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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

#461

Post by JackFr »

wpietri wrote: post #346
hapnin wrote: post #321

Earlier quoted context omitted.

Bitcoin averages something on the order of 200,000 transactions per day. It's useful to someone.

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.

Not (necessarily) true.

Expected value is not the only thing to consider. Higher moments matter.

Insurance typically has negative expected value but it’s rational to buy it (in conjunction with owning the insured object) to reduce one’s variance.

Gambling will increase the variance of one’s portfolio at the cost of expected value, which can be rational depending on one’s situation.

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

#462

Post by tome »

actsasbuffoon wrote: post #460
tome wrote: post #432

Earlier quoted context omitted.

Where would you buy a put (sell) option on Bitcoin (without substantial counterparty or settlement risk)? I genuinely want to know. I would have bought one in November if I could have.

I’ve read about plans to introduce crypto currency ETFs, but I’m not aware of any that are publicly traded yet.

Even then it's not clear you'll be able to buy options on them...

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

#463

Post by actsasbuffoon »

dragonwriter wrote: post #212
h1d wrote: post #196

Earlier quoted context omitted.

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

Association with or interest in a different (crypto or not) currency, leading to wanting to shake faith in the target currency. Hostility toward a community in which the target currency is particularly popular. “Some men just want to watch the world burn.”

If you had a strong interest in Ethereum (for example), then I think you’d want to avoid the wholesale destruction of Bitcoin. If the biggest crypto currency fails, it’ll probably send shockwaves through out the entire crypto currency market.

Mind you, I say this as a crypto currency outsider.

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

#464

Post by api »

TeMPOraL wrote: post #322
api wrote: post #52

Earlier quoted context omitted.

How much energy is spent securing conventional financial systems? You have to include everything: banks, minting, enforcement, physical security, even military and intelligence action.

For conventional financial systems, energy spending is upkeep. Something that needs to be done (due to thermodynamics), but is best minimized, because it costs money. So banks, minting, enforcement, branches, ATMs, etc. - they all try to minimize their upkeep, per the regular ways markets optimize this. All of this also arguably represents the lower bound of what it costs to run a financial system. Cryptocurrencies,…

I think the other reply about TX counts vs. people-hours of power convinced me that indeed cryptocurrency is much less efficient than conventional currency even if you put large error bars on that analysis. I do think it's a solvable problem.

Your reply about trust though...

Trust is massively less expensive until it's not. The trouble with trust is that when it breaks "fixing" it is immensely painful, often requiring major political upheaval or worse. In extreme cases people die when trust has to be "fixed."

I do still wonder... what happens when you amortize the cost of trust across say two hundred years time? Reminds me of the cost analysis of nuclear power. Nuclear power is cheap until Fukushima happens, and one Fukushima amortized over even 50-100 years renders nuclear power more expensive than any other energy source.

I do not think it's a coincidence that the cryptocurrency explosion happened right after the 2008 financial crisis. The level of corruption revealed by the crisis and by the nature of the state and financial sector response to the crisis (selective bailouts, bailouts only to the rich, bailouts that preserved the wealth of those responsible, etc.) showed that our trust in the financial sector and possibly in larger institutions is dangerous. People started looking for alternatives. I have doubts about whether cryptocurrency would have caught on to the level it has prior to 2008.

What cryptocurrency needs to be successful is some alternative to proof of work mining. I'm not convinced proof of stake is it since it has a lot of other problems.

What conventional economic systems need to be successful is a housecleaning and a restoration of public trust.

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

#465

Post by kgwgk »

radisb wrote: post #451
Nursie wrote: post #444

Earlier quoted context omitted.

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

Do you care about the price of 1 dollar? "In what?" you will ask. "Exactly. In what?" I will respond.

Everyone who decides whether to keep their dollars instead of spending/investing them (or even to borrow and be short dollars), do care about the future value of one dollar.

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

#466

Post by aje403 »

cheschire wrote: post #422
dnautics wrote: post #387

Earlier quoted context omitted.

In practice, Airbnb has failed at its aim of providing airbed style accommodations for conference goers.

Airbnb is a service, where bitcoin is a commodity. I don't mean to imply you are wrong. I simply mean that there may be an even more interesting parallel out there where a commodity is no longer being used in its originally intended way which may support bitcoin's evolution of purpose.

Airbnb is a service. Bitcoin is a commodity in the same way online poker chips are a commodity

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

#467

Post by api »

gtirloni wrote: post #65
api wrote: post #52

Earlier quoted context omitted.

How much energy is spent securing conventional financial systems? You have to include everything: banks, minting, enforcement, physical security, even military and intelligence action.

If/when cryptocurrencies reach the same size as conventional financial systems, they will require all of the same. Bitcoin is relevant for the US economy and a rogue state tries to have 51% of hashing power? Military and intelligence to the rescue. Someone is very rich in Bitcoins? Bunker services for offline storage, physical/computer security, etc. Too many scams with altcoins? Legal enforcement, more bureaucracy,…

The 51% scenario: just install more hash power. That would be cheaper and would not risk anyone's life.

Protecting cryptocurrency: there are cryptographic ways to achieve very high security that are free or very inexpensive. Physical encryption keys cost under $100. Combine those with multiple signatures and offline storage in a safe deposit box and you have several physical and cryptographic layers of security for pretty cheap. Services that do those things do not need to be very expensive.

Too many scams? Point taken. We will still need police.

BTW there's a reason I said cryptocurrency and not Bitcoin. Bitcoin is one of the slower cryptocurrencies. Energy spent securing the chain is per block, and its block size limit and other aspects of its design artificially boost its energy per TX. That and in the long term I expect people to find less energy intensive ways to secure block chains.

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

#468

Post by mrep »

root_axis wrote: post #291
gruez wrote: post #259

Earlier quoted context omitted.

>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 wa…

They could fake the results to make it look like everything was ok while the attack happened. That's apparently what stuxnet did: https://news.ycombinator.com/item?id=17099969

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

#469

Post by codetrotter »

hndamien wrote: post #237
CydeWeys wrote: post #222

Earlier quoted context omitted.

You've always had to protect against cheating though; what's changed? The standard advice from as far back as I can remember is to wait six confirmations on transactions, more for big transactions, and 120 for freshly minted coins.

The difference here is you can just wait long and you are good. In the case of lightning network there is a time limit. If you wait too long and don't notice what happened/ is happening you are cooked.

> In the case of lightning network there is a time limit. If you wait too long and don't notice what happened/ is happening you are cooked.

Could you expand a bit more on this?

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

#470

Post by saalweachter »

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…

When Bitcoin was hitting $20,000, which I never thought they'd do, I mostly concluded I'd missed any investment opportunity.

I plausibly could have invested a few hundred or thousand in Bitcoin was in the low hundreds, and if I hodl'd to the moon realized a hundredfold gain, which would have been nice.

But once you're at the moon, then what?

The new price predictions are things like "If Bitcoin replaces gold it could be worth $135,000/BTC.". Which is a lot, and a little far fetched, but also only 6x from the last peak.

I'm not interested in a risky investment which takes years to come to fruition and only yields 6x. It's too risk for a safe investment and too low-yield for a risky investment. Boat missed.

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