Transactions Withholding Attack

[daviducsb]

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.
[/quote]

Anyone with a college degree or even self taught student of history ought to know that any elite is not homogenous. There are always divergences of opinion and action within the elite. Some of the elite will seek to protect bitcoin's authenticity, others won't. This is already happening. Again, you miss the most basic, rudimentary understanding of human behavior.

Sidenote: Are you being paid by a hedge fund or other entity that wants to accumulate more bitcoin for cheap? Your overly technical arguments and choice use of jargon seem like they're intended to mislead newbies. Or maybe you are just upset you didn't buy when the price was right. Or maybe you really believe your theoretical nonsense. In any case, you leave yourself enormous wiggle room by saying bitcoin will reach a trillion dollars before going to 0. Gee, thanks for the deep insight, like most human endeavors things will ebb and flow. Aside from self-agrandizing theoreticizing, I don't see much in your posts.

[1713899433]

1713899433

[1713899433]

1713899433

[1713899433]

1713899433

[1713899433]

1713899433

[AnonyMint]

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

That is not an argument. It is 0 specific information content.

I already refuted your specifics.

I need to go eat guys. Be back later.

[MoonShadow]

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.
[/quote]

You can speculate as much as you like as well.  Once again, I don't need to disprove your theory.  You need to disprove my objections.  Thus far, you have failed to disprove any of them.  Not one, and I have provided at least 6 market forces that undermine your theory.  I have not even touched upon the technical/protocol reasons your theory is flawed. 

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.

What part is nonsense?  First, show me that Amazon has control of 58,000 petaflops of computational power.  Then show me how they would be able to commit same to such a project without completely starving their existing businesses for resources.  I know that you can't show either, because while Amazon certainly has quite a network, they are actually using it for a great many other business functions.

Furthermore, the 33 petaflop supercomputer sits on more than 40 acres.  Amazon doesn't possess 40,000 acres of server farms.

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.

I understand your attack better than you do, you just don't know it yet.  The percentage of global commerce that Amazon may control is what is irrelevant.  You don't know enough about the protocol for me to even explain why this is.

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

Won't work.  It's been tried already.  It didn't work for them either.

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

You've never actually stated anything of substance.  If you ever did, you'd have to admit failure when others ate out your substance.  Personally, I'd like to see it.

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.

Prove it.

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.

YES IT DOES! The nature of the protocol requires that the cartel delay transaction processing for it's customers because it withholds them from other miners.  There is no way to avoid it!  That's what you can't wrap your head around!

[daviducsb]

Please address the question of whether you are being paid to spread fear re. bitcoin in order to influence the price.

[AnonyMint]

Please address the question of whether you are being paid to spread fear re. bitcoin in order to influence the price.

Absolutely false. I would like to see an altcoin which fixes this attack.

[freedomno1]

Feel like poking at this somewhat amusing
Breaks it down into assumptions postulation hypothesis statements and fact
   
Transactions Withholding Attack
November 17, 2013, 07:22:44 AM
Reply with quote  #1
I have been mentioning this postulated attack on Bitcoin for months in various posts of mine. I figured it was time to give it a thread, so we can discuss it.

I think it is an economic attack (Assumption) so I place it in the Economics forum.

Also because I don't get good reception from Bitcoin developers (Assumption) when I try to post in the developers forums.
Lets see if they ignore this thread or come post to refute it. I doubt they will. (Assumption)

Once Bitcoin's coin rewards decline to less than can pay for the miner's costs, e.g. <1% per annum debasement by 2033 and <0.2% by 2040, then transaction fees are supposed to fund miners. (Fact) The following attack applies whether transactions are voluntary, variable, fixed, or mandatory-- it makes no difference. (Hypothesis)

But a cartel (e.g. Amazon.com) could for example harvest transactions from its vast network and keep them without forwarding them to other miners. (Postulation and Assumption)

Then put them on the blocks found by its own mining servers. (Assumption (Heavy Centralization)

This would starve the rest of the network of funding (Postulation and Assumption)
and eventually the cartel would be doing all the mining. (Assumption)

They could even offer 0% transaction fees (even refund mandatory tx fees) to entice more of the masses to process through their servers. (Assumption and Postulation)

That is the same as turning Bitcoin into a centralized currency, (Statement)  and thus eventually controlled by the government and thus back to fiat again. (Postulation)

Note this postulated attack wouldn't be possible for 20 years or so, so this is a long-term issue. (Hypothesis)
The problem is if we wait, it will be too late to undo and revert, because we only get one chance to create a digital currency that the masses adopt. (Assumption and Postulation) Once they adopt one, they will stay with that one due to inertia and network effects. (Assumption)

Thus I see Bitcoin is doomed and it is not a solution to anything long-term, (Postulation) although short-term it shows us what might be possible with decentralized currencies if we were to improve them. (Statement)

Well that was amusing

On the Assumptions

OP assumes it is an economic attack but we also must then assume that rational actors would fight against this attack
OP assumes that Bitcoin will be the only successful digital currency in a newly emerging field
OP assumes that new currencies or technologies built on top of bitcoin will not re-mediate the problem
OP assumes that the developers cannot understand the issue and therefore cannot fix it
OP assumes Centralization will occur and cartels will do all the mining and someone pulls txt fees from a decentralized network
OP assumes the txt fees are more incentive than the blocks

On the Postulation

OPs Hypothesis:
The following attack applies whether transactions are voluntary, variable, fixed, or mandatory-- it makes no difference. (Hypothesis)

Rebuttal:

It would make a difference as network participants in a voluntary system would need to have the incentive to still coexist with this regime in spite of it being an economic attack.

OPs Second Hypothesis:
Note this postulated attack wouldn't be possible for 20 years or so, so this is a long-term issue. (Hypothesis)

Rebuttal:

We are assuming that the time to centralization will take 20 years and that prices will not incentivize miners to keep building up network hash rate to secure the network, leading towards a monopolization that leads to the scenario below.

OPs viewpoint on the end result:

This would starve the rest of the network of funding (Postulation and Assumption)

Rebuttal:

Assuming that the network and bitcoins own value would not be put into jeopardy if a Collective was to initiate such action
There must be rationality in the Attack as it must maximize profit while promoting stability

OPs conclusion:

and thus eventually controlled by the government and thus back to fiat again. (Postulation)

Rebuttal:

This is an assumption that there will be no new developments or innovations in Bitcoin or Alternative Cryptocurrency occurring during this 20 year period.
That new and emerging technological innovation does not occur and is stagnant that groups will lack the innovative foresight to adapt and that bitcoin will become a failed experiment in crytocurrency because of the flaw you mentioned

___

Sort of interesting but runs into a lot of assumptions and postulation that make it weaker when broken down through a case by case point analysis
Also it was mostly restating your points and your presumptions when you made your statements not really breaking any of your points down rather than clarifying your position

Seems clearer to me maybe it will be clearer to the thread too have fun you all  

[AnonyMint]

freedomno1, I can't read that. It is very poorly formatted and worded. Click Edit and improve or I will ignore it.

[freedomno1]

freedomno1, I can't read that. It is very poorly formatted and worded. Click Edit and improve or I will ignore it.

No edit required (But I edited anyways should be clearer now it was basically a restatement of your own statement)
I just sorted your points into assumptions postulation facts and statements you made.

I copied your OP to the bone then added brackets where I thought your points fit

To that extent I put a (postulation) (assumption) (hypothesis) in Brackets after each of your sentences and left your OP untouched
If you can't read your own OP after each sentence then it is your poorly worded formatting

Carrying on I then evaluated each of your sentences in the categories below

Your Assumptions

Your Hypothesis

Your Postulation

Then provided a rebuttal to each assumption or postulation you made
Nice and organized

[AnonyMint]

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.

YES IT DOES! The nature of the protocol requires that the cartel delay transaction processing for it's customers because it withholds them from other miners.  There is no way to avoid it!  That's what you can't wrap your head around!

INCORRECT!

You still didn't get the point.

The customer will never care that the transaction is delayed into the blockchain (delayed until the cartel's mining servers wins a block in the proof-of-work), because Amazon will give their customers 0-confirmation access to what they purchased.

So that delay is irrelevant.

Whereas when the non-cartel transactions are delayed because the cartel's mining servers don't include them in their blocks, the non-cartel customers using a normal bitcoin client will notice the delays.

So thus this drives the system towards competing cartels which can offer 0-confirmations due to repeat customers.

Then cartels merge to increase profits.

Same old shit that happens over and over in history.

[AnonyMint]

freedomno1, I don't respond to something written in jumbled way like that. Sorry. My time is valuable to me.

[mootinator]

I think I understand this attack, and will now summarize it in a form a five year old can understand:

http://www.youtube.com/watch?v=-vohNUTTx3A

[AnonyMint]

I think I understand this attack, and will now summarize it in a form a five year old can understand:

http://www.youtube.com/watch?v=-vohNUTTx3A

Haha that is funny. I don't think the masses care enough for it to be $trillions in terms of the retail model. But I do get your deeper point which is innovation could create entirely new business models perhaps that are much more productive. Indeed cartels fail when the paradigm changes out from under them, e.g. Microsoft.

But I don't yet see retail changing, except we might someday be downloading and 3D printing and perhaps that would lower the capital requirement for retailing so much that it could disrupt amazon's lead.

But here is the thing. Amazon is not profitable now. They are already a front for someone who wants control of the market, not profit.

And the government will not give up their monopoly on money at any cost. Thus I can see the attack is already being formulated.

Bezos bought the Washington Post, so it means he must be part of or cowtail to the elite now. Mass media is definitely rubbing shoulders with the ilk of Bilderbergers.

[freedomno1]

freedomno1, I don't respond to something written in jumbled way like that. Sorry. My time is valuable to me.

Fine edited it

Meat:

OP assumes it is an economic attack but we also must then assume that rational actors would fight against this attack
OP assumes that Bitcoin will be the only successful digital currency in a newly emerging field
OP assumes that new currencies or technologies built on top of bitcoin will not re-mediate the problem
OP assumes that the developers cannot understand the issue and therefore cannot fix it
OP assumes Centralization will occur and cartels will do all the mining and someone pulls txt fees from a decentralized network
OP assumes the txt fees are more incentive than the blocks

On the Postulation

OPs Hypothesis:
The following attack applies whether transactions are voluntary, variable, fixed, or mandatory-- it makes no difference. (Hypothesis)

Rebuttal:

It would make a difference as network participants in a voluntary system would need to have the incentive to still coexist with this regime in spite of it being an economic attack.

OPs Second Hypothesis:
Note this postulated attack wouldn't be possible for 20 years or so, so this is a long-term issue. (Hypothesis)

Rebuttal:

We are assuming that the time to centralization will take 20 years and that prices will not incentivize miners to keep building up network hash rate to secure the network, leading towards a monopolization that leads to the scenario below.

OPs viewpoint on the end result:

This would starve the rest of the network of funding (Postulation and Assumption)

Rebuttal:

Assuming that the network and bitcoins own value would not be put into jeopardy if a Collective was to initiate such action
There must be rationality in the Attack as it must maximize profit while promoting stability

OPs conclusion:

and thus eventually controlled by the government and thus back to fiat again. (Postulation)

Rebuttal:

This is an assumption that there will be no new developments or innovations in Bitcoin or Alternative Cryptocurrency occurring during this 20 year period.
That new and emerging technological innovation does not occur and is stagnant that groups will lack the innovative foresight to adapt and that bitcoin will become a failed experiment in crytocurrency because of the flaw you mentioned

[AnonyMint]

One thing that all of you have failed to do is argue why I shouldn't fix the attack?

Do you have a problem within fixing threats?

Sounds like you love to leave things broken.

So all this tit-for-tat is really a waste of my time. If we just fix the problem, then nothing more to argue about.  

[freedomno1]

One thing that all of you have failed to do is argue why I shouldn't fix the attack?

Do you have a problem within fixing threats?

Sounds like you love to leave things broken.

So all this tit-for-tat is really a waste of my time. Just fix the problem, then nothing more to argue about.  

OP assumes that something needs to be fixed when the Economic incentive to do so is not there as it would create an instability in the system
IT is after all an economic attack

[mootinator]

So assuming there's something worth worrying about here, what's to prevent the same thing from happening off the blockchain:

1. Cartel releases zero fee transactions.
2. Nobody outside the cartel gains from cartel transactions.
3. Cartel bribes people to come join their pool and get a percentage of sales as block reward.
4. 51%

[freedomno1]

So assuming there's something worth worrying about here, what's to prevent the same thing from happening off the blockchain:

1. Cartel releases zero fee transactions.
2. Nobody outside the cartel gains from cartel transactions.
3. Cartel bribes people to come join their pool and get a percentage of sales as block reward.
4. 51%

Extending on that the Amazon cartel would need to have a majority of the network to initiate the 50% attack and we would run into the Double Spend and reverse transaction problems which could be significantly worth more to the Cartel than transaction fees from withholding blocks

OP assumes that the 50% attack is not a greater risk if it can control the servers its not decentralized at less than 50%
Each node being independent and what not
But a cartel (e.g. Amazon.com) could for example harvest transactions from its vast network and keep them without forwarding them to other miners. Then put them on the blocks found by its own mining servers. This would starve the rest of the network of funding and eventually the cartel would be doing all the mining.

[AnonyMint]

One thing that all of you have failed to do is argue why I shouldn't fix the attack?

Do you have a problem within fixing threats?

Sounds like you love to leave things broken.

So all this tit-for-tat is really a waste of my time. Just fix the problem, then nothing more to argue about.  

OP assumes that something needs to be fixed when the Economic incentive to do so is not their as it would create an instability in the system
IT is after all an economic attack

That makes no sense to me. My proposed fix is to not stop coin rewards.

And that has the benefit of increasing distribution, and possibility making it a currency and not a ponzi scheme as bitcoin most unarguably is. If you want to refute that not-a-currency-and-is-a-ponzi point, do it in the linked thread, not off-topic here.

If you don't like an altcoin with coin rewards, then don't buy it.

I am not proposing to fix bitCON. They would never fix it any way.

[freedomno1]

One thing that all of you have failed to do is argue why I shouldn't fix the attack?

Do you have a problem within fixing threats?

Sounds like you love to leave things broken.

So all this tit-for-tat is really a waste of my time. Just fix the problem, then nothing more to argue about.  

OP assumes that something needs to be fixed when the Economic incentive to do so is not their as it would create an instability in the system
IT is after all an economic attack

That makes no sense to me. My proposed fix is to not stop coin rewards.

And that has the benefit of increasing distribution, and possibility making it a currency and not a ponzi scheme as bitcoin most unarguably is. If you want to refute that not-a-currency-and-is-a-ponzi point, do it in the linked thread, not off-topic here.

If you don't like an altcoin with coin rewards, then don't buy it.

I am not proposing to fix bitCON. They would never fix it any way.

Well if you can code a theoretical fix then propose it to the Dev team assuming they accept it as a real concern. (Why shouldn't I fix the attack?)

What is your proposed fix

Coin rewards and bonus blocks ?
And bitcoin is not a ponzi

I digress that is off topic here but the point must be stated for the record


Is Bitcoin a Ponzi scheme?

In a Ponzi Scheme, the founders persuade investors that they’ll profit. Bitcoin does not make such a guarantee. There is no central entity, just individuals building an economy.

A ponzi scheme is a zero sum game. Early adopters can only profit at the expense of late adopters. Bitcoin has possible win-win outcomes. Early adopters profit from the rise in value. Late adopters, and indeed, society as a whole, benefit from the usefulness of a stable, fast, inexpensive, and widely accepted p2p currency.
The fact that early adopters benefit more doesn't alone make anything a Ponzi scheme. All good investments in successful companies have this quality.

[AnonyMint]

I digress that is off topic here but the point must be stated for the record


Is Bitcoin a Ponzi scheme?

In a Ponzi Scheme, the founders persuade investors that they’ll profit. Bitcoin does not make such a guarantee. There is no central entity, just individuals building an economy.

A ponzi scheme is a zero sum game. Early adopters can only profit at the expense of late adopters. Bitcoin has possible win-win outcomes. Early adopters profit from the rise in value. Late adopters, and indeed, society as a whole, benefit from the usefulness of a stable, fast, inexpensive, and widely accepted p2p currency.
The fact that early adopters benefit more doesn't alone make anything a Ponzi scheme. All good investments in successful companies have this quality.

I asked you to post that in the linked thread that discuss why it is a ponzi scheme. And you have not refuted the reasons given in the thread I linked to. Indeed early adopters can only profit at the expense of late adopters. And they can't exit, because the investment has no value other than as a ponzi (no significant currency use). The statistics prove bitCON can never be a currency. Distribution is lacking and can't be fixed (not without offchain fractional reserves which means bankruptcy and government regulation). Read the linked thread for why. And reply there if you want to.