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Bitcoin is a Startup

blog.tlrobinson.net

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Re: Bitcoin is a Startup

#11

Post by wmf »

fluidcruft wrote: post #9
fragsworth wrote: post #5

Slightly off-topic, but I don't understand how it can survive long-term. A 51% attack seems inevitable. The ability to short-sell bitcoins will eventually become widespread. Weigh the estimated cost of building a 51% attack network versus the estimated gains of short-selling all the bitcoins in the world. Suppose you can make 10% of the market cap ($1.5B) of bitcoins by short-selling the entire market - a very low es…

> A 51% attack seems inevitable. So, what are you going to do with your 51% of the network? Somehow double spend $150m before everyone upgrades their clients?

Just mine no transactions. After the network grinds to a halt the exchange rate will crater and then you can close out your short position.

Re: Bitcoin is a Startup

#12

Post by tlrobinson »

fluidcruft wrote: post #9
fragsworth wrote: post #5

Slightly off-topic, but I don't understand how it can survive long-term. A 51% attack seems inevitable. The ability to short-sell bitcoins will eventually become widespread. Weigh the estimated cost of building a 51% attack network versus the estimated gains of short-selling all the bitcoins in the world. Suppose you can make 10% of the market cap ($1.5B) of bitcoins by short-selling the entire market - a very low es…

> A 51% attack seems inevitable. So, what are you going to do with your 51% of the network? Somehow double spend $150m before everyone upgrades their clients?

I think fragsworth was suggesting one could short Bitcoin (a lot) then launch a 51% attack to erode confidence in Bitcoin, thus dropping the price, and profiting from your short position.

Re: Bitcoin is a Startup

#13

Post by netwerk »

fragsworth wrote: post #5

Slightly off-topic, but I don't understand how it can survive long-term. A 51% attack seems inevitable. The ability to short-sell bitcoins will eventually become widespread. Weigh the estimated cost of building a 51% attack network versus the estimated gains of short-selling all the bitcoins in the world. Suppose you can make 10% of the market cap ($1.5B) of bitcoins by short-selling the entire market - a very low es…

I thought about how you would attack BitCoin and how to achieve that 51% of the work. My solution is basically to create network partitions (using some DDoS or something to prevent communication) and force a small number of good nodes to start working on your solution. Over time you can rejoin partitions where you will control 51% of the compute eventually converting all of the nodes.

Re: Bitcoin is a Startup

#14

Post by [deleted] »

fragsworth wrote: post #5

Slightly off-topic, but I don't understand how it can survive long-term. A 51% attack seems inevitable. The ability to short-sell bitcoins will eventually become widespread. Weigh the estimated cost of building a 51% attack network versus the estimated gains of short-selling all the bitcoins in the world. Suppose you can make 10% of the market cap ($1.5B) of bitcoins by short-selling the entire market - a very low es…

[deleted]

Re: Bitcoin is a Startup

#15

Post by randyrand »

fragsworth wrote: post #5

Slightly off-topic, but I don't understand how it can survive long-term. A 51% attack seems inevitable. The ability to short-sell bitcoins will eventually become widespread. Weigh the estimated cost of building a 51% attack network versus the estimated gains of short-selling all the bitcoins in the world. Suppose you can make 10% of the market cap ($1.5B) of bitcoins by short-selling the entire market - a very low es…

While I mostly agree with you - it's easier said than done. How exactly are you going to buy $150 million (or whatever the needed amount is) of ASICs without being noticed? The government could obviously do it - but at least in the near future that sounds far fetched.

Like wise as soon as your attack is noticed your IP addresses would be blocked by the other clients preventing you from adding to the chain.

Edit: after looking more into the 51% attack IP blocking wont really solve it since it only would take a handful of unique IPs to pull off.

Edit2: Couldn't we prevent the double spend part of the 51% attack (or at least make it more like 90%) by doing 2 things:

1) Merchants would only accept bit coins that have been in the block chain at least 6 blocks ago (this already is the recommended case)

2) Nodes reject any blocks received if they receive it over an hour (6 blocks worth) past receiving the 'sister' block in the competing (true) chain. This would prevent an attacker from 'reversing history.' What would be the drawbacks to this?

Edit3: like wise we could stop the "prevent other people from making transactions" part of it (the only other part) by doing this:

http://gavintech.blogspot.com/2012/05/neutralizing-51-attack...

I would love it if someone responded to this.

Re: Bitcoin is a Startup

#16

Post by ewillbefull »

wmf wrote: post #11
fluidcruft wrote: post #9

Earlier quoted context omitted.

> A 51% attack seems inevitable. So, what are you going to do with your 51% of the network? Somehow double spend $150m before everyone upgrades their clients?

Just mine no transactions. After the network grinds to a halt the exchange rate will crater and then you can close out your short position.

It will almost certainly cost more money to obtain 51% hashrate than you could gain from a short position, by the time mining rewards aren't enough of an incentive.

Even the NSA doesn't have enough computing power to achieve 51%.

Re: Bitcoin is a Startup

#17

Post by fragsworth »

tlrobinson wrote: post #12
fluidcruft wrote: post #9

Earlier quoted context omitted.

> A 51% attack seems inevitable. So, what are you going to do with your 51% of the network? Somehow double spend $150m before everyone upgrades their clients?

I think fragsworth was suggesting one could short Bitcoin (a lot ) then launch a 51% attack to erode confidence in Bitcoin, thus dropping the price, and profiting from your short position.

A 51% attack, compounded with a massive short-sell, could drop the price to effectively nothing.

Re: Bitcoin is a Startup

#18

Post by dcc1 »

I love Bitcoin, especially after being shafted by Paypal+Ebay

Anyone know any good bitcoin auction/selling sites? (i already use bitmit)

Re: Bitcoin is a Startup

#19

Post by samweinberg »

This analogy can be applied to almost anything. According to this criteria, coffee could be considered a startup: the growers of the beans are the founders, the hipsters sipping their cold frappuccinos at Starbucks are the evangelists, and the price for one pound of coffee beans is its market price.

The only problem here is that coffee is a commodity, not a startup. Anyone can grow it and sell it. Likewise, bitcoins can be mined and sold by anyone. Bitcoin by design is decentralized, meaning that there is no central authority, such as a bank, mining new bitcoins. There is no company or government body that officially runs Bitcoin, only individuals (but in a distributed fashion). A startup is completely different, in that it has a governing body and is usually centralized.

Bitcoin in a sense is both a currency and a commodity, but is definitely not a startup.

Re: Bitcoin is a Startup

#20

Post by tlrobinson »

ewillbefull wrote: post #16
wmf wrote: post #11

Earlier quoted context omitted.

Just mine no transactions. After the network grinds to a halt the exchange rate will crater and then you can close out your short position.

It will almost certainly cost more money to obtain 51% hashrate than you could gain from a short position, by the time mining rewards aren't enough of an incentive. Even the NSA doesn't have enough computing power to achieve 51%.

I agree with the first sentence, but I'm pretty sure the NSA could do it.

Until recently it would have only cost a few million dollars to fab enough ASICs for a 51% attack. I haven't seen a recent analysis, but it's probably still only in the 10s of millions (possibly 100s of millions)

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