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A systematic critique of Bitcoin's value proposition

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Re: A systematic critique of Bitcoin's value proposition

#71

Post by dxhdr »

pcthrowaway wrote: post #52
greyface- wrote: post #45

The consequences of a 51% attack are greatly overstated. A 51% attacker can prevent new transactions from confirming, and roll back recent transactions. They can't roll back transactions that happened (roughly) longer ago than the sustained duration of the attack. They can't mint extra coins, or double-spend arbitrarily old transactions. Under 51% conditions, you need to be more careful about accepting recently-confi…

Just the possibility of 51% attacks (if they occur 'occasionally') means people have to wait longer til they can consider transactions settled. Do they need to wait 4 hours instead of 1? 1 day? 3 days? 2 weeks? Whatever it is, it's materially significant. What does bitcoin do well now? What does it do better than other networks?

> What does it do better than other networks?

Provides you complete control over your money. You can send any amount to whoever you want, whenever you want, with no third parties capable of approving, disapproving, or delaying the transaction.

Obviously, there are downsides to that. But that's what it does better.

Re: A systematic critique of Bitcoin's value proposition

#72

Post by SilasX »

JumpCrisscross wrote: post #62
SilasX wrote: post #26

Earlier quoted context omitted.

Even when buying puts on a regulated exchange like LedgerX, which custodies all the cash that would pay out on the bet?

> a regulated exchange like LedgerX, which custodies all the cash that would pay out on the bet Bitcoin crashing would take out LedgerX. At that point, you’re an unsecured creditor. There is also legitimate question to them paying out a massive short after something like this.

The exchange is not long Bitcoin, and it holds (edit: typo) all trader assets separately from its own, so no, a crash in bitcoin wouldn’t “take out” LedgerX. You’re just making stuff up now.

Re: A systematic critique of Bitcoin's value proposition

#73

Post by checkdrain »

yellowapple wrote: post #55

> The cost of a 51% attack drops dramatically if you can rent the necessary hardware rather than buy it. Bitcoin mining hardware is available for rent. Would carrying out a 51% attack on rented hardware be possible? Would it be practical? A back-of-the-envelope calculation indicates that the answer to both of these questions is "yes", indeed, that it might be even worse than possible and practical, it might even be p…

[dead]

Re: A systematic critique of Bitcoin's value proposition

#74

Post by latchkey »

pcthrowaway wrote: post #61
latchkey wrote: post #43

Earlier quoted context omitted.

> I suppose if your worry is a government trying to destroy Bitcoin, then that’s exactly how to do it… Andreas Antonopoulos - 51% Bitcoin Attack https://www.youtube.com/watch?v=ncPyMUfNyVM

Did you read the article?

Please don't comment on whether someone read an article. "Did you even read the article? It mentions that" can be shortened to "The article mentions that".

Re: A systematic critique of Bitcoin's value proposition

#75

Post by paulgb »

TheBlight wrote: post #27
paulgb wrote: post #21

Something I've always considered a curious decision about Bitcoin is the decision for halvings to occur as discrete events rather than as an exponential decay occurring on each block. Having them be discrete events is probably easier for someone to verify by eyeball, I guess, but it has the disadvantage that it creates moments in time where some large portion of the hardware in the market can suddenly no longer mine…

I don't follow your attack logic. If mining hardware becomes inefficient why would using it to "attack the network" be profitable? Can you say more about what attack you're thinking of? He absolutely did imagine speciality hardware would be used to mine: "At first, most users would run network nodes, but as the network grows beyond a certain point, it would be left more and more to specialists with server farms of sp…

> If mining hardware becomes inefficient why would using it to "attack the network" be profitable? Can you say more about what attack you're thinking of?

The idea is that under normal day-to-day circumstances, a big deterrent to dishonest mining is that miners are deeply invested in the hardware and attacking the network would devalue that investment (if it craters the market). Normally if you have a big mining operation, the winning strategy is not to “defect”.

But halvings change the dynamic, because they take a bunch of hardware that was profitable one day and make it unprofitable the next. So for a brief period there's a bunch of hardware floating around that can't be used profitably to mine, and so has no value to honest miners, but has temporary value to dishonest ones if they can accumulate enough of it.

I don't think this will be feasible for a while, but a few halvings from now it could be.

> He absolutely did imagine speciality hardware would be used to mine

I stand corrected, I hadn't seen that post: https://satoshi.nakamotoinstitute.org/emails/cryptography/2/...

Re: A systematic critique of Bitcoin's value proposition

#76

Post by jerry1979 »

As far as I can tell, for most users a 51% would at worst look like their transaction didn't "go through". This is because wallet software waits for the system to mine a certain number of blocks before showing the final wallet balance. A 51% attack that is 1 block deep may actually be a good thing for bitcoin because it would cement the idea of needing to wait for confirmations in the minds of users. In this way, 51% attacks do not kill bitcoin, but instead the attack simply makes the network appear as though it is moving more slowly than it used to because users would need to wait for more confirmations.

Re: A systematic critique of Bitcoin's value proposition

#77

Post by pcthrowaway »

dxhdr wrote: post #71
pcthrowaway wrote: post #52

Earlier quoted context omitted.

Just the possibility of 51% attacks (if they occur 'occasionally') means people have to wait longer til they can consider transactions settled. Do they need to wait 4 hours instead of 1? 1 day? 3 days? 2 weeks? Whatever it is, it's materially significant. What does bitcoin do well now? What does it do better than other networks?

> What does it do better than other networks? Provides you complete control over your money. You can send any amount to whoever you want, whenever you want, with no third parties capable of approving, disapproving, or delaying the transaction. Obviously, there are downsides to that. But that's what it does better.

That completely ignores the question.

How does it do this better or differently than Ethereum, or Solana, or Avalanche, or Polygon.

Re: A systematic critique of Bitcoin's value proposition

#78

Post by lisper »

yellowapple wrote: post #55

> The cost of a 51% attack drops dramatically if you can rent the necessary hardware rather than buy it. Bitcoin mining hardware is available for rent. Would carrying out a 51% attack on rented hardware be possible? Would it be practical? A back-of-the-envelope calculation indicates that the answer to both of these questions is "yes", indeed, that it might be even worse than possible and practical, it might even be p…

> Bitcoin Cash is not Bitcoin

That's true, but that is just branding. The values of fiat currencies are bound to the economies of their sponsoring countries. The value of cryptocurrency is not bound to anything except the name, so if enough people start to believe that "bitcoin" and "bitcoin cash" are interchangeable, it will become so.

And the only reason this is not a problem right now is because the BTC/BTCC split was amicable. Had it not been, had both sides insisted on branding themselves as "Bitcoin", then it would be a lot less clear which side's claim to the name was legitimate.

Re: A systematic critique of Bitcoin's value proposition

#79

Post by lisper »

jerry1979 wrote: post #76

As far as I can tell, for most users a 51% would at worst look like their transaction didn't "go through". This is because wallet software waits for the system to mine a certain number of blocks before showing the final wallet balance. A 51% attack that is 1 block deep may actually be a good thing for bitcoin because it would cement the idea of needing to wait for confirmations in the minds of users. In this way, 51%…

No, it's much worse than that. The nightmare scenario for most people is thinking that a transaction for which they are the recipient did go through and then later have it turn out that it didn't, and the money actually went somewhere else. Because of this, the net effect of a 51% attack would be to very quickly destroy confidence in the system for the duration of the attack (at least).

Re: A systematic critique of Bitcoin's value proposition

#80

Post by JumpCrisscross »

SilasX wrote: post #72
JumpCrisscross wrote: post #62

Earlier quoted context omitted.

> a regulated exchange like LedgerX, which custodies all the cash that would pay out on the bet Bitcoin crashing would take out LedgerX. At that point, you’re an unsecured creditor. There is also legitimate question to them paying out a massive short after something like this.

The exchange is not long Bitcoin, and it holds (edit: typo) all trader assets separately from its own, so no, a crash in bitcoin wouldn’t “take out” LedgerX. You’re just making stuff up now.

> exchange is not long Bitcoin, and it hold me all trader assets separately from its own, so no, a crash in bitcoin wouldn’t “take out” LedgerX

It would take Herculean effort for any crypto business to survive, well, crypto wiping out. Deposits would become worthless, cash would be pulled, credit would vanish as would investment. If markets don’t take them out, their banks and regulators will. It’s the crypto equivalent of Treasuries defaulting.

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