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Author Topic: The BTC price is too high for it's current security model  (Read 4488 times)
raid_n
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July 29, 2014, 07:23:49 AM
 #41

1) The attacker can attempt a double spend
2) The attacker withholds a transaction to cause economic harm

Incomplete list, and you are ignoring some very important implications.


No that list is complete. Even your link just points out different nuances of using these two actions.
It is complete because these are the only valid actions that the protocol allows a miner to take. (we will disregard a >50% attack on running the protocol code because that effectively just forks bitcoin)


Please don't give me some primitive list off an FAQ.

I'm not talking about some one time double spend, I'm talking about how the pools are so large of an attack vector, that it's trivial for governments to take over or impose their will on the network.  Also how it's supposed to be a decentralized network without trusted 3rd parties, yet the tiny amount of mining pools are the trusted third parties.  The protocol never actually succeeded in it's stated goals, and is currently just a giant fugazi.

Do you remember the initial Bitcoin premise and intro to the world?  When Satoshi types he claims to have figured out a way to create decentralized consensus without trusted third parties?  Everyone gives him credit like he actually succeeded. 

He never did succeed.


Again you post arguments based on your premises but not on hard facts.
It is trivial to see if the network behaves. All you need to do is have enough participants log broadcast transactions and from this you can derive if those transactions were put through.

Bitcoin has probabilistic consensus on the blockchain. Do you even know what this means? It means that the probability of a block not changing converges towards 1.
So unless you use checkpointing (which is basically consensus enforced through the protocol) you never have a 100% certainty that your transaction is stable.
That does not matter however as a very large probability is good enough for most use cases.

You do not have to trust third parties because you can observe their behaviour and decide for yourself if a transaction has reached a level of trust you desire.


Statments like saying bitcoin is just a "giant fugazi" just strengthens my assumption on your motives.
It is not so much about the security of bitcoin but more about you wanting another coin you deem more secure to succeed.

I think it is great that altcoins are exploring new routes and methods which can flow back into all other cryptos if they are valid and useful.
But lets face it. Altcoins need to inflate issues with bitcoin to give people an incentive to switch to them.

"Oh look, bitcoin is so horribly broken but coin xyz fixes all that and has free candy on top! who would not want free candy right*?"


* Disclaimer, I have large holdings in xyz coin.
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July 29, 2014, 07:31:30 AM
 #42

1) The attacker can attempt a double spend
2) The attacker withholds a transaction to cause economic harm

Incomplete list, and you are ignoring some very important implications.


No that list is complete. Even your link just points out different nuances of using these two actions.
It is complete because these are the only valid actions that the protocol allows a miner to take. (we will disregard a >50% attack on running the protocol code because that effectively just forks bitcoin)

False.

Add, at least:

3. The attacker can refuse to mine on top of certain blocks

(Which prevents such blocks from ever being accepted into the longest chain.) The protocol allows that as well. I'm still not quite sure if this is a complete list.

But your 2. would only be correct if you did not include the phrase "to cause economic harm." The protocol is agnostic about why something is being done.
raid_n
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July 29, 2014, 07:50:43 AM
 #43


False.

Add, at least:

3. The attacker can refuse to mine on top of certain blocks

(Which prevents such blocks from ever being accepted into the longest chain.) The protocol allows that as well. I'm still not quite sure if this is a complete list.

But your 2. would only be correct if you did not include the phrase "to cause economic harm." The protocol is agnostic about why something is being done.


You are right it would probably make sense to differentiate between the rewards of a miner and a regular transaction.

What is a block? Effectively it is a set of transactions including the one where the miner pays himself. The block is linked to previous blocks and has a PoW (in the case of bitcoin)
Double spends can only happen if you "erase" a block by presenting a longer chain in which it is not present.
In a sense robbing a different miner of their rewards by intentionally making a new chain is very similar to a double spend.

[edit] I'm unsure if the selfish mining approach is as viable as it is claimed to be
You would obviously find a pattern if a pool consistently tries to maliciously remove blocks.
Of course it can't be prevented but at the same time you have a similar effect to that of double spending.
Everyone will know you are behaving badly and will shun you. Furthermore you are negatively affecting your profits (loss in confidence of the system).



r0ach (OP)
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July 29, 2014, 11:27:03 AM
 #44

Again you post arguments based on your premises but not on hard facts.

Your premises seem to rely on the assumption that Bitcoin will live forever, and that any disruption to the block chain is only temporary and greedy miners will sort things out from there.  My premise is that the centralization of mining pools will be an ongoing issue that provides so large of an attack vector, that it's inevitable central governments will impose their will over how the protocol functions, either getting rid of it outright, or turning it into governmentcoin.

For example, let's say all western governments suddenly said, "sorry, you can't mine anymore because you could be processing financial transactions for terrorists".  Various third world Asian governments would probably follow suit as well.  Mining would suddenly be a crime in most places.  You might end up with only small amounts of hash rate in obscure places like Bulgaria.  There would be no real security for the network since overpowering it's hash rate would be trivial.  Price would go down to nothing, market cap would be nothing, nobody would use it.

You seem to ignore the obvious fact that if governments have any opportunity whatsoever to regulate, manipulate, or screw something up, they will.  The giant mining pools have to go or Bitcoin has no future.  As for your claim of me "shilling" for a specific altcoin, my point has nothing to do with altcoins.  My point is that you either have to remove the giant pool mining from PoW, or use PoS and utilize reputation as a finite resource to fix most of proof of stake's current issues.

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raid_n
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July 29, 2014, 12:29:31 PM
Last edit: July 29, 2014, 12:46:43 PM by raid_n
 #45

Again you post arguments based on your premises but not on hard facts.

Your premises seem to rely on the assumption that Bitcoin will live forever, and that any disruption to the block chain is only temporary and greedy miners will sort things out from there.  My premise is that the centralization of mining pools will be an ongoing issue that provides so large of an attack vector, that it's inevitable central governments will impose their will over how the protocol functions, either getting rid of it outright, or turning it into governmentcoin.

For example, let's say all western governments suddenly said, "sorry, you can't mine anymore because you could be processing financial transactions for terrorists".  Various third world Asian governments would probably follow suit as well.  Mining would suddenly be a crime in most places.  You might end up with only small amounts of hash rate in obscure places like Bulgaria.  There would be no real security for the network since overpowering it's hash rate would be trivial.  Price would go down to nothing, market cap would be nothing, nobody would use it.

You seem to ignore the obvious fact that if governments have any opportunity whatsoever to regulate, manipulate, or screw something up, they will.  The giant mining pools have to go or Bitcoin has no future.  As for your claim of me "shilling" for a specific altcoin, my point has nothing to do with altcoins.  My point is that you either have to remove the giant pool mining from PoW, or use PoS and utilize reputation as a finite resource to fix most of proof of stake's current issues.


The problem is that you want a solution to a formally impossible problem.
In the type of system we have you need at least a majority to reach consensus and you can't circumvent this.

What you are proposing when you say there will be government intervention etc. is that there is an external entity that enforces rules.
For absolutely any protocol the government can come in and pull out the "its illegal" card.

Actually here is something for you to think about:
All it takes to break any of these models (PoS,PoW whatever you want) is to control the exchange of information.
If I can assert control over the underlying network used to exchange information (i.e the internet) I can isolate groups and participants so they cannot post new blocks to participate.
Because these systems are decentralized they have to be able to deal with failures of participants.
Satoshi was clever to assume that messages are disseminated quickly enough because it simplifies the problem.
It is in part a dangerous assumption but given the long block intervals he chose reasonable enough to withstand most issues.

Say you use a PoS model with reputation or whatever. For the network to function it has to be able to generate blocks with fluctuating amounts of participants.
How do you want to enforce distribution of the active resources used in creating blocks is fair (no one has a majority)? You can't unless you block during times where this is not the case.

The issue of some entity being able to control >50% of the active resources required to generate new blocks will always be there.
It is impossible to remove because it is impossible to reach consensus in the proposed model without a majority.
Probabilistic consensus allows smaller disruptions to be rectified later on because eventually the majority overrules any decisions taken contrary to the majority.
If you do not allow this the system has to block as soon as a majority cannot be reached.


[edit]

Reading through my own text it is a bit unclear what I want to say.

In a blockchain type of consensus sytem:

1) you cannot guarantee that a single entity won't somehow obtain more than 50% of the active resources used to create blocks, whatever they are.
You can try to encourage stronger distribution but there is no way to enforce it at all times.
2) Indecision will always exist in a probabilistic consensus model. You cannot fully prevent double spending because no block is 100% agreed on.




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July 29, 2014, 05:04:31 PM
 #46

In a blockchain type of consensus sytem:

1) you cannot guarantee that a single entity won't somehow obtain more than 50% of the active resources used to create blocks, whatever they are.

Technically, you can with ease in the short term by boot strapping a DPOS system with 101 pseudo-random, pre-selected candidates from various countries, then treating their role as a supreme court judge type position where it's difficult to remove them.  The challenge in that scenario is selecting what method for allowing their replacement:  voting with money from coin holders (plutocracy), other delegates (democracy), or thousands of other combinations of variables.

The method BitsharesX used for their system was executed extremely poorly, and I've already come out against their system, so don't even think I'm shilling for that.  Some people will say 101 delegates isn't decentralized, but when only 1-4 mining pools really matter in Bitcoin, it beats the hell out of that decentralization, or lack thereof.

There are many other technicalities to hammer out as well, such as should delegates be allowed to run anonymously, or force it so the original 101 delegate names are handed down over time for people to better keep track of.  Then you have things like TOR/I2P integration and timing attacks and all that.

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July 29, 2014, 05:07:16 PM
 #47

Yeah, it's true. It is simply too easy for regular people to get scammed by someone. There need to be simpler solutions for people to securely sign their transactions. This needs to be solved before Bitcoin can enter the mass market. I'm curious to see, though how all the wallets in Apple's restricted ecosystem are doing, and whether such a restrictive marketplace suffices in protecting peoples' bitcoins!

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July 29, 2014, 07:05:08 PM
 #48

In a blockchain type of consensus sytem:

1) you cannot guarantee that a single entity won't somehow obtain more than 50% of the active resources used to create blocks, whatever they are.

Technically, you can with ease in the short term by boot strapping a DPOS system with 101 pseudo-random, pre-selected candidates from various countries, then treating their role as a supreme court judge type position where it's difficult to remove them.  The challenge in that scenario is selecting what method for allowing their replacement:  voting with money from coin holders (plutocracy), other delegates (democracy), or thousands of other combinations of variables.

The method BitsharesX used for their system was executed extremely poorly, and I've already come out against their system, so don't even think I'm shilling for that.  Some people will say 101 delegates isn't decentralized, but when only 1-4 mining pools really matter in Bitcoin, it beats the hell out of that decentralization, or lack thereof.

There are many other technicalities to hammer out as well, such as should delegates be allowed to run anonymously, or force it so the original 101 delegate names are handed down over time for people to better keep track of.  Then you have things like TOR/I2P integration and timing attacks and all that.


Look, that is just externalizing the problem.
I'm all with you on better types and methods of democracy and I feel that the current political system is rotten to the core.
I would also warmly welcome any incentives that foster stronger decentralization of bitcoin mining.

Nevertheless I stand by my argument that from a technical standpoint PoW and even the current hashrate distribution is not as problematic for bitcoin as suggested.

Like you hinted governments can and probably will try to manipulate cryptocurrencies until they are a shadowy joke of what they were and are intended to be.
But it will happen in the public space and not through a brute force attack on hashing power.
Through lobbying, through enforcing stupid regulations and maybe even through making the software illegal or otherwise manipulating it.


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July 30, 2014, 12:56:41 AM
Last edit: July 31, 2014, 02:24:08 PM by r0ach
 #49

Look, that is just externalizing the problem.

The system I described earlier limits the government's ability to become involved in such a role by removing their obvious entryway into the system, the small number of centralized mining pools.  If you think you can fix that giant, central authority attack vector while still using PoW, then by all means, go for it, but I don't think you can personally.  A system based on DPOS is the only way forward that I see currently.

How do I know DPOS is the future?  Because even the government itself could easily use it.  They could do something like make each member of the UN a DPOS delegate, and suddenly you have a distributed world currency.

You can either wait for this to happen, or create a private, non-government run model before they do.

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