Bitcoin's 10000 TH network is extremely vulnerable

[kendog77]

Right now, I'm more concerned about ghash.io controlling ~40% of the network.

As long as people keep overpaying for hash power from cex.io, they can keep expanding their farm at an alarming rate.

https://blockchain.info/pools?timespan=24hrs

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[mprep]

Right now, I'm more concerned about ghash.io controlling ~40% of the network.

As long as people keep overpaying for hash power from cex.io, they can keep expanding their farm at an alarming rate.

https://blockchain.info/pools?timespan=24hrs

Went to the link... damn, this might get out of hand if the hashrate of ghash.io keeps increasing.

[kendog77]

I was just looking at the bitcoin difficulty chart and realized how small this network really is despite the extreme difficulty increases over the last 2 years.  Lets get to it:

1) Currently difficulty is at ~10,000 TH
2) Single 1 TH mining box cost ~$1000 to manufacture (reality is much less than 1k, but for easy calculation lets use $1k)
3) To destroy the bitcoin network you need to control 51% of the network.
4) To bring 10,000 TH (assume evildoer wants to be thorough) online it will cost:  10,000 * $1000 = $10million,  add on another $10millon for R&D,  $20million total.
5) Goldman saches makes ~$30million a day in NET revenue (same with most other banks)
6) It will cost a SINGLE bank HALF day's net revenue to wipe bitcoin out - less than their office supply budget.

We are just an ant...not even ant, a microscopic organism in the financial world.  If bitcoin becomes too big or start hurting those bank's bottomline (transaction fees), all they need to do is sneeze and bitcoin is gone. And there is no regulation/anti-competitive laws to protect bitcoin, it is completely de-regulated at this point.

Heck it doesnt even have to be the banks, even a small hedge fund or single person with some cash can wipe out bitcoin in a single instance.

The other ironic thing is the market cap of bitcoin is around $12billion right now compared to the $20million to destroy it. It shows how far removed from reality everything is, i dont think people really thought this through. If bitcoin can be shorted, someone can just short it, then destroy the network for riskfree win.

The difficulty needs to increase by 1000X at the minimum ($10 billion) to provide some bare minimum security to bitcoin's network

Dont agree with what I said about the current state of bitcoin? then provide your reasons, i love to be proven wrong. But just cant find a fault in my numbers.

You're analysis is flawed and $20 million estimate is low for a number of reasons:

1.) In order for someone to pull this off, they would need $20 million worth of mining hardware today. If they start now, it will be months before they can bring the hardware online, at which time the difficulty will be much higher. In less than 5 days, the difficulty will go up another 25% so they will need $25 million worth of hardware.

2.) The analysis only covers the manufacturing and development costs, and ignores the cost of labor to set everything up, power, and facilities to run 10,000 TH. The ignored costs are not small.

3.) If someone really could bring 10,000 TH online today for $20,000,000, that setup would earn almost $3,000,000 in bitcoin per day. It doesn't make any sense for someone to spend $20,000,000 to destroy something that would earn them $3,000,000 per day.

4.) If Bitcoin is destroyed, I have little doubt that users will switch to a non SSA-256 coin like Litecoin. Some other crypto that doesn't contain the flaw would take over, so anyone trying to destroy crypto would end up playing whack-a-mole and waste millions of dollars.

5.) If the user was malicious, I suspect they would have millions of dollars worth of liability and end up getting sued into oblivion. Can you imagine how much negative publicity a company would get for even trying to destroy Bitcoin?

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There are actually some good responses to find fault in my logic, but the response you quoted is actually one of the worst (no offense to the poster), every single point is just flat out wrong.

Understand spending 20 or 50 million to bring 10-50k TH online is nothing in the real business world, we are not talking BFL or Avalon here. Lookup how much a single sp500 bank makes in revenue in a day, lookup how many hardware/chips apple/Foxconn/tsmc can dump out in a day.  Did those BFL/Avalon scams really conditioned the community to think mass producing asic boxes is difficult?

Understand the corps don't give a shit about mining 3600 or whatever btc a day to make a few million $, lookup how much they make in transaction fees, wire fees, credit card fees. All will be gone if btc fulfill its intended purpose.

Also understand you can replace 1 currency network with another, but to actually have people trust and support the new network, is extremely difficult. See replace gold with copper analogy earlier.

Finally understand there is no liability, implied to otherwise. Btc is not legal tender under any country including us. There is no regulation nor law to prevent company or person to destroy it.

As I said only reason none bothered is because it is not popular enough to affect their bottom line yet. Difficulty needs to catch up - at minimum another 1000x increase before it becomes popular, otherwise there will be trouble.

I don't understand how you can say a bad actor would have no financial liability. I'm all for fair competition, but burning down your competitors house is not fair, legal competition.

Something analogous to this would be for credit card issuer A to hack into credit card issuer B's network to destroy it. Just because B has poor security does not give A the right to destroy it, and A would be liable for financial damages.

People sue for just about anything these days, and the bar is fairly low, so I have no doubt that the bad actor would face a lot of legal action by folks harmed by their actions. Also, the damage to the bad actors reputation may cause more financial harm than any lawsuit.

[qualia8]

This is my #1 worry for bitcoin, and has been for a long time.  See my fantasy post over on /r/bitcoin from 9 days ago:

http://www.reddit.com/r/Bitcoin/comments/1u2mfr/an_offer_to_vampire_banks_repressive_governments/

The exact numbers are really irrelevant.  A few billion is still to be found in GS's seat cushions.

[kwukduck]

First off, by the time you can get TH miners without preorder at a massive scale, the rest of the network will also be hashing on the same generation of devices, drastically increasing the difficulty once again.

Please sell me some of those TH miners for 1k USD....

Secondly, you have to sustain your attack. And its not just the devices, housing, cooling, energy, management etc.

[qualia8]

Do you really think the US govt, or the PRC, or a major bank is incapable of finding the cash, acquiring the hardware, and running the machinery? 

The NSA datacenters don't have ASICS as far as we know, but they seem to be doing fine on running a large-scale operation.

Moreover, they needn't build from the ground up.  If it's China, they can just co-opt what's already in the country.

Lastly, if they threw $50 million at the issue, difficult would spike to absurd levels, making mining a losing proposition for everyone, thereby forcing out those who can't afford to spend electricity for nothing.  This makes 50% much easier, as lots of computing power goes offline and simultaneously up for sale.

How people can comfort themselves with "oh, it's too hard for the threatened $7 trillion cartel to figure out and implement" is beyond me.  This is why Satoshi wanted bitcoin to build slowly and fly under the radar.  While small -- and it is still very small -- bitcoin is easily crushed by the powers that be.

[newguy05]

First off, by the time you can get TH miners without preorder at a massive scale, the rest of the network will also be hashing on the same generation of devices, drastically increasing the difficulty once again.

Please sell me some of those TH miners for 1k USD....

Secondly, you have to sustain your attack. And its not just the devices, housing, cooling, energy, management etc.

they are not going to buy it from KNC or cointerra.....

jesus christ are some people really this..... i thought a minimum intelligence level is required to own bitcoins.

[bittymymitty]

First off, by the time you can get TH miners without preorder at a massive scale, the rest of the network will also be hashing on the same generation of devices, drastically increasing the difficulty once again.

Please sell me some of those TH miners for 1k USD....

Secondly, you have to sustain your attack. And its not just the devices, housing, cooling, energy, management etc.

Look at that link.. https://blockchain.info/pools?timespan=24hrs Ghash.io is getting pretty close, 39%

[bittymymitty]

They sent out a press release about hitting 51%.. https://ghash.io/ghashio_press_release.pdf  I'm pretty sure any large financial institution can replicate what ghash.io got and blow past 51% with a small slice of their IT spend.

[minerva]

Pfft. Forget financial institutions.

Any government that wants to kill Bitcoin... they have billion dollar signals intelligence budgets. They can perform attacks. Period.

[mrkent]

Here's a game theory conclusion as to why logical entities wouldn't invest in 51% attack to do it.

Even if a 51% attack automatically "destroys" Bitcoin, people would just jump to a diverse group of cryptocurrencies. It would be a wackamole game for the attacker. Everytime an altcoin is taken down, the attacker loses some money, while the coinfolks are net neutral. The attacker, expecting this, would best not play that game in the first place.

Of course a successful attack on all crypto-coins is possible using more creative means.

[minerva]

Here's a game theory conclusion as to why logical entities wouldn't invest in 51% attack to do it.

Even if a 51% attack automatically "destroys" Bitcoin, people would just jump to a diverse group of cryptocurrencies. It would be a wackamole game for the attacker. Everytime an altcoin is taken down, the attacker loses some money, while the coinfolks are net neutral. The attacker, expecting this, would best not play that game in the first place.

Of course a successful attack on all crypto-coins is possible using more creative means.

So only Quarkcoin will survive?

[runam0k]

First off, by the time you can get TH miners without preorder at a massive scale, the rest of the network will also be hashing on the same generation of devices, drastically increasing the difficulty once again.

Please sell me some of those TH miners for 1k USD....

Secondly, you have to sustain your attack. And its not just the devices, housing, cooling, energy, management etc.

Look at that link.. https://blockchain.info/pools?timespan=24hrs Ghash.io is getting pretty close, 39%

Yes and everybody knows about it. Keep in mind ghash is a collaborative effort. One miner with a very high network percentage would not appear overnight or otherwise go unnoticed.

[timmmers]

As if any powerful organisation is going to piss about in the bowels of the bitcoin network. They don't need to. The rich and the powerful all watch each other's backs. If you think about the banking crisis THEY caused, an how little happened to the people responsible ..they all protected each other to the extent that they didn't even stop bankers getting massive bonuses during the height of the crisis..although they made noises that they were going to.

IF they wanted it gone, a few connected people who all piss in the same pot get together, a few phone calls, "Hiya Barak, let's close bitcoin down mate, it's costing us profits?" "Really? OK , let's say a lot of terrorists use it shall we, ban it? I'll tell Cameron to do the same. " "Great mate, thanks!"

Game over. Hardly broke sweat. Old boy's networks run the financial establishments in the free world and the governments too, have done for centuries.

[Elwar]

Here's a game theory conclusion as to why logical entities wouldn't invest in 51% attack to do it.

Even if a 51% attack automatically "destroys" Bitcoin, people would just jump to a diverse group of cryptocurrencies. It would be a wackamole game for the attacker. Everytime an altcoin is taken down, the attacker loses some money, while the coinfolks are net neutral. The attacker, expecting this, would best not play that game in the first place.

This.

Bank spends $20 million, destroys Bitcoin. People change their code slightly, now using LiteCoin.

Bank spends $20 million, destroys Litecoin. People change their code slightly to PPC.

Same thing happens, by now the code change is just the click of a button, points to the next crypto-currency.

Meanwhile, bank is spending a lot of money on something that does not increase their revenue.

Change that from bank to government...after enough money spent, it takes a toll on their economy. If it is a government where the people have a say, there would be protests about their foolish spending to attack something that hurts nobody.

[davidgdg]

.....

Finally understand there is no liability, implied to otherwise. Btc is not legal tender under any country including us. There is no regulation nor law to prevent company or person to destroy it.

There would very likely be liability for tortious conspiracy to injure and goodness knows what else. There is no way in a million years that the board of a large company would authorise such a scheme, with the horrendous associated legal exposure. Once you factor in punitive damages, loss of profit etc, even a company as large as GS would probably be ruined.  

Governments on the other hand are a different matter ....

[davidgdg]

As I said only reason none bothered is because it is not popular enough to affect their bottom line yet. Difficulty needs to catch up - at minimum another 1000x increase before it becomes popular, otherwise there will be trouble.

Difficulty is irrelevant. What is important is cost. Broadly speaking you would expect the cost to be proportionate to the price of btc, because the more btc is worth the more efforts will be put into mining and hence the greater the cost of a 51% attack.

Thus the real defence against such an attack is simply the continued growth and success of bitcoin.

[Oldminer]

I actually hope BTC fails so other more advanced alts can take its place.

Time for bitcoin to be retired imo. Its a prototype that's run its course. It's served us well, but its time to move on. There's much better altcoins around.

[kendog77]

I actually hope BTC fails so other more advanced alts can take its place.

Time for bitcoin to be retired imo. Its a prototype that's run its course. It's served us well, but its time to move on. There's much better altcoins around.

Spoken like someone who owns a lot of alt coins and hardly any BTC... 

[exocytosis]

In one talk Andreas Antonopoulos says that it would cost in excess of $400 million. $20 million seems low.

But $400 million (or a bit more) isn't a lot of money for players such as GS or JPM Chase. If such banks start seeing BTC as a threat somewhere down the line, I'm sure they'd be willing to spend a measly 400 m. to take it down. That's just the cost of doing business for them, just like paying $ 80 billion fines. It's a small sum for the megabanksters, and a sum they'd gladly spend if it meant they got rid of a serious competitor.