoly is the risk, and that is impossible.

Cartels always functionally merge because it is more profitable, i.e. they can charge higher prices with less competition.

Only if regulatory capture is an option.  There has never been an exception.  There is no evidence that regulatory capture is possible in bitcoin mining.

Customers do buy from monopolies. They bought Windows like hotcakes up until Linux started to compete effectively recently.

I already addressed this one.

Microsoft was not able to attain regulatory capture to prevent Linux, so monopoly was eroded and now dying.

That happened long before you think, but why couldn't Microsoft gain a regulatory capture advantage over Linux?  Because it wasn't a company that could be regulated, it was simply the product of a new kind of development.  Open source.  Which turns out to be rather resistant to regulation by governments.  Bitcoin is open source, and p2p, and distributed.  All things deliberately designed to contribute to it's resitance to regulation.

P.S. Besides any one who has been to amazon.com knows that amazon.com processes the payment for the order, not the vendors. But that isn't necessary to make my point above. Maybe he is thinking instead of Amazon payments, not Amazon vendors.

Anyone who deals with online vending knows that Amazon's payment system is preferred by vendors because it's cheap and effective, but it's not the only way these same vendors sell products.  Almost all of them have their own websites, and can take payments outside of the Amazon ecosystem.  If Amazon were to turn hostile to those vendor's own interests, it's relatively easy for those vendors to abandon Amazon.  The same is true with any aggragate commerce site.

It is not easy for them to turn away. They get an ever increasing percentage of their sales from Amazon, because it is more efficient for both the customer and the vendor.

What do you think they will do if it's no longer efficient?  Do you think they will just sit back and take it?  Or do you think that they will contrive to come up with other solutions, with or without Amazon's explict permission?

You may not like it, but they stick with the monopoly. That is the way monopolies work out, unless there is an alternative. Cartels are good at regulatory capture.

My point is that there is an alternative, even for Amazon's vendors.  You just seem to be blind to the alternatives.

And the government and banks have every incentive to go along with it in this case.

Doesn't matter if they do.

[daviducsb]

My post was directed at AnthontMint. Sorry for confusion.

The argument just seems so inane and theoretical and devoid of behavioral analysis and common sense.

[MoonShadow]

It would take nation-state level resources for Amazon to even match one of the top 10 mining pools, and they would have to commit those resources to this end for an indefinate period of time.  Even the NSA couldn't pull this one off, and they tried it more than a year ago.

They did? Do you have a link? (Not because I don't believe you, but because I'd like to read more about it.)

Search this forum for the elusive "mystery miner" of yesteryear.