The Biggest Flaw with Bitcoin that Could Crash the Entire System

[cryptocoinsnews]

A recent post from Reddit made me aware of that Bitcoin’s biggest flaw and threat which could crash the entire system, including the Bitcoin price, is now more current than ever. The threat is becoming even more real after months with Bitfury ASIC mining pool GHash.io gaining more and more hashing power. Now let me explain what is going on.

Read the full story here:
http://www.cryptocoinsnews.com/2013/12/26/biggest-flaw-bitcoin-crash-entire-system/

What do you think of the threat that GHash.io is for the Bitcoin community?

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[LiteCoinGuy]

51%...

[Tomatocage]

It's like the DeepBit threads all over again...

[nestor]

Don't worry about it. There is enough autopoietic-system beauty within bitcoin to self regulate this problems away!

Cheers.

[Gabi]

The attacker can’t:

    Reverse other people’s transactions
    Send coins that never belonged to him

Actually YES HE CAN. He can rewrite the whole blockchain so
1)He can delete other transactions, it will be like they never existed
2)He can go back in the blockchain and make it that the coins were mined by him. Thus he has these coins, not other people, so yes he can now send these coins to who he want, or just keep them. Oh and yes if you mined that coins/received them you lose them.

A 51% attack is catastrophic. Sure, if used in a such obvious way the bitcoin value will just plummet to 0. But it can be used in a more insidious way, just modify some transactions because someone 'paid' you for that... corruption...

[t1000]

The attacker can’t:

    Reverse other people’s transactions
    Send coins that never belonged to him

Actually YES HE CAN. He can rewrite the whole blockchain so
1)He can delete other transactions, it will be like they never existed
2)He can go back in the blockchain and make it that the coins were mined by him. Thus he has these coins, not other people, so yes he can now send these coins to who he want, or just keep them. Oh and yes if you mined that coins/received them you lose them.

A 51% attack is catastrophic. Sure, if used in a such obvious way the bitcoin value will just plummet to 0. But it can be used in a more insidious way, just modify some transactions because someone 'paid' you for that... corruption...

An attacker can rewrite the blockchain up to the last checkpoint.

The severity of the threat depends on how high above 51% of the hashrate the attacker has.

At 51% it can win all block conflict contests. It can also ignore blocks from others on the network, and
while doing that it can hash blocks according to its own set of rules like paying itself more reward per block, causing a fork.

[AnonyMint]

CPU-only mining that is botnet resistant and also limits the sizes of pools is very much needed.

[rarkenin]

What if the incentive to mine in pools in the first place was lost? What if people could generate coins in small amounts using low-difficulty hashes, and then redeem those coins through a special txn inserted into a block (created by someone that met the high hash difficulty)? It wouldn't create too much more txn spam as mining pools already send coins out to small miners in small denominations.

[franky1]

anyone that attempts a 51% attack knows they can mess up the chain and cause all their hard work to become useless(meaning devalue bitcoin to a point their hard work is not even worth the cost) so its never in the benefit, no matter how tempting it is.

it is also noted that most of the big ASIC farms actually use more then 1 pool to spread their hashrate and to atleast get the most bitcoins from every block so big farms like ghash.io will spread out their hash power once they become to independently dominant on the network

[eternaluniverse]

The attacker can’t:

    Reverse other people’s transactions
    Send coins that never belonged to him

Actually YES HE CAN. He can rewrite the whole blockchain so
1)He can delete other transactions, it will be like they never existed
2)He can go back in the blockchain and make it that the coins were mined by him. Thus he has these coins, not other people, so yes he can now send these coins to who he want, or just keep them. Oh and yes if you mined that coins/received them you lose them.

A 51% attack is catastrophic. Sure, if used in a such obvious way the bitcoin value will just plummet to 0. But it can be used in a more insidious way, just modify some transactions because someone 'paid' you for that... corruption...

An attacker can rewrite the blockchain up to the last checkpoint.

The severity of the threat depends on how high above 51% of the hashrate the attacker has.

At 51% it can win all block conflict contests. It can also ignore blocks from others on the network, and
while doing that it can hash blocks according to its own set of rules like paying itself more reward per block, causing a fork.

How would ghash benefit from controlling ALL of the bitcoins? They wouldn't be able to transfer them into cash as everyone wouldn't want to deal with them. If they decide to use the 51% attack to siphon btc from ppl (satoshis amount of btc that has been stationary would be a good target) people would notice this and move to stop it. I don't think the 51% attack is as dangerous as people think.

[jongameson]

What if the incentive to mine in pools in the first place was lost? What if people could generate coins in small amounts using low-difficulty hashes, and then redeem those coins through a special txn inserted into a block (created by someone that met the high hash difficulty)? It wouldn't create too much more txn spam as mining pools already send coins out to small miners in small denominations.

that would take the whole fun out of bitcoin

believe me, i refuse to operate with pools anymore, period.  it just isn't fun!

[AnonyMint]

I don't think the 51% attack is as dangerous as people think.

Because you don't think.

[drewster]

The attacker can’t:

    Reverse other people’s transactions
    Send coins that never belonged to him

Actually YES HE CAN. He can rewrite the whole blockchain so
1)He can delete other transactions, it will be like they never existed
2)He can go back in the blockchain and make it that the coins were mined by him. Thus he has these coins, not other people, so yes he can now send these coins to who he want, or just keep them. Oh and yes if you mined that coins/received them you lose them.

A 51% attack is catastrophic. Sure, if used in a such obvious way the bitcoin value will just plummet to 0. But it can be used in a more insidious way, just modify some transactions because someone 'paid' you for that... corruption...

First, we could easily be at 51 percent today if two big pools chose to combine.

Second, while rewriting the whole block chain would obviously bring serious devaluation, adding "small transactions" from long-idle wallets would be more efficient, no? Is that possible, theoretically?

[lemfuture]

CPU-only mining that is botnet resistant and also limits the sizes of pools is very much needed.

music to my ears ha. since ive missed the sha 256 wagon

[zimmah]

This has been said so many times, but if you worry that much about it, why don't you start a pool that's as attractive to miners as GHASH.io?

Ghash is so popular as a pool mostly because the reward for miners is extremely good, specifically:

• Clear user interface
• low pool fees (actualy 0% IIRC)
• pays transaction fees (which EVERY pool should do, but not every pool does)
• merged mining of 3 different coins for extra benefit (also every pool should do this, there's no loss at all and it's just pure extra profit even if it's small)
• on top of all that they offer cloud mining, although it's pretty expensive, but people still use it

there's not a single pool that comes even close.

[zimmah]

The attacker can’t:

    Reverse other people’s transactions
    Send coins that never belonged to him

Actually YES HE CAN. He can rewrite the whole blockchain so
1)He can delete other transactions, it will be like they never existed
2)He can go back in the blockchain and make it that the coins were mined by him. Thus he has these coins, not other people, so yes he can now send these coins to who he want, or just keep them. Oh and yes if you mined that coins/received them you lose them.

A 51% attack is catastrophic. Sure, if used in a such obvious way the bitcoin value will just plummet to 0. But it can be used in a more insidious way, just modify some transactions because someone 'paid' you for that... corruption...

First, we could easily be at 51 percent today if two big pools chose to combine.

Second, while rewriting the whole block chain would obviously bring serious devaluation, adding "small transactions" from long-idle wallets would be more efficient, no? Is that possible, theoretically?

possible? yes

going to happen? no, because it's theft.

[BitThink]

The attacker can’t:

    Reverse other people’s transactions
    Send coins that never belonged to him

Actually YES HE CAN. He can rewrite the whole blockchain so
1)He can delete other transactions, it will be like they never existed
2)He can go back in the blockchain and make it that the coins were mined by him. Thus he has these coins, not other people, so yes he can now send these coins to who he want, or just keep them. Oh and yes if you mined that coins/received them you lose them.

A 51% attack is catastrophic. Sure, if used in a such obvious way the bitcoin value will just plummet to 0. But it can be used in a more insidious way, just modify some transactions because someone 'paid' you for that... corruption...

What do you mean? 51% hashing power or 51% of all nodes? The OP is talking about the former, which cannot change the history at all. You are talking about the latter, which is much harder to achieve.

[IsaacGoldbourne]

CPU-only mining that is botnet resistant and also limits the sizes of pools is very much needed.

Why not suggest something possible?
For example on reddit it was suggested that we have 3 algos which are used seperately dependent on block #

So 1/3 blocks scrypt, 1/3 aes and 1/3 sha.

That means it would only be feasible to have 33%. And that means dominating an entire algo!

[Siegfried]

CPU-only mining that is botnet resistant and also limits the sizes of pools is very much needed.

So when can we expect that to appear?

[t1000]

CPU-only mining that is botnet resistant and also limits the sizes of pools is very much needed.

Why not suggest something possible?
For example on reddit it was suggested that we have 3 algos which are used seperately dependent on block #

So 1/3 blocks scrypt, 1/3 aes and 1/3 sha.

That means it would only be feasible to have 33%. And that means dominating an entire algo!

RuCoin kind of tried that.