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Bitcoin Gold Hit by Double Spend Attack, Exchanges Lose Millions
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Re: Bitcoin Gold Hit by Double Spend Attack, Exchanges Lose Millions
#82Satoshi really downplayed 51% attacks in his/her original whitepaper[1]: > The incentive may help encourage nodes to stay honest. If a greedy attacker is able to assemble more CPU power than all the honest nodes, he would have to choose between using it to defraud people by stealing back his payments, or using it to generate new coins. He ought to find it more profitable to play by the rules, such rules that favour h…
But wouldn't the long-term honest mining be more profitable than a single hit and run? Kinda the same reason that when you go to a restaurant the restaurant owners almost always exchange food for money rather than rob you and leave town forever. If you own a restaurant it's generally more profitable to run it honestly than run away with a one-time dishonest payoff.
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Re: Bitcoin Gold Hit by Double Spend Attack, Exchanges Lose Millions
#83When Bitcoin was running up to $20,000, I tried to analyze the system and come to a personal conclusion about its equilibrium value, because I didn't want to miss out if it really was the currency of the future.
I ended up not investing, because of the possibility of a double-spend attack. I think that cryptocurrency enthusiasts are seriously underestimating the importance of double-spending attacks to the economics of bitcoin and other cryptocurrencies.
A few points that convinced me not to put my money into this system:
If hash capacity were traded on a perfectly competitive market, then it would always make sense to rent 51% of the capacity at market rates, earn the transaction fees, and also perform a double-spending attack. There is no equilibrium point for transaction fees where this attack becomes uneconomical. The only defense is that the market for hash capacity is imperfect.
The market for hash capacity is going to become more efficient over time. ASIC miners will be commoditized, so that hardware investment becomes a much smaller factor in hash cost versus energy. This might be even worse during a bitcoin downturn, because there could be a glut of ASIC miners.
Miners will coordinate with market prices, turning off capacity when the price dips (for example, because someone is underbidding to create a 51% attack). If mining becomes more decentralized, it will be harder for miners to act in their common interest (fending off 51% attacks) and against their immediate interest (selling their hashrate to the highest bidder, or taking it off the market during an underbidding attack).
High transaction volume is not necessarily any help - the more transaction volume, the higher the cost of the attack, but the greater the rewards. The semi-anonymous nature of bitcoin means that one could easily flood the network with double-spend transactions. Attacking a huge network like bitcoin would be an audacious and expensive act, but there are certainly organizations with the resources to do it, e.g. intelligence agencies, organized crime. The massive rewards to such an attack also offset fixed costs such as writing and testing the software to carry out the attack.
Re: Bitcoin Gold Hit by Double Spend Attack, Exchanges Lose Millions
#84Crypto currencies are worthless unless they have an enormous amount of hashing power behind them. We could really do with a webpage with a list of crypto currencies, the hashing power currently behind them, and how much it would cost somebody to take over 50% of the network. Or does that already exist?
it exists https://bitinfocharts.com/comparison/bitcoin%20gold-hashrate...
That graph doesn't tell me how much it costs to launch a 50% attack. Maybe I'm just lazy, but I want a table with the name of the crypto currency in one column, and the cost in USD to launch an attack in another column.
Re: Bitcoin Gold Hit by Double Spend Attack, Exchanges Lose Millions
#85Earlier quoted context omitted.
Exactly. We should stop using the word "waste" to describe the energy consumption of the Bitcoin miners. It's not waste if it serves a purpose. The service it provides is to guarantee the integrity of the blockchain without the requirement of a central authority.
> We should stop using the word "waste" to describe the energy consumption of the Bitcoin miners. All you bitcoin shysters can keep telling yourself that to sleep at night, but you are lying to yourself and you know it. Bitcoin consumes massive amounts of energy for a pathetically small amount of transactions per second. ON a per transaction basis, Bitcoin uses several orders of magnitude more energy than anything us…
Your biggest mistake is comparing energy use. You need to compare the total overhead of bitcoin to the total overhead of the competitive financial system. The second mistake is comparing a per-transaction basis; this is of interest when we are comparing suitability for particular applications, but if you want to talk more generally about whether bitcoin is efficient for payments you need to look at things on a value basis (use usd, eur, cny, or gold ounces).
Re: Bitcoin Gold Hit by Double Spend Attack, Exchanges Lose Millions
#86Earlier quoted context omitted.
> We should stop using the word "waste" to describe the energy consumption of the Bitcoin miners. All you bitcoin shysters can keep telling yourself that to sleep at night, but you are lying to yourself and you know it. Bitcoin consumes massive amounts of energy for a pathetically small amount of transactions per second. ON a per transaction basis, Bitcoin uses several orders of magnitude more energy than anything us…
Your biggest mistake is comparing energy use. You need to compare the total overhead of bitcoin to the total overhead of the competitive financial system. The second mistake is comparing a per-transaction basis; this is of interest when we are comparing suitability for particular applications, but if you want to talk more generally about whether bitcoin is efficient for payments you need to look at things on a value…
Why?
Why does a new system need to be just as bad as the old one?
Re: Bitcoin Gold Hit by Double Spend Attack, Exchanges Lose Millions
#87Earlier quoted context omitted.
Those are both activities which use up trivial quantities of those natural resources. Bitcoin uses up nontrivial quantities of electricity.
You forgot to calculate how much (in resources) it costed to build all those banks and vaults and how much it costs to run and maintain, globally.
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Re: Bitcoin Gold Hit by Double Spend Attack, Exchanges Lose Millions
#88Earlier quoted context omitted.
I think stealing is illegal, yes.
Is this stealing by whatever definition police/the courts currently use? Isn't it an intentional part of the design of a cryptocurrency that decisions are made by a consensus based on hashing power? If you have 51% of the hashing power, you have control over that cryptocurrency; that's by design. Can you really steal at that point? edit: to those replying, I'm not saying this double spend is ethically fine, or not th…
Uh, yes, you can steal. Just because the vault is open at a bank doesn't mean that you can walk in, take the money and leave, and then claim that it's yours because they didn't lock the door.
When you send money to an exchange, there's an understanding that the money now belongs to the exchange. The exchange waits 6 confirmations to ensure that the money is not easily stolen, but the money legally belongs to the exchange as soon as the transaction is sent.
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Also, a 51% attack doesn't give you control over the cryptocurrency. You still have to follow the rules of the system, you can't print extra money from thin air, you can't spend money you don't control, the most you can do is change the ordering of the transactions that have happened on the system. And a lot of times, those transactions have block height or block id dependencies, which means you are even limited in your power to do that.
A 51% attacker is not God. They have a limited set of actions they can take, and while certain forms of stealing are included in that set of actions, it's overall a pretty limited set of things that you can do.
Re: Bitcoin Gold Hit by Double Spend Attack, Exchanges Lose Millions
#89Crypto currencies are worthless unless they have an enormous amount of hashing power behind them. We could really do with a webpage with a list of crypto currencies, the hashing power currently behind them, and how much it would cost somebody to take over 50% of the network. Or does that already exist?
This point should be made more often. It also supports the ethereum and EOS use case, a general purpose computing blockchain and distributed vm, it allows smaller utility coins to be backed by the same size network as the eth token and ecosystem, something they would never do on their own. The token's security is proportional to it's network size. Fragmentation of the already small subset of people capable of running blockchain nodes that actually do run nodes is great for innovation but bad for network security and confidence.
Re: Bitcoin Gold Hit by Double Spend Attack, Exchanges Lose Millions
#90Earlier quoted context omitted.
Those are both activities which use up trivial quantities of those natural resources. Bitcoin uses up nontrivial quantities of electricity.
There's a hidden cost of trust there, though, which vanishes with bitcoin (or at least reduces its cost). Maybe the value of bitcoin is more apparent from the perspective of venezuela at the moment, where the risk involved with traditional banks, currency, and security is more apparent. I am emphatically not taking a stance on which I prefer here, I might add, just pointing out that there are more variables here than…
> There's a hidden cost of trust there, though, which vanishes with bitcoin
With fiat, I at least have some idea who I am trusting, and if my trust is betrayed, I have some idea who to work with others to organize to work to inflict punishment. And, the people involved are aware of that.
With crypto, I have to trust an anonymous network of people that I have only distant and indirect indications aren't, in overwhelming majority, mutually cooperating agents of a single potentially adverse party, and no idea of who to go after if my trust is betrayed. And the people involved know that, too.