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Taking Down The Bitcoin Network

bitcoinweekly.com

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Re: Taking Down The Bitcoin Network

#21

Post by gasull »

mootothemax wrote: post #16
gasull wrote: post #11

Earlier quoted context omitted.

> Surely there's an easier, legal and potentially cheaper solution open to any government that wants to shut down bitcoin: buy up each and every bitcoin they can lay their hands on. Some people won't sell. And all this would do is making bitcoins more expensive in dollars (deflation). Prices in bitcoins would adjust. No problem at all.

Some people won't sell. And all this would do is making bitcoins more expensive in dollars (deflation). Prices in bitcoins would adjust. No problem at all. Great if it's not a problem: can you tell me why in a bit more detail please? :) You see, I love the idea of bitcoin, but this is the one thought I can't get out of my head. Say the government drives up the price of bitcoin, as you suggest. Every hour of every day…

Bitcoin is divisible to one tenth of it, if I remember correctly. Prices in bitcoins can be adjusted to reflect the deflation. Merchants are already using MtGox API and ticker so they set a price in dollars, and the displayed price in bitcoins is updated as the BTC/USD exchange goes up or down in MtGox, automatically.

Extending your argument, the Government could try to mess up buying up a lot of bitcoins, to force deflation, then selling them all to force inflation, and so on. Good luck with that, because that would be very expensive in dollars (buying high and selling low). And if the Federal Reserve did this with out-of-thin-air dollars, it would just weaken the dollar in the long term, what would be good for Bitcoin.

Some people say the Fed has being trying this price suppression with gold. I don't know if that's true. But apparently nothing has stopped gold to go to the roof in the last 10 years.

Re: Taking Down The Bitcoin Network

#23

Post by jerf »

gst wrote: post #13
fraserharris wrote: post #6

The government does not need to take down the network to cripple Bitcoin, it just needs to make it difficult to exchange it for other currencies. This will dry up demand for Bitcoins, and the exchange rate will plummet. The US government can compel almost any financial institution in the world to stop exchanging Bitcoins by threatening to sanction them for money laundering.[1] A private letter from the State Departme…

Yes, the US gov can easily prevent financial institutions from exchanging Bitcoins: If a bank holds US dollars, those dollars are "stored" in the US (even if the bank is located outside the US). So the US gov just needs to threaten that it will freeze the banks dollar deposits in case a bank decides to exchange Bitcoins. No, the US government cannot easily block other types of Bitcoin exchanges. Consider bitmarket.eu…

I think a lot of people aren't really following this argument correctly. There is no necessity for the government to completely destroy BitCoin. This isn't about it being all or nothing, or even the government obtaining satisfaction in its efforts. The point is that they have very powerful tools to move the "demand" part of the supply/demand curve determining BitCoin's value in dollars (and by extension, the greater Global Economy that dollars are a part of; it is basically impossible for BitCoins to have vastly greater value in Euros than Dollars because that's just an arbitrage opportunity that will be immediately exploited and thereby removed). By powerfully dropping demand, the value of BitCoins will rapidly drop. The fact that they are rapidly dropping tends to self-reinforce. In minutes or hours, your "$500,000" of BitCoin could be worth ten cents. Are you going to be motivated to stick around after that? The True Believers will, but most average folk and most intelligent financial folk won't.

The end result may be an economy that the US government can't shrink past a few tens of thousands of dollars any more than it can eliminate drugs. But even if BitCoin is not "killable", it certain can fail to meet the goals set out for it, and it is pretty much within the power of the US government, and for that matter several others, to make that happen. You don't have to destroy it utterly to make it useless. In fact I'm rather concerned that BitCoin can't even survive a non-government caused shock once it is being used by more than just True Believers.

(Also, note that the immediately obvious parallel of the drug war doesn't apply; government attacked the supply of the drugs but has much less power to affect demand. Attacking supply causes prices to rise, but then the increased prices drove increasingly well funded smuggling efforts. If the government could actually remove the demand for drugs in some magical manner, the War on Drugs would be over in a matter of weeks.)

Re: Taking Down The Bitcoin Network

#24

Post by gst »

gasull wrote: post #14
gst wrote: post #8

"Even in a worst case scenario, if a government or some other anti-Bitcoin faction gets a hold of greater than 50% of the processing power (an extremely expensive feat, and hardly worth it unless you're really determined to destroy the network), the rest of the network can be reconfigured to reject that block chain." At this point the author shows that he does not have much technical background in regard to the Bitco…

> Once an adversary gains >50% of the processing power you have basically lost. Wrong. An attacker having more than 50% of the network would just stop payments until the rest of the network rejects the attacker nodes. https://en.bitcoin.it/wiki/Weaknesses#Attacker_has_a_lot_of_...

You can't "reject attacker nodes". There is nothing in the blockchain that identifies a given miner.

Re: Taking Down The Bitcoin Network

#25

Post by gasull »

gst wrote: post #24
gasull wrote: post #14

Earlier quoted context omitted.

> Once an adversary gains >50% of the processing power you have basically lost. Wrong. An attacker having more than 50% of the network would just stop payments until the rest of the network rejects the attacker nodes. https://en.bitcoin.it/wiki/Weaknesses#Attacker_has_a_lot_of_...

You can't "reject attacker nodes". There is nothing in the blockchain that identifies a given miner.

I've seen pie charts with the computing power of several mining pools and the total. I believe you can find the IP of a miner that has a lot of computing power.

Re: Taking Down The Bitcoin Network

#26

Post by gst »

gasull wrote: post #25
gst wrote: post #24

Earlier quoted context omitted.

You can't "reject attacker nodes". There is nothing in the blockchain that identifies a given miner.

I've seen pie charts with the computing power of several mining pools and the total. I believe you can find the IP of a miner that has a lot of computing power.

If there's a public mining pool it's easy to estimate it's computing power. Just take part in the mining pool and compare your own computing power with the percentage of the 50 BTC that you get for each block. Or, alternatively, you can track the BTC that you get from the mining pool back to the block where they were generated, and so you know that this block must have been generated by the mining pool (again, allowing you to use the amount of blocks generated by the mining pool to estimate it's overall computing power).

However, if the attacker does not use a public mining pool, but private infrastructure, things get more complicated: The only way how Bitcoin clients can agree on a common view of the block chain is to treat the highest block number as the authoritative one. A malicious miner can now just generate new blocks and inject them over Tor to some of the Bitcoin nodes. As Bitcoin nodes distribute the blockchain amongst each others, those "malicious" blocks will quickly spread throughout the Bitcoin network.

The only way how you could prevent this problem is some kind of whitelisting approach, where miners need to be manually approved before their blocks are accepted. However, this would totally change the current Bitcoin infrastructure and turn a completely decentralized network into a more centralized one.

Re: Taking Down The Bitcoin Network

#27

Post by gasull »

gst wrote: post #26
gasull wrote: post #25

Earlier quoted context omitted.

I've seen pie charts with the computing power of several mining pools and the total. I believe you can find the IP of a miner that has a lot of computing power.

If there's a public mining pool it's easy to estimate it's computing power. Just take part in the mining pool and compare your own computing power with the percentage of the 50 BTC that you get for each block. Or, alternatively, you can track the BTC that you get from the mining pool back to the block where they were generated, and so you know that this block must have been generated by the mining pool (again, allowi…

This is very interesting. Thank you for the info.

I think a solution to this attack would be a web of trust, like PGP/GnuPG works for verifying signatures.

Re: Taking Down The Bitcoin Network

#28

Post by mrvc »

gasull wrote: post #22
mrvc wrote: post #17

If anyone wants it I'd be happy to write up a quick how to on how Bitcoin really could be shut down, I have some expertise in the area if that matters and no serious bias either way.

Go ahead and write a blog post.

Done. Check nerdr front page for the article.

Re: Taking Down The Bitcoin Network

#29

Post by gasull »

mrvc wrote: post #28
gasull wrote: post #22

Earlier quoted context omitted.

Go ahead and write a blog post.

Done. Check nerdr front page for the article.

Thanks for writing it. Point by point:

- Bitcoin software: It's open-source. How would anybody compromise it with so many eyes watching?

- Bitcoin trail: Solved using Tor and adding noirc='1' to bitcoin.conf file. Also you need to earn your bitcoins anonymously. Anyway, Bitcoin isn't supposed to be anonymous. It can be anonymous if you do it right, like you can browse the web anonymously if you do it right.

- Bitcoin public data: Same as with bitcoin trail.

- Bitcoin exchange: Right, but you can buy bitcoins from someone without revealing him/her your name.

It seems your article analyzes if Bitcoin is good for money laundering. It can be used for that, but I don't care. It isn't what makes Bitcoin interesting. Bitcoin is an alternative to payment methods like paypal, to currencies like the dollar or the euro, to payment transfers like ACH or Western Union, and to bank accounts. That is what makes it an awesome currency. That is what makes it disruptive.

It can be used for money laundering just like cash and offshore bank accounts can be used for money laundering. Way more people are using cash than bitcoins for money laundering. And that isn't what makes Bitcoin disruptive, because money laundering already exists.

Re: Taking Down The Bitcoin Network

#30

Post by mrvc »

gasull wrote: post #29
mrvc wrote: post #28

Earlier quoted context omitted.

Done. Check nerdr front page for the article.

Thanks for writing it. Point by point: - Bitcoin software: It's open-source. How would anybody compromise it with so many eyes watching? - Bitcoin trail: Solved using Tor and adding noirc='1' to bitcoin.conf file. Also you need to earn your bitcoins anonymously. Anyway, Bitcoin isn't supposed to be anonymous. It can be anonymous if you do it right, like you can browse the web anonymously if you do it right. - Bitcoin…

Open source code tends to give a false sense of security. Many people assume others will check the code, yet few do. In addition, it is possible to spread malicious code throughout a code base to prevent detection. (mentioned in article).

To use TOR you still connect through an ISP. That can be tracked and deep packet analysis can be done. TOR is not a magic bullet.

Exchange - Correct. That was coming in part 2 of the article covering methods around each point, but unlikely to find the time to write it up at this point.

I leave the question: Why else would one use an anonymous currency unless they don't want to be detected? From there, who does not want to be detected? Usually those doing things they shouldn't. Otherwise, you'd just use a credit card or normal payment service as an everyday citizen would.

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