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Bitcoin's $137k Jackpot

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Re: Bitcoin's $137k Jackpot

#81

Post by CydeWeys »

vilhelm_s wrote: post #23
Bedon292 wrote: post #7

Obviously I am missing something on this. How do you direct the transaction fee to a specific miner? I thought it just went out there for anyone to process. If you can, why don't people just direct all their transaction fees at their own mining operation or a friend they trust?

Ordinarily transactions are broadcasted to the entire network for anyone to process. The miner who first finds a solution will get the fee for that transaction. I think the idea here is that you instead privately give the transaction to only your favoured miner. He will then try to hash it, and if and when he finishes it, he will broadcast the transaction and the solution to the network at the same time. Ordinarily t…

> I think the idea here is that you instead privately give the transaction to only your favoured miner. He will then try to hash it, and if and when he finishes it, he will broadcast the transaction and the solution to the network at the same time.

That's not really a good description of how this will work. Each miner maintains a transaction pool of transactions that have been broadcasted across the network. Think of it as a priority queue. Transactions are of different sizes and fees, and the miner is trying to maximize their total fee up to the 1 MB block size limit. These transaction pools are largely the same across all miners, with of course some differences owing to time delays and network propagation issues.

So all that would happen in miner tumbling is that the miner maintains its transaction pool as normal, but then additionally adds in the special transaction that it does not rebroadcast. The end result is you end up mining a block that has almost the same transactions in it as any other miner would, except with that one extra special transaction, and a low priority one being bumped.

Re: Bitcoin's $137k Jackpot

#82

Post by CydeWeys »

joshuak wrote: post #79
CydeWeys wrote: post #76

Earlier quoted context omitted.

In traditional tumbling, let's say you have ten people who all want to intermingle their funds. So you have ten inputs and ten outputs, and now there's some plausible deniability added because you don't know which particular one of the ten any given output corresponds to. But you do know it belongs to one of the ten, which is still significant information. And, most importantly, the vast majority of Bitcoiners do not…

This does not serve as a tumbling mechanism because the participants aren't peers. The coins went all one direction from source to many destinations. If those many destinations don't, in turn, pay the source back in some way you've just lost the money not laundered it.

I don't understand your objection. The mechanism I explained works to launder and obscure the auditable trail of Bitcoin. All I figure is that you're pointing out some there is some risk inherent in the mining pool simply walking away with the money. OK, sure. There's lots of trust involved in the Bitcoin ecosystem. Every time I buy something on the Internet with Bitcoin I'm trusting the retailer to send me what I ordered rather than walking away with my money. Every time I transfer BTC to an exchange in order to sell it I'm similarly trusting that they won't instead simply screw me over.

Re: Bitcoin's $137k Jackpot

#83

Post by CydeWeys »

wcoenen wrote: post #58
maxerickson wrote: post #34

Earlier quoted context omitted.

Presumably the high fee transaction could be withheld from the network until the block was mined. I don't know if that is possible, but if it is it would ensure that a given miner was getting those fees.

It is indeed possible to withold a transaction while trying to mine it into a block But this still doesn't provide 100% certainty that you will collect the transaction fee. You risk that other miners try to orphan the block once it is published (i.e. ignore it and build on the previous one instead) in order to put the transaction in their own block.

Any miner that would want to steal a block fee would have to mine two blocks in succession before the rest of the network gets another one. It's possible, but quite unlikely, and if you don't pull it off you've thrown away a lot of hashing cycles. The only way to make it probable is to control a majority of the network hashrate, but in that case, there are much larger problems afoot (i.e. a 51% attack).

It does place an upper bound on the total amount of BTC that can be laundered through transaction fees on a single block, though. I won't do the math right now but it's some multiple of the block reward fee that depends on what percentage of the network hash rate you control.

Fortunately (?) for the would-be launderer, the average pool is mining a good deal more than one block per day, so you just spread your laundering across a series of blocks.

Re: Bitcoin's $137k Jackpot

#84

Post by MichaelGG »

CydeWeys wrote: post #80
mwilcox wrote: post #71

Earlier quoted context omitted.

Yes tumbling is much more secure if your goal is to anonymise your money. MML is much more easily traceable as you just look at the guy who mined the block and send the authorities to go and speak with him. Especially if the large mining operations are well known. The usefulness to a launderer seems more the simplicity of exchanging a large amount of coins for fiat currency in a single transaction, rather than going…

> MML is much more easily traceable as you just look at the guy who mined the block and send the authorities to go and speak with him. Well that's easier said than done. There are a large number of blocks for which the miner is not known. The only reason the miner is known for as many blocks as it is is because several of the largest mining pools tag every block that they mine as a form of accountability to their min…

OK but you know the account that got the "laundered" money. So whatever you were going to do with the BTC before laundering (like cash them in), you still can't do. The previous identity flows.

I think the article is simply wrong.

Re: Bitcoin's $137k Jackpot

#85

Post by MichaelGG »

maxerickson wrote: post #61
MichaelGG wrote: post #51

Earlier quoted context omitted.

I don't think it'd even be that hard. Unless new mined blocks are untraceable (as in, it's impossible to see which fees went to which new coins), then it provides no covering at all. It's the same as sending small amounts from one address to another.

There aren't coins as such. The address the fee goes to is given in the block.

Exactly. So this accomplishes absolutely nothing. Your identity from address A flows right through to the "fee address".

Re: Bitcoin's $137k Jackpot

#86

Post by fiatmoney »

XaspR8d wrote: post #55
hughes wrote: post #2

This reminds me of a similar error from 2005[1] where a trader mistook the "price" and "quantity" fields of the trading software. Instead of selling 1 share for 610,000 yen, 610,000 shares were sold for 1 yen. The mistake cost around $225 million. [1] http://www.foxnews.com/story/2005/12/09/typing-error-causes-...

> Worse still, the number of shares in Mizuho's order was 41 times the number of J-Com's outstanding shares, but the Tokyo Stock Exchange processed the order anyway. There are a lot of simultaneous errors going on here...

Stock exchanges really cannot be expected to track numbers of outstanding shares. One puts in a bid or an ask, indicating that one is willing to purchase or sell the given number at the given price, and an order type, indicating the manner to fulfil (fill-or-kill, limit to a certain price, take whatever outstanding offers are necessary...). This is more than enough nuance for a professional product like a stock exchange that needs to operate at microsecond cadence.

If you want to validate whether an order makes sense or is a "good idea", the place to do it on the client.

Re: Bitcoin's $137k Jackpot

#87

Post by CydeWeys »

MichaelGG wrote: post #84
CydeWeys wrote: post #80

Earlier quoted context omitted.

> MML is much more easily traceable as you just look at the guy who mined the block and send the authorities to go and speak with him. Well that's easier said than done. There are a large number of blocks for which the miner is not known. The only reason the miner is known for as many blocks as it is is because several of the largest mining pools tag every block that they mine as a form of accountability to their min…

OK but you know the account that got the "laundered" money. So whatever you were going to do with the BTC before laundering (like cash them in), you still can't do. The previous identity flows. I think the article is simply wrong.

No you don't know where the laundered money ends up. See my other longer comment in this thread, but the gist of it is that the pool will use the transaction fee to pay their mining rewards out of, and pay out rewards from previous blocks to a series of separate virgin addresses controlled by the original party in a way that looks indistinguishable from mining reward payouts.

I will grant you that the article didn't fully explain the process, and elided important details.

Re: Bitcoin's $137k Jackpot

#88

Post by URSpider94 »

wcoenen wrote: post #58
maxerickson wrote: post #34

Earlier quoted context omitted.

Presumably the high fee transaction could be withheld from the network until the block was mined. I don't know if that is possible, but if it is it would ensure that a given miner was getting those fees.

It is indeed possible to withold a transaction while trying to mine it into a block But this still doesn't provide 100% certainty that you will collect the transaction fee. You risk that other miners try to orphan the block once it is published (i.e. ignore it and build on the previous one instead) in order to put the transaction in their own block.

This is an excellent point. If a block with unusually high fees comes up, you'd be well served to try to re-mine it as long as P(win)^(n+1) * fee > P(win) * mining reward, where n equals the number of blocks after the few was published. If you have a 10% chance of earning a block, you could push on for quite a while.

Re: Bitcoin's $137k Jackpot

#89

Post by aaron695 »

xigency wrote: post #21

Sort of unrelated but, "According to my calculation, a single Bitcoin transaction uses roughly enough electricity to power 1.57 American households for a day." http://motherboard.vice.com/read/bitcoin-is-unsustainable I find this interesting thinking about Bitcoin as a currency. The first cryptographic currency example that I had read, from a cryptography book, didn't involve active power. I'm really surprised that B…

> Sort of unrelated but,

Totally unrelated and an old argument talked about in depth.

Plus you are conflating the word transaction. It is not how the article used that word.

The person tried to spend 5 cents on the transaction. This is not one days worth of electricity.

Re: Bitcoin's $137k Jackpot

#90

Post by jbmorgado »

dghughes wrote: post #66
taesu wrote: post #3

I'd definitely keep that amount if I won it through mining. It's really hard swapping `amount` to `fee`, in coding, so I bet that this was a human mistake on sending btc, not coding mistake...

Well aren't you an opportunistic prick.

The correct working - in bitcoin culture - is "libertarian".
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