How a social attack could defeat a prosperous Bitcoin network

[stillfire]

In this thread I will propose a simple legal and social approach which will allow a government entity to take control over Bitcoin with minimal resistance. This attack is, in a way, much simpler than the various technical ones (building a super computer, etc).

There have been a number of threads in this forum regarding ways a freedom-hostile entity, usually a government, could take control over Bitcoin and destroy its benefits such as inflation resistance and privacy. These threads so far have focused on the idea that the entity would either set up a super computer to become the largest miner in the world, or that the entity would hunt down the largest miners in existence and regulate/coerce them. The usual counterargument is that Bitcoin is too small to warrant that kind of attention, and later it will be too large to effectively mount such attacks.

Unfortunately, the very popularity of a large Bitcoin network would open it up to being taken over by tricking the average uneducated user. The attack would become more effective the more widespread Bitcoin adoption is. This is true even if all of the following wildly positive assumptions were true:

• Bitcoin is a great success: you can even buy your vegetables in microcoins.
• Economy is booming because of the lack of transaction fees. People love using Bitcoin since everything is cheaper without all the Visa and Mastercard middlemen.
• Mining operations are plentiful making it impractical to take over 51% of all mining activity.
• Bitcoin is so ingrained in public culture that making it outright unlawful to use Bitcoin would be difficult without resistance.

Let's say our freedom-hostile entity is China. Here's how China would gain essential control over even this huge Bitcoin success in 8 easy steps:

1. China makes the public case that while Bitcoin is great, it is still used in part for terrorism, money laundering and crime. This will drum up political and public support for "something to be done", even if shutting down Bitcoin altogether is not on the table.

2. China creates its own Bitcoin client. Let's say they call it Bitcoin Patriot Edition. The only visible difference between Patriot Edition and the regular edition is that Patriot Edition requires a validated national ID or social security number to use. The government openly tracks the association between your wallet and your identity and says this is a feature, not a drawback. The software is free and voluntary, but if you have nothing to hide why wouldn't you use it? You do want to help fighting terrorism, don't you? As we know, regular people love hearing this argument and gobble it up.

3. China waits a good bit of time to allow the software to spread without alarm from the Bitcoin community. Perhaps several years. We will all laugh about how stupid these average users are for switching to the Patriot Edition.

4. China makes a law that requires banks, money exchanges, commercial stores and other major commercial entities to use Patriot Edition. Most people won't care because they're not banks nor major commercial entities. People generally don't care when people they don't know suffer, and besides these banks are rich.

5. China begins to promote the law from point 4 ("Patriot Protected Economy") internationally. The one thing that unifies governments across the globe is the desire to collect taxes and even countries which normally hate each other cooperate when it comes to tracking untaxed money (see Switzerland's bank privacy laws). So the law will spread easily. The international leadership community will describe it in glorious hyperbole, saying how it's protecting everyday people from fraud and crime.

6. China flips a secret switch. From now on, you cannot send Bitcoins to the Patriot Edition unless you too run the Patriot Edition. People are perhaps a little miffed but since your bank, your exchange, the grocery store and everyone else you deal with already uses the Patriot Edition, you make the 'upgrade'. China also buys or seizes Bitcoin.org at this point and makes Patriot Edition the 'official' edition. Most users will not notice nor care.

7. The Patriot Edition "upgrade" becomes viral because your friends are upgrading and you can't send money to them anymore without this edition. Yes, intermediaries start popping up allowing you to send money through them from vanilla Bitcoin, but do you really want to pay those fees? Avoiding fees was one of the reasons your choose Bitcoin to begin with. Easier to just upgrade. The Patriot Edition is now the most common edition of the Bitcoin software on the planet, and it's entirely controlled by China and a coalition of willing governments internationally.

8. Flip the second switch. The Patriot Edition now rejects mining activity by non Patriot Edition versions of the software. This is possible since Patriot Edition is used by almost every user - much more than 50%. Most people won't notice because they all use the Patriot Edition and the commercial entities they communicate with do so as well. The 'old guard' Bitcoin network is essentially segmented and frozen out. The value of any coins remaining in the old segment crashes since their proof of transactions cannot be trusted anymore, having been corrupted by the Patriot Edition.

The only reason this attack was possible was because the broad majority of the Bitcoin users were no longer libertarians and futurists like those who populate this forum. At step 6 very few complained that their freedoms were being taken away, and those who did were quickly shut down as 'terrorist sympathisers'. Even people who were just uncertain about the change didn't really know what to do because they weren't technical, and bitcoin.org said the Patriot Edition was the right choice.

There was very little economical disruption since the frog was boiled gradually.

Now the majority of the Bitcoin advantages are gone.

• It is no longer decentralised: Patriot Edition is centrally controlled.
• Inflation is perfectly possible: Patriot Edition can at any point set new rules for how hard it is to make coins or how many may exist, or indeed, even what a coin is.
• It is no longer open: not everyone can use Bitcoin anymore. If your Bitcoin Patriot Edition license is revoked, you can only use the now devalued, tiny economy of vanilla Bitcoin.
• 'No small print' is no longer true. The Patriot Edition can log everything you do, choose which transactions to allow. Most people will not even realise this because people are uneducated.
• 'No freeze' is no longer true. The Patriot Edition can freeze your account at any time. It has already marked all bitcoins in the 'old guard' economy as badcoins and will never touch them. It can mark your coins as badcoins whenever it pleases, or even transfer them against your will to the coalition of willing.

Of course 'old guard' Bitcoin would be altered to freeze out Patriot Edition in return. But it will be too late for that: the large economy you built up is gone since the majority of the population already made the switch. You will have a very hard time finding a proper Bitcoin/Chinese yuan exchange since they'll be illegal. You have been relegated to a shattered shadow economy, trading badcoins among the few remaining disenfranchised who must.

All of this happened because the growing popularity of Bitcoin replaced this forum's ideologists with regular people. The same regular people who allowed today's surveillance society and top controlled economy to form.

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[deadlizard]

Social engineering is always easier than a technical attack and is the most likely vector for attacking a successful future bitcoin network.
Posts like this help identify possible threats and I love reading them when they pop up.

Of course in your scenario the core bitcoin community responsible for maintaining the client would de construct the China edit within weeks of launch and find the switch. Then they could block it from Vanilla or flip it making it useless from the outset.

Not entirely a social attack is it 

[eMansipater]

If this attack works, I suggest it should be tried on p2p filesharing networks first as a test.  Oh....wait....hasn't that basically been tried?  I don't think many people would use a non-open-source Patriot Edition.

[matonis]

This attack probably will be attempted and the g-men tasked with it will most likely post to this forum for stress-testing, feedback, etc.

However, one fact that is overlooked is that "original" bitcoin enables a parallel economy with a tax-less monetary system. It is not just crypto-libertarians that prefer that economic arrangement but 99% of the non-ruling world.

[MoonShadow]

Any closed source client would be prodded and reverse-engineered by the open source community.  Even if this somehow doesn't expose the backdoor controls, any use of code that can be shown to have been taken from the open source community would expose the closed source client to using the copyright laws against them.   This would not be the first time that China had been caught doing such things.

In short, I'm not worried about it.

[stillfire]

Yup. The fact that the custom client is not open-source and requires an anchor to identity is a non-starter. The philosophical principles about transparent operation and development, and the ability to control one's personal information are deeply ingrained in the psyche of Bitcoin adopters and this is unlikely to change... Case in point: Bitcoin USA.

Indeed, it is ingrained in the psyche of the people who created Bitcoin. But that's precisely what the scenario highlights: the percentage of people who care about these things will steadily go down if Bitcoin gains in popularity. There will be a day when the average user is the same person who enters their credentials into anything: supermarket points systems, phishing scams, free screen savers.

Any closed source client would be prodded and reverse-engineered by the open source community.

Naturally, but the backdoor wouldn't need to exist in the first version - it can be downloaded through auto-update the very same day it's needed.

[marcus_of_augustus]

Sounds good.

Bitcoin2 will be an exclusive product for the connoisseurs of crypto-currency who wish to escape the grasping clutches of the state, yet again.

Those who are a step ahead, will always be a step ahead. G-men parasites should just give up already..

[stillfire]

All that would only accomplish the creation of a forked block chain. They would be better off just starting their own chain from scratch, then they wouldn't have to muck about with all the subterfuge and just set the thing up the way they want from the beginning.

In the scenario there is already a booming Bitcoin economy and they want to control it. By gradually taking over the system they preserve the existing Bitcoin economy without disruption. If you had a balance of 10 BTC which you could use to buy a Netbook at Fry's one day, you'd still have that the next day and the same transaction would still work.

There would be a fork but the 'winning' fork for most people would be the one controlled by China.

[marcus_of_augustus]

All that would only accomplish the creation of a forked block chain. They would be better off just starting their own chain from scratch, then they wouldn't have to muck about with all the subterfuge and just set the thing up the way they want from the beginning.

In the scenario there is already a booming Bitcoin economy and they want to control it. By gradually taking over the system they preserve the existing Bitcoin economy without disruption. If you had a balance of 10 BTC which you could use to buy a Netbook at Fry's one day, you'd still have that the next day and the same transaction would still work.

There would be a fork but the 'winning' fork for most people would be the one controlled by China.

You an I have a different definition of "winning" clearly. The ones on the China patriot net just won a crap sandwich in my opinion.

The ones of the new network fork get all the benefits of the original bitcoin and can probably switch anonymously between the two via Tor like capabilities anyways ... try again G-man.

[silvercardbank]

could the bitcoin network be broken down into localy or regionally operating cells ?
with some kind of post code signature.... although exchangeable world wide people tend to do most of there buying or selling in the area that they live ,with the people they know and trust in that area. to avoid attack of the system as a whole on the net, in the way you describe.
Groups of people trading using local versions of the system would be as good a protection as having one massive system with the exact same version on there computer worldwide.
of course  they would all have to be compatible with each other in other country's/areas, but if one cell goes down or gets led away all others could still function. or am i not understanding this correctly.
there would be more safety is in the tight trading relationships of the people, as there is all using one big version of the exact same system. 

[stillfire]

You an I have a different definition of "winning" clearly. The ones on the China patriot net just won a crap sandwich in my opinion.

They are the ones with access to commercial services. Remember that China also pushed this law around the world requiring the majority of the commercial BTC handlers, be it exchanges or POSs, to use the Patriot Edition. The world governments played along because they wanted their tax revenue. In secret they may even have been made aware of the plan to "flip the switch", and governments wanted in on all that free inflation money goodness.

So on the Patriot Edition side you have the great economic system Bitcoin.org fought so long and hard to build up. On the Old Guard side you have merely a sliver of the former network, badcoin listed in the 'civilised world' with a rapidly crashing exchange rate.

[stillfire]

Groups of people trading using local versions of the system would be as good a protection as having one massive system with the exact same version on there computer worldwide.

Having multiple networks would indeed make it much harder to infiltrate in the manner I described - just like how countries have different currencies in world today. It would also protect somewhat against any vulnerability found in the software itself. It's unlikely all of the versions would have the same weakness.

This would however make it much harder to build the Bitcoin network and the value of currency as it would be fragmented. It would also negate the cross country trading options available now because coins from different networks could not mix without intermediary exchanges.

[stillfire]

An uneducated public might be running such proprietary clients for daily transactions as dictated by their governments, but none of them are doing any significant work on the block chain, for that you need big iron.

I think your defence here is based on the assumption that 'the good guys' will have the majority of the usage and/or mining capacity and therefore will be able to take action. For instance you wrote about "culling connections [miners] no longer trust". But this would not be effective because Patriot Edition would already have culled those connections itself. Indeed it was quite happy to do so. It only trusts the Patriot Edition blocks and simply ignores miners which aren't in the Patriot camp. It wants a permanent fork because it has control over a large enough share of the network to 'own' the critical economical mass.

The key here is that exchange and service providers were coerced first and Patriot Edition was playing nice at that time. This helped create a large install base for Patriot Edition without causing the fork just yet. Like you said, if the fork happened too soon, the healthy parts of the network would isolate it and disable it, limiting its damage to just the small install base it had. No, only once sufficient mass was built up the '0 day' switch would be thrown.

By the time the switch has been thrown the majority of the money, and more importantly, the actual usage points for the money, will be in the Patriot camp. 'Big iron' miners will find that the economical incentive to continue mining will be on the Patriot side - that's where the majority of the transaction fees are and more importantly Patriot coins are worth more since the majority of service providers and exchanges switched to the Patriot Edition. The miners will switch, and those who don't will again be in the small side of the fork, a shivering shadow of Bitcoin's former economy.

Certainly I might misunderstand the technical details, but I think on the social side of things the Bitcoin system is based on the idea that most users - miners in particular - will run software which upholds the rules. But if the software could slowly be replaced, like a disease, all those rules could fall over night.

[marcus_of_augustus]

You seem pretty heavily invested in this Chinese Bitcoin Patriot Edition fantasy scenario thing you got going on here ... it is pretty far out there as an attack mode and I don't think you have actually pointed to a possible technical remedy that could be implemented ... do you have any other point besides "I don't think it can work because ..." .... ?

Meandering through the politics, implications, permutations of money will take up a lifetime but at some point the rubber has got to hit the road, that's bitcoin right now.

[Zerbie]

Cool.  Another poster is considering different angles of attack besides the technical aspect.

<Tries to up-vote... damn, this is not Reddit.>

[error]

The only problem with this idea is that it isn't China that's most likely to do something like this.

[stillfire]

You seem pretty heavily invested in this Chinese Bitcoin Patriot Edition fantasy scenario thing you got going on here ... it is pretty far out there as an attack mode and I don't think you have actually pointed to a possible technical remedy that could be implemented ... do you have any other point besides "I don't think it can work because ..." .... ?

I don't particularly have a technical remedy - I think this is more of a social problem. Average people don't mind losing their freedoms - look at the TSA in the US or constant surveillance in the UK. If those people become the majority of the Bitcoin users, they'll happily hand the keys over to whomever asks.

Personally, I am interested in the inflation resistance of Bitcoin. I don't believe that the inflationary spending going on internationally right now is good nor fair. The possibility to avoid inflation intrigues me but it also forces me to ask: what will be done about it? All of us should be asking this question because something will be done and this community can either be surprised or be prepared.

Too much growth is dangerous. Most people here want to see a large flourishing economy by making Bitcoin easy to use. Maybe that's the wrong thing to do. Maybe keeping Bitcoin difficult and technical is the only way to keep it safe as that promotes a user base formed out of the kind of free thinkers who'd never let a Patriot Edition get on their machines.

[rezin777]

It's my hope that average people who are introduced to bitcoin will ask themselves some important questions as they learn about the problems that bitcoin solves and will become more enlightened because of it.

By average I mean the normal giving up freedom for "security" type of people.

Perhaps once they are free from the ills of the current system they will realize they never want to go back.

One can dream ehh?

[marcus_of_augustus]

You seem pretty heavily invested in this Chinese Bitcoin Patriot Edition fantasy scenario thing you got going on here ... it is pretty far out there as an attack mode and I don't think you have actually pointed to a possible technical remedy that could be implemented ... do you have any other point besides "I don't think it can work because ..." .... ?

I don't particularly have a technical remedy - I think this is more of a social problem. Average people don't mind losing their freedoms - look at the TSA in the US or constant surveillance in the UK. If those people become the majority of the Bitcoin users, they'll happily hand the keys over to whomever asks.

Personally, I am interested in the inflation resistance of Bitcoin. I don't believe that the inflationary spending going on internationally right now is good nor fair. The possibility to avoid inflation intrigues me but it also forces me to ask: what will be done about it? All of us should be asking this question because something will be done and this community can either be surprised or be prepared.

Too much growth is dangerous. Most people here want to see a large flourishing economy by making Bitcoin easy to use. Maybe that's the wrong thing to do. Maybe keeping Bitcoin difficult and technical is the only way to keep it safe as that promotes a user base formed out of the kind of free thinkers who'd never let a Patriot Edition get on their machines.

Good points, it is a social problem and social behaviours are only somewhat predictable so there is large amount of speculation in possible outcomes. But while Bitcoin is technical and difficult it will not be widely adopted so will not be a threat to the current facist fiat monetary system. Hopefully other competing flavours of bitcoin will spring up before it goes mainstream. That is the one other thing the mainstream loves is the illusion of choice .... a blue team and red team to cheer for even if there is no real competition.

Co-opting one bitcoin over to the patriot edition will be lengthy and difficult ... co-opting multiple flavours over would be next to impossible I'd say.

[gigabytecoin]

In this thread I will propose a simple legal and social approach which will allow a government entity to take control over Bitcoin with minimal resistance. This attack is, in a way, much simpler than the various technical ones (building a super computer, etc).

There have been a number of threads in this forum regarding ways a freedom-hostile entity, usually a government, could take control over Bitcoin and destroy its benefits such as inflation resistance and privacy. These threads so far have focused on the idea that the entity would either set up a super computer to become the largest miner in the world, or that the entity would hunt down the largest miners in existence and regulate/coerce them. The usual counterargument is that Bitcoin is too small to warrant that kind of attention, and later it will be too large to effectively mount such attacks.

Unfortunately, the very popularity of a large Bitcoin network would open it up to being taken over by tricking the average uneducated user. The attack would become more effective the more widespread Bitcoin adoption is. This is true even if all of the following wildly positive assumptions were true:

• Bitcoin is a great success: you can even buy your vegetables in microcoins.
• Economy is booming because of the lack of transaction fees. People love using Bitcoin since everything is cheaper without all the Visa and Mastercard middlemen.
• Mining operations are plentiful making it impractical to take over 51% of all mining activity.
• Bitcoin is so ingrained in public culture that making it outright unlawful to use Bitcoin would be difficult without resistance.

Let's say our freedom-hostile entity is China. Here's how China would gain essential control over even this huge Bitcoin success in 8 easy steps:

1. China makes the public case that while Bitcoin is great, it is still used in part for terrorism, money laundering and crime. This will drum up political and public support for "something to be done", even if shutting down Bitcoin altogether is not on the table.

2. China creates its own Bitcoin client. Let's say they call it Bitcoin Patriot Edition. The only visible difference between Patriot Edition and the regular edition is that Patriot Edition requires a validated national ID or social security number to use. The government openly tracks the association between your wallet and your identity and says this is a feature, not a drawback. The software is free and voluntary, but if you have nothing to hide why wouldn't you use it? You do want to help fighting terrorism, don't you? As we know, regular people love hearing this argument and gobble it up.

3. China waits a good bit of time to allow the software to spread without alarm from the Bitcoin community. Perhaps several years. We will all laugh about how stupid these average users are for switching to the Patriot Edition.

4. China makes a law that requires banks, money exchanges, commercial stores and other major commercial entities to use Patriot Edition. Most people won't care because they're not banks nor major commercial entities. People generally don't care when people they don't know suffer, and besides these banks are rich.

5. China begins to promote the law from point 4 ("Patriot Protected Economy") internationally. The one thing that unifies governments across the globe is the desire to collect taxes and even countries which normally hate each other cooperate when it comes to tracking untaxed money (see Switzerland's bank privacy laws). So the law will spread easily. The international leadership community will describe it in glorious hyperbole, saying how it's protecting everyday people from fraud and crime.

6. China flips a secret switch. From now on, you cannot send Bitcoins to the Patriot Edition unless you too run the Patriot Edition. People are perhaps a little miffed but since your bank, your exchange, the grocery store and everyone else you deal with already uses the Patriot Edition, you make the 'upgrade'. China also buys or seizes Bitcoin.org at this point and makes Patriot Edition the 'official' edition. Most users will not notice nor care.

7. The Patriot Edition "upgrade" becomes viral because your friends are upgrading and you can't send money to them anymore without this edition. Yes, intermediaries start popping up allowing you to send money through them from vanilla Bitcoin, but do you really want to pay those fees? Avoiding fees was one of the reasons your choose Bitcoin to begin with. Easier to just upgrade. The Patriot Edition is now the most common edition of the Bitcoin software on the planet, and it's entirely controlled by China and a coalition of willing governments internationally.

8. Flip the second switch. The Patriot Edition now rejects mining activity by non Patriot Edition versions of the software. This is possible since Patriot Edition is used by almost every user - much more than 50%. Most people won't notice because they all use the Patriot Edition and the commercial entities they communicate with do so as well. The 'old guard' Bitcoin network is essentially segmented and frozen out. The value of any coins remaining in the old segment crashes since their proof of transactions cannot be trusted anymore, having been corrupted by the Patriot Edition.

The only reason this attack was possible was because the broad majority of the Bitcoin users were no longer libertarians and futurists like those who populate this forum. At step 6 very few complained that their freedoms were being taken away, and those who did were quickly shut down as 'terrorist sympathisers'. Even people who were just uncertain about the change didn't really know what to do because they weren't technical, and bitcoin.org said the Patriot Edition was the right choice.

There was very little economical disruption since the frog was boiled gradually.

Now the majority of the Bitcoin advantages are gone.

• It is no longer decentralised: Patriot Edition is centrally controlled.
• Inflation is perfectly possible: Patriot Edition can at any point set new rules for how hard it is to make coins or how many may exist, or indeed, even what a coin is.
• It is no longer open: not everyone can use Bitcoin anymore. If your Bitcoin Patriot Edition license is revoked, you can only use the now devalued, tiny economy of vanilla Bitcoin.
• 'No small print' is no longer true. The Patriot Edition can log everything you do, choose which transactions to allow. Most people will not even realise this because people are uneducated.
• 'No freeze' is no longer true. The Patriot Edition can freeze your account at any time. It has already marked all bitcoins in the 'old guard' economy as badcoins and will never touch them. It can mark your coins as badcoins whenever it pleases, or even transfer them against your will to the coalition of willing.

Of course 'old guard' Bitcoin would be altered to freeze out Patriot Edition in return. But it will be too late for that: the large economy you built up is gone since the majority of the population already made the switch. You will have a very hard time finding a proper Bitcoin/Chinese yuan exchange since they'll be illegal. You have been relegated to a shattered shadow economy, trading badcoins among the few remaining disenfranchised who must.

All of this happened because the growing popularity of Bitcoin replaced this forum's ideologists with regular people. The same regular people who allowed today's surveillance society and top controlled economy to form.

I like your thinking! Great imagination!

Bitcoin downfall scenarios are a fun topic for anybody involved in the community. Although this might not be the most plausible one according to other members, I encourage you to keep coming up with them!