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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

#441

Post by dmichulke »

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 hash capacity were traded on a perfectly competitive market, then it would always make sense to rent 51% of the capacity at market rates

"Renting 51%" (of any global market) and "at market rates" are mutually exclusive.

> There is no equilibrium point for transaction fees where this attack becomes uneconomical.

The counterforce against doublespending is not transaction fee but cost of ownership of mining equipment.

Some other arguments against your conclusion:

- As mentioned nearby, for big transactions you want to wait longer than 6 confirmations.

- Also, as recipient you might want to distribute huge payments into smaller ones distributed over time.

- It's in the interest of mining capacity lenders to make sure you don't get 51% because it renders their equipment worthless in case you are successful.

- As you correctly stated, low prices will lead to lower hash rates (and higher prices to higher rates). This means actually that bitcoin will be more stable (it's harder to obtain 51%) if prices rise. There's an equilibrium on that side as well! That is, if double spending is what you're worried about.

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

#442

Post by bitreality »

Erlich_Bachman wrote: post #389
rvense wrote: post #380

Earlier quoted context omitted.

The mechanics would be the internal workings, a tamper-proof shared ledger. It's so amazing! Think of all the possibilities! Then it hits the real world, and suddenly what people actually do with it and its valuation is dependent on how the exchanges operate (are exchanges even mentioned in the original paper?), energy prices in China, media coverage, interactions with alt-coins, etc.

You seem to assume that the greatest feat of Bitcoin is it's price. Yes, sure the price might be affected (somewhat) by how exchanges operate and media covers. However, many people don't care too much about the monetary price, and play the long game. In the long run, the market always adjusts. In in the end, it is the same with any other commodity or currency.

Mr. Bachman, with all due respect, I would argue that the majority of people proclaiming they don't care about the price are bluffing. Perhaps even bluffing themselves. Bitcoin's price increase has far outpaced its adoption or disruption of the financial system.

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

#444

Post by Nursie »

Erlich_Bachman wrote: post #389
rvense wrote: post #380

Earlier quoted context omitted.

The mechanics would be the internal workings, a tamper-proof shared ledger. It's so amazing! Think of all the possibilities! Then it hits the real world, and suddenly what people actually do with it and its valuation is dependent on how the exchanges operate (are exchanges even mentioned in the original paper?), energy prices in China, media coverage, interactions with alt-coins, etc.

You seem to assume that the greatest feat of Bitcoin is it's price. Yes, sure the price might be affected (somewhat) by how exchanges operate and media covers. However, many people don't care too much about the monetary price, and play the long game. In the long run, the market always adjusts. In in the end, it is the same with any other commodity or currency.

What game are you playing if you don't care about the price?

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

#445

Post by bitreality »

vasilipupkin wrote: post #300
IkmoIkmo wrote: post #235

Earlier quoted context omitted.

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?

I'm not even sure you would need to exchange it to another coin. You would never be exchanging it to USD because USD withdrawals will require you to identify yourself and a corresponding bank account. To withdraw crypto you just need an address.

So you can exchange it to BTC or ETH and withdraw. Or you can just deposit it and withdraw it after. Most exchanges just mix customer funds together, so as long as the exchange has enough BTG balance minus the double spent deposit, they will send you real BTG.

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

#446

Post by nopinsight »

hvidgaard wrote: post #419
nopinsight wrote: post #410

Earlier quoted context omitted.

It is far from clear that Bitcoin will likely ever reach $70,000. That implies an approx market cap of $1,200,000,000,000 or more. Would Bitcoin ever be useful enough or generate more value than Google or several Big Energy companies combined to justify and sustain that valuation?

People said the same thing about $1,000 when it reached $35. in about 6 months, bitcoin will be 10 years, so considering that it went from $0 to $20,000 in those 10 years, so as my statement say, it's not without reason to expect it to reach $70,000 in the next 5 years. People like to compare bitcoin to gold, which has an estimated current market cap of $6,000,000,000,000. Will gold ever generate more value than Goog…

Nearly 70% of gold is actually used as jewelry and in industrial applications (based on a diagram linked from an HN comment). So after 10,000+ years of trust building, the portion of gold used as a store of value is perhaps still less than $3 trillion. (Also, $20,000 Bitcoin was a tiny blip. The value was not sustained.)

Gold is also quite unique and "best" or close-to-best in its collection of properties. Bitcoin is not really rare and many other recent variants are "better" in a number of ways. Would the network effect be sufficient for its valuation to come close to physical gold? Warren Buffett, Robert Shiller, a well-known Nobel prize winner in economics, and several other respected economists say unlikely [1] [2] [3]. Basic logic says the same.

[1] ""It has no value at all unless there is some common consensus that it has value. Other things like gold would at least have some value if people didn't see it as an investment," Shiller told CNBC in an interview ahead of the World Economic Forum in Davos, Switzerland, where he will be speaking next week."

https://www.cnbc.com/2018/01/19/bitcoin-likely-to-totally-co...

[2] https://www.project-syndicate.org/commentary/cryptocurrencie...

[3] https://www.project-syndicate.org/commentary/cryptocurrencie...

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

#447

Post by wellboy »

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…

Your analysis isn't really a good one, since Proof of Work consensus through mining, isn't really used anymore by the new coins.

It seems you're too focused on a specific decentralized consensus solution, while there are already much better ones out there, e.g. Iota with a tangle, skycoin with a web of trust or Elastos that are immune to 51% attacks.

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

#448

Post by giancarlostoro »

swift532 wrote: post #428
B-Con wrote: post #417

> Ordinarily, the blockchain would resolve this by including only the first transaction in the block, but the attacker was able to reverse transactions since they had majority control of the network. Not a very precise explanation, just checking, what exactly does this mean? I always thought the way a 51% double-spend attack worked was by broadcasting a transaction for human consumption (eg, I'll give you Y coins for…

You are correct. The longest chain is accepted as the correct one, so if you have 51% hashpower and secretly mine while maintaining majority hashpower the whole time, your chain will be longer and you can publish it at any time, and effectively rewrite recent history.

Has there been other approaches at solving the double spend problem? I know ByteCoin (which is from scratch and uses 'CryptoNote' (or CryptoNight?) and respectively it's forks which includes Monero are designed a little different and I think they boast having solved the double spend problem too but I am not sure if they just do the same decisions as Bitcoin concerning updating the Blockchain?

Anyone care to weigh in on this?

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

#449

Post by dpq »

conanbatt wrote: post #371
wpietri wrote: post #346

Earlier quoted context omitted.

That's definitely not proof of real economic utility. How many bets happen in Las Vegas every day? But economically, they're negative-sum events exploiting cognitive weaknesses.

They are not negative sum, because they provide entertainment. Also, all systems that pay taxes are negative sum as well! Utility is not measured in money.

Entertainment can also have negative value. That's what the parent meant: your entertainment is provided by someone exploiting your gambling-addicted (and gambling may cause an actual addiction afaik, no less so than opioid addiction although based on different biochemistry) dopamine circuitry in order to extract actual (social) value.

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

#450

Post by [deleted] »

brownbat wrote: post #423
wpietri wrote: post #347

Earlier quoted context omitted.

It's more like saying you can't buy anything with gold. Credit and debit cards are just a way of shifting dollars around. Bitcoin is more a commodity than a currency. Yes, you can convert gold or oil to dollars and buy things, but you can't walk into a store and give them some gold flake or a quart of Texas crude in exchange for a candy bar.

> Credit and debit cards are just a way of shifting dollars around A credit card is shifting a line of credit, an intangible promise to pay, a form of trust, that happens to be denominated in dollars. We can pretend it's just a balance of dollars, even though it technically isn't, because it makes conversations easier, and in practical fact that's how it appears to work. But that's just a shorthand. We can use the sa…

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