Bitcoin Gold Hit by Double Spend Attack, Exchanges Lose Millions • Hacker News Board

Re: Bitcoin Gold Hit by Double Spend Attack, Exchanges Lose Millions

#291

Post by root_axis » Thu, May 24, 2018, 2:56 AM UTC

gruez wrote: post #259

root_axis wrote: post #232

I'm just waiting for the day when it's revealed that ~70% of miners on a top 5 cryptocurrency are compromised by a specialized worm or malware. We'll probably only find out after the double spending is discovered but this type of outcome seems almost inevitable. The people writing this type of software are definitely financially motivated, but I can easily imagine such a person throwing away millions of dollars in 0-…

>We'll probably only find out after the double spending is discovered but this type of outcome seems almost inevitable attacks like this is harder to pull off than you think. miners constantly submit "shares" to the pool, which are then validated to credit them a share in the block reward[1]. depending on the difficulty threshold of the shares are, these could be submitted a few times a minute to every few minutes. i…

You're right that there are a few canaries in the coal mine, but there are a lot of creative options if you have the ability to execute arbitrary code on a mining node botnet, assuredly some of which are yet to be discovered (as far as we know). Consider as well the many financial opportunities available to someone who may have an interest in sabotaging or disrupting some kind of mining activity, perhaps in subtle ways that are not usually noticed.

Re: Bitcoin Gold Hit by Double Spend Attack, Exchanges Lose Millions

#292

Post by lugg » Thu, May 24, 2018, 2:56 AM UTC

h1d wrote: post #196

dragonwriter wrote: post #115

Earlier quoted context omitted.

Assuming you want to make money directly, sure. If you want to harm a community in which the currency is widely used, the incentives are different.

What kind of incentive does the attacker have to just harm a community of a distributed system?

Money? Tax is a pretty good motivator for governments.

Re: Bitcoin Gold Hit by Double Spend Attack, Exchanges Lose Millions

#293

Post by flashmob » Thu, May 24, 2018, 2:56 AM UTC

jhpriestley wrote: post #83

When 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…

If you wait long enough, say, for 144 confirmations (or 24 hours, whichever is greater) then a double spend may as well be the least of your worries, for bitcoin, or any of the top mined crypto-currencies.

These double-spend attacks are only successful if the receiving party doesn't wait long enough.

Also, could't find any sources from exchanges if they were actually successful? The article didn't mention which exchanges.

Quote:

"Blockchain data indicates that the attacker successfully reversed transactions as far back as 22 blocks, leading developers to advise raising confirmation requirements to 50 blocks."

So as long as exchanges wait 50 blocks before crediting, they should be all right.

Re: Bitcoin Gold Hit by Double Spend Attack, Exchanges Lose Millions

#294

Post by cdetrio » Thu, May 24, 2018, 2:59 AM UTC

drexlspivey wrote: post #98

jhpriestley wrote: post #83

When 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…

What a lot of people in the thread seem to be missing is that when you receive a huge payment you can require a higher amount of confirmations to accept it. High enough that it would make the 51% attack unprofitable.

Requiring more confirmations decreases the probability that a transaction will be reverted, under the assumption that an attacker has < 49% of the hashpower. If you attempt an attack with 49%, then you have a fair chance of mining, say, 6 blocks before the rest of the network. If you get unlucky then you sacrifice those rewards. But if you mine with 51% then your attack chain is (probabilistically) guaranteed to eventually become the longest chain, so there won't be any loss of revenue.

Re: Bitcoin Gold Hit by Double Spend Attack, Exchanges Lose Millions

#295

Post by Jommi » Thu, May 24, 2018, 3:00 AM UTC

duxup wrote: post #279

Is there a laymans explination for this attack? "but the attacker was able to reverse transactions since they had majority control of the network." I thought these crypto currencies didn't allow for reversing a transaction? Or is this "reversing" such as just deposit and then withdraw?

It's not reversing per se, it's like the transaction never happened.

They send the money from their address to the exchange, the exchange credits that money.

Then they release their chain (that they have been building privately). This chain is taken as the consensus and accepted.

Why? Because it is the longest chain.

Why? Because it has had more than 50% of hashpower behind it, allowing it to add blocks faster than the current network.

Now the trick here is that because a single entity controls this new chain, they can just not include the transaction which happened between them and the exchange. So it a sense, it never happened. Yet, the exchange credited the account -- Thus the exchange account now has currency, and the original account has currency as well.

Re: Bitcoin Gold Hit by Double Spend Attack, Exchanges Lose Millions

#296

Post by cdetrio » Thu, May 24, 2018, 3:02 AM UTC

DennisP wrote: post #228

jhpriestley wrote: post #83

When 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…

Interesting points. A defense against this type of attack is to use at least the hybrid proof-of-stake design that Ethereum is rolling out in about three months; blocks are proposed by proof of work, but proof of stake periodically adds a layer of "economic finality." Here's a paper: https://arxiv.org/abs/1710.09437

51% attacks on the block proposal mechanism could prevent the PoS commitments from ever becoming finalized (i.e. violate liveness), though.

Re: Bitcoin Gold Hit by Double Spend Attack, Exchanges Lose Millions

#297

Post by hisabness » Thu, May 24, 2018, 3:02 AM UTC

cesarb wrote: post #175

tedunangst wrote: post #18

Earlier quoted context omitted.

> If the exchange is aware of the attack, they may also freeze his account, so that all the funds will be locked inside the Exchange. A failed 21 block attack performed with a 10,000 BTG deposit where the Exchange freezes the account in time will result in a 10,262.5 BTG loss for the attacker. (From link.) That sounds problematic. If I deposited coins and the exchange determined I was attacking them (how does that wo…

Not only that, but also an attacker can wait until the money is "safe" outside the exchange before revealing the attack. If the attacker really has more than half of the hash rate, there's no time limit; the malicious chain will always be longer than the innocent one.

It’s also odd that the exchange would step into mediate. The miner is effectively playing by the rules i.e. if you have 51% you can do what you want.

Re: Bitcoin Gold Hit by Double Spend Attack, Exchanges Lose Millions

#298

Post by Jommi » Thu, May 24, 2018, 3:02 AM UTC

zaroth wrote: post #148

So this would require an attacker to pay into the exchange with BTCg, have the deposit clear and approve for trading, trade it for another currency, and have that trade settle and be clear for withdrawal, and then process the withdrawal, all in under 4 hours. After which point the attacking miner surfaces a longer chain they had been keeping which doesn’t include the original BTCg deposit. Alternatively, if the excha…

You're hitting the nail on the head on this one. Couldn't have said it myself.

Majority of current exchanges are playing it absolutely fast-and dangerous. It's no surprise with new exchanges popping up like mushrooms.

I'd bet that the top exchanges didn't lose anything on this. I'd actually wager this didn't happen to an exchange, but some other type of site, like a BTG Betting site or something.

Re: Bitcoin Gold Hit by Double Spend Attack, Exchanges Lose Millions

#299

Post by EGreg » Thu, May 24, 2018, 3:05 AM UTC

tlarkworthy wrote: post #92

jhpriestley wrote: post #83

When 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…

I think the argument is that by doing a 51% attack you undermine the market value so you never get the rewards. This makes sense, but only for the leading crypto coin. As we see here today, you can 51% attack smaller coins, which should imply an increase in the value of Bitcoin from consolidation.

1. Short bitcoin cash

2. Rent 51% and mine a fork in secret for a week

3. Wreak havoc

4. Collect money

Re: Bitcoin Gold Hit by Double Spend Attack, Exchanges Lose Millions

#300

Post by vasilipupkin » Thu, May 24, 2018, 3:05 AM UTC

IkmoIkmo wrote: post #235

apo wrote: post #216

Oddly enough, one of the selling points of Bitcoin Gold (a hard fork of Bitcoin) was its use of Equihash instead of SHA-256. The idea was that a memory-hard proof-of-work function would inoculate Bitcoin Gold from miner centralization. The problem with mining centralization is that sufficiently powerful miners can attack the network by rewriting blocks. This opens the door to double spending. This was exactly the att…

The problem I think is that there are 25 cryptocurrencies bigger than it. Particularly with its form of mining, it's trivially easy for say a big player in the 10th largest currency to shift their mining power to a smaller one like Bitcoin Gold, overpowering everything else. Normally the non-51% attack argument is that anyone who invests enough in 51% of the infrastructure and has sufficient coins to profit from doub…

so how exactly do you cash out? by exchanging double spent coins for btc or usd? but then can't exchanges just stop that from happening?