smart hostile takeover

[SaintFlow]

Lets assume you are a paid agent for one of the near monopoly power payment providers like MasterCard or visa:

How would you use lets say 5 million$ that the company has given you to destroy our communitys trust in bitcoin systematically?

[1715261585]

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[Tuxavant]

That's barely enough to buy all my Bitcoin (what I'd sell it for), let alone everyone else. Just sayin'.

[SaintFlow]

With smart I mean not to use the money to buy all including yours but how about
use the money to produced most downmovement possible.

[Tuxavant]

Because of the awesomeness that is Bitcoin, any manipulated downward movement would have to continually be applied and eventually exceed your $5 million dollar budget and the value would then increase to a natural level.

[DeathAndTaxes]

$5M is likely insufficient.  For $16M-$24M you could 51% attack the network and double spend it into oblivion.  

Some people like to quote lower numbers looking at the cost of a single GPU but it would require tens of thousands of GPU and ~4MW of electrical supply.

So that requires a real team, with real skills, and substantial warehouse space (likely multiple warehouses).  You are going to need either onsite power generation, or a very expensive high current connection to the grid.  Neither of which are available for 1 month leases.  The thermal load is going to be massive so no "normal" warehouse is going to cut it.  Likely you are talking about custom AC solution.

Using COTS you are talking $2 to $2 per MH.  

[Tuxavant]

And correct me if I'm wrong, but that would be a HIGHLY visible attack.

[DeathAndTaxes]

And correct me if I'm wrong, but that would be a HIGHLY visible attack.

Not until after the fact.  You make a chain in private until it is longer than the real chain.  When you publish it every client updates to the longer "attack" chain.  You also need sufficient capital to cause massive disruptions via double spends.  "Spending BTC not just to merchants, but also exchanges.

The longer you keep the private chain private the more disruptive the effect will be.  Imagine if you accepted some BTCs 20 days (>3000 blocks ago) and shipped say Gold coins to a "customer" weeks ago and suddenly the coins "vanish".  Now think of the secondary damage that causes as you likely sent coins to someone else and those coins were never legit to begin with.

If the network doesn't die then you take profits from first attack and start work on another private chain. Then you do it again and again and again.

[Tuxavant]

But doesn't the game theory behind Bitcoin incentivize playing the game, rather than disrupting it? If you have that much computing power, then you have a better chance at earning all the inflation and transaction fees. I suppose if you valued destroying Bitcoin more than you valued the potential earnings, then your incentives would be different. But the government does have it's own evil benefits for not destroying Bitcoin too... think of the political payoffs that can occur anonymously.

[DeathAndTaxes]

But doesn't the game theory behind Bitcoin incentivize playing the game, rather than disrupting it? If you have that much computing power, then you have a better chance at earning all the inflation and transaction fees. I suppose if you valued destroying Bitcoin more than you valued the potential earnings, then your incentives would be different. But the government does have it's own evil benefits for not destroying Bitcoin too... think of the political payoffs that can occur anonymously.

From a normal actor?  Yes.  From a government, banking cartel, or monopolistic payment processor (VISA) no.

"I suppose if you valued destroying Bitcoin more than you valued the potential earnings, then your incentives would be different."

That is your answer.  Yes 51% attack is never going to be directly profitable.  Someone with that much computing power would always make more being legit.  However if it is your intent to destroy the network at no profit which is what I assumed the OP was talking about then the profitability of being legit is a non-deterrence. 

For example if the US govt determined that Bitcoin was a supporter of terrorism and tasked the NSA or some other organization of disrupting it they could for ~$16M to $24M using COTS.  Likewise if VISA felt Bitcoin was a threat to their money printing hegemony they could consider an investment of ~$16M to be a cost of eliminating a competitor.

[Tuxavant]

For example if the US govt determined that Bitcoin was a supporter of terrorism and tasked the NSA or some other organization of disrupting it they could for ~$16M to $24M using COTS. 

Not much could be done here. Unless another country got behind it and considered an attack on their "legitimate" currency an act of war.

Likewise if VISA felt Bitcoin was a threat to their money printing hegemony they could consider an investment of ~$16M to be a cost of eliminating a competitor.

If a commercial entity did it, it seems like there would be cause for a class action lawsuit for damages.

[Gabi]

Likewise if VISA felt Bitcoin was a threat to their money printing hegemony they could consider an investment of ~$16M to be a cost of eliminating a competitor.

If a commercial entity did it, it seems like there would be cause for a class action lawsuit for damages.

What damages? Because they hashed something? Sorry but it's legal.

[DeathAndTaxes]

If a commercial entity did it, it seems like there would be cause for a class action lawsuit for damages.

I don't think so at least not under current laws.  The network exists.  VISA isn't using illegal actions to attack the network (like DDOS, spreading malware, threatening pool operators).  They are simply using the network to their benefit.

I mean if you could sue VISA for a 51% "attack" then you could equally sue someone for making an FPGA and thus making your GPU farm unprofitable.

Now it would be possible to get legal protection for the Bitcoin network but that would require the support of the government(s).

[deslok]

Want to be disruptive, for that much you could build your own exchange, rival gox and manipulate the market. Visa does not care about bitcoin, visa cares about profit.

[DeathAndTaxes]

Want to be disruptive, for that much you could build your own exchange, rival gox and manipulate the market. Visa does not care about bitcoin, visa cares about profit.

Bitcoin is highly accepted means lower profits.  VISA wouldn't make the same level of profits in an open transparent network.  They command high premiums due to a closed market with few players and high barriers to entry.  Your right VISA doesn't care bout Bitcoin today but if it became a threat I wouldn't expect VIA to roll over and embrace it.

Bitcoin = lower cost of transferring money.
Lower cost on moving money = consumers win.
For every winner there is a loser = VISA, Banks, Western Union, etc.

[deslok]

They'd make a fortune opening an exchange, bitcoins in seconds via visa. I'd they did it right they'd have a monopoly the other processors couldn't break either, but that is probably why many of us would never touch a visa owned exchange...

[TheMarketAnarchist]

Lets assume you are a paid agent for one of the near monopoly power payment providers like MasterCard or visa:

How would you use lets say 5 million$ that the company has given you to destroy our communitys trust in bitcoin systematically?

If I had only $5 million, I wouldn't attack the currency directly. That's not enough money to do a successful attack. What I *would* do is use that $5 million to assemble a team of the best malware writers in the world and attack the shit of out the Bitcoin community. I'd write viruses that co-opt computers for mining, steal bitcoins, etc. It's much easier (and cheaper) to undermine the *legitimacy* of the currency and destroy it that way than it is to attack the technology itself.

TMA

[Rejinx]

Lets assume you are a paid agent for one of the near monopoly power payment providers like MasterCard or visa:

How would you use lets say 5 million$ that the company has given you to destroy our communitys trust in bitcoin systematically?

If I had only $5 million, I wouldn't attack the currency directly. That's not enough money to do a successful attack. What I *would* do is use that $5 million to assemble a team of the best malware writers in the world and attack the shit of out the Bitcoin community. I'd write viruses that co-opt computers for mining, steal bitcoins, etc. It's much easier (and cheaper) to undermine the *legitimacy* of the currency and destroy it that way than it is to attack the technology itself.

TMA

This

Or create a new currency with corporte backing and a large ad campane.

Or research and find a way to counter fit bitcoins.

[TheMarketAnarchist]

This

Or create a new currency with corporte backing and a large ad campane.

Or research and find a way to counter fit bitcoins.

I would suspect a currency with corporate backing might have many of the same problems Bitcoin does now. First, acceptance would be a problem. Would only a single corporate redeem or use the currency? What motivation would there be for other corporations to use the currency? Users would face the same limited retailer space that they do with Bitcoin until the new corp currency reached a critical mass.

Finding a way to counterfeit Bitcoins is probably *much* more effective and destructive. Not only would it totally devalue the currency but it would obliterate trust in the system itself. I'm not sure that Bitcoin could recover from something like that.

Regards,
TMA

[DeathAndTaxes]

You can't counterfeit BTC.  It would require breaking SHA-256.  Given entire world governments and every cryptographer on the planet has looked for vulnerabilities spending $5M trying to break SHA-256 would be slightly less productive than putting it into one big pile and lighting it on fire.  At least the fire could keep you warm.

[TheMarketAnarchist]

You can't counterfeit BTC.  It would require breaking SHA-256.  Given entire world governments and every cryptographer on the planet has looked for vulnerabilities spending $5M trying to break SHA-256 would be slightly less productive than putting it into one big pile and lighting it on fire.  At least the fire could keep you warm.

I agree with you, assuming that everything was implemented correctly. We thought the same thing about SSL for a while and look how that turned out. I'm not saying that SHA-256 is vulnerable in any way but I am saying there can be a lot of variables to be considered when attacking an algorithm and particular implementations of that algorithm.