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Bitcoin (Probably) Isn't Broken

Unknown Lamer posted about 9 months ago | from the cheaters-cheating-on-cheaters dept.

Bitcoin 78

Trailrunner7 writes "In the wake of the publication of a new academic paper that says there is a fundamental flaw in the Bitcoin protocol that could allow a small cartel of participants to become powerful enough that it could take over the mining process and gather a disproportionate amount of the value in the system, researchers are debating the potential value of the attack and whether it's actually practical in the real world. The paper, published this week by researchers at Cornell University, claims that Bitcoin is broken, but critics say there's a foundational flaw in the paper's assertions. ... The idea of a majority of Bitcoin miners joining together to dominate the system isn't new, but the Cornell researchers say that a smaller pool of one third of the miners could achieve the same result, and that once they have, there would be a snowball effect with other miners joining this cartel to increase their own piece of the pie. However, other researchers have taken issue with this analysis, saying that it wouldn't hold together in the real world. 'The most serious flaw, perhaps, is that, contrary to their claims, a coalition of ES-miners [selfish miners] would not be stable, because members of the coalition would have an incentive to cheat on their coalition partners, by using a strategy that I'll call fair-weather mining,' Ed Felten, a professor of computer science and public affairs at Princeton University and director of the Center for Information Technology Policy, wrote in an analysis of the paper."

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78 comments

It is fundamentally broken (1, Insightful)

Anonymous Coward | about 9 months ago | (#45379391)

Its inventor is anonymous and has holdings of several million bitcoins.

Who knew all you needed to do to beat the ancient alchemists at their own game was make money from nothing instead of lead?

Re:It is fundamentally broken (5, Insightful)

gmuslera (3436) | about 9 months ago | (#45379501)

Ask the Federal Reserve, they are pretty successful making money out of thin air. And if well the inventor may be anonymous, the source code is not. You can check if it is broken or not by yourself.

Re:It is fundamentally broken (0)

Anonymous Coward | about 9 months ago | (#45379589)

Why is this modded flamebait and GP not?
The monetary system we have today is fundamentally broken. The only reason it still exists is because of corruption.
Is an anonymous developer of a decentralized replacement holding a big share of the new money really worse than corrupt people controlling the whole system it replaces? Really?

Re:It is fundamentally broken (1)

umdesch4 (3036737) | about 9 months ago | (#45379881)

Just wait, it gets worse. Have you seen the backwards moderation elsewhere below in these comments? On topic: Watch this video on How Bitcoin Works Under the Hood if you don't fully understand Bitcoin: http://www.youtube.com/watch?v=Lx9zgZCMqXE [youtube.com]

Re:It is fundamentally broken (2)

sjames (1099) | about 9 months ago | (#45379741)

It's actually harder to mint new bitcoins than it is for the Fed to poof more money into existence.

Re:It is fundamentally broken (0)

Anonymous Coward | about 9 months ago | (#45379535)

Exactly. This whole "mine coins with processor power and electricity" seems pretty stupid. That anyone has fallen for it just shows that they aren't thinking clearly. Apparently it is "bitcoins all the way down". There is a fundamental problem with unregulated currencies that create value out of thin air. Oh, not to mention currencies where it is seemingly NORMAL to have "all your bitcoins are belong to us" happen every couple of weeks.

Re:It is fundamentally broken (0)

Anonymous Coward | about 9 months ago | (#45379591)

You make it sound like the dollar is actually backed by something. As for the other point, that is idiots fault for leaving their bitcoins on web based wallets on someones server somewhere. Not a flaw with the protocol at all.

Re:It is fundamentally broken (3, Funny)

killkillkill (884238) | about 9 months ago | (#45380873)

Well, the dollar is backed by the biggest most advanced army ever known in the history of the world. I count that as a point for Bitcoin, though,

Re:It is fundamentally broken (1)

Bengie (1121981) | about 9 months ago | (#45401467)

The dollar is backed by perceived value. Circular reasoning at it's finest, but it works. It has value because people think it has value.

Re:It is fundamentally broken (2, Insightful)

Anonymous Coward | about 9 months ago | (#45379681)

Value is not created out of thin air; it is individuals who decide whether something is valuable.

Re:It is fundamentally broken (0)

Anonymous Coward | about 9 months ago | (#45379909)

Funny thing is, I think I've bought more gold bullion with bitcoins that I mined (which was of course promptly lost in a tragic boating accident), than most people have ever owned. But you go on ahead and call me stupid.

Re:It is fundamentally broken (0)

Anonymous Coward | about 9 months ago | (#45380485)

Well, apparently you aren't very good at securing gold bullion, that's apparent enough.

Re: It is fundamentally broken (0)

Anonymous Coward | about 9 months ago | (#45385489)

You lost uour gold bullion in a boating accident?? What are you in 1492?

Re:It is fundamentally broken (0)

Anonymous Coward | about 9 months ago | (#45386717)

Where was this accident? Just curious.

Re:It is fundamentally broken (2)

umdesch4 (3036737) | about 9 months ago | (#45379943)

I don't know about right now, but a few months ago people were saying it was stupid too, but I bought a new $200 video card for my machine and decided to try mining. It took me about a month, and a $6 increase in my monthly electricity bill to mine one bitcoin. I just exchanged that bitcoin for $350 yesterday, so...I don't feel particularly stupid right now. Otherwise, the small handful of bitcoins I acquired the first month that bitcoin started are still in my wallet, so this "all your bitcoins are belong to us" statement is pure FUD. Sure, if the Feds are going to torture the Dread Pirate Roberts for weeks to get him to cough up his wallet password, things like that are bound to happen, but all the other garbage people keep spouting about Bitcoin is silly, IMHO.

Re:It is fundamentally broken (1)

Anonymous Coward | about 9 months ago | (#45380101)

You do realize you are exhibiting typical attitude of an early adopter in a Ponzi scheme, don't you?

Re:It is fundamentally broken (1)

umdesch4 (3036737) | about 9 months ago | (#45380285)

Who me? I dunno about that. I suppose you could be right, but my point was that people were saying that the mining wasn't worth the processing power and electricity a few months ago, over 3 years into the introduction of Bitcoin, and I found that to be completely false in my personal experience. I'm still mining now, and the value proposition is getting to be more questionable. I'm only mining about $0.05 BTC a month, or around $17 USD at current rates, for my $6 in electricity and wear-and-tear on my computer equipment. But the inflammatory statement that it "seems pretty stupid" is what gets me. As long as I can use those BTC to buy stuff that adds up to more in dollars than I seem to be spending to mine it, I'll keep going. Sure, at some point mining probably won't make sense, but it's not as if you can't simply go on an exchange and trade you inflating-to-no-value dollars for (maybe by then) stable BTC. Then again, I keep $160 trillion dollars in Zimbabwe bills pinned to the wall above my computer monitor as a constant reminder of the fictitious nature of artificial money...

Re:It is fundamentally broken (2)

ahabswhale (1189519) | about 9 months ago | (#45381417)

If you actually got a bitcoin doing that (and I highly doubt it), then you got EXTREMELY lucky. The odds are heavily against you. If it were reliable to get a bitcoin in the way you did, then all of the coins would have been mined already. You can read lots of articles on how difficult it is to actually do and how you generally have to team up unless you have server farms dedicated to it.

Re: It is fundamentally broken (0)

Anonymous Coward | about 9 months ago | (#45382007)

He almost certainly did team up to mine that 1btc. Pooled mining in any reasonable sized pool has very little variance. I.e. no luck involved. Currently if you find a block alone you'd get 25 so there is no way to solo mine for one. No hobbyists solo mine really anyway.

Re:It is fundamentally broken (0)

Anonymous Coward | about 9 months ago | (#45382979)

It's probably best if you read up on a technical subject before spouting drivel and making yourself look stupid.

A few months ago it was indeed possible to earn a single bitcoin in a month (using pooled mining, of course) with a high-end AMD graphics card.

This isn't possible any more for the same reason that 'all the coins' haven't been mined already; the network increases the difficulty to mine bitcoins as more processing power is thrown on to it to maintain the current rate of 25 bitcoins produced every ten minutes.

Re:It is fundamentally broken (1)

umdesch4 (3036737) | about 9 months ago | (#45385671)

Yes, sorry for the lack of clarity in my post. I have been mining with a worker in a BTCGuild pool, using a cgminer client, and powering it with a Radeon HD 7870 card.

Re:It is fundamentally broken (0)

Anonymous Coward | about 9 months ago | (#45385077)

> Exactly. This whole "mine coins with processor power and electricity" seems pretty stupid.

Yeah, this whole "mint coins with metal stamps and printing presses" seems pretty stupid too.

> That anyone has fallen for it just shows that they aren't thinking clearly.

Really. When did you "fall for" the idea that bits of paper and metal are worth anything?

Re:It is fundamentally broken (0)

Anonymous Coward | about 9 months ago | (#45379577)

You do realise all transactions are public and people are pretty sure the very early developers do not have millions of coins. Sure they might be rich but the people that get in on the ground floor usually do.

If Bitcoin had no value, people wouldn't be paying for them.

The problem isn't value (2)

sjbe (173966) | about 9 months ago | (#45379657)

If Bitcoin had no value, people wouldn't be paying for them.

The problem with bitcoin isn't that it has no value. Obviously some people (not many) have a use for it. The problem(s) with bitcoin is that it is HIGHLY illiquid, volatile and risky. Few people even know what bitcoin is, and fewer are willing to accept it as a form of payment. Exchange rates bounce around like a caffeinated border collie on a pogo stick which makes for significant exchange rate risk. Furthermore it depends on encryption and one cannot be certain that said encryption is ultimately secure. And those problems are just the tip of the proverbial iceberg.

Re:It is fundamentally broken (1)

Anonymous Coward | about 9 months ago | (#45380075)

If Bitcoin had no value, people wouldn't be paying for them.

People paid good money for Pogs as well. People actually buy Justin Bieber records. Bicycles with no brakes or gears are a thing, apparently. The fact that fools can be parted from their money is hardly an iron-clad argument.

(The difference with USD, EUR, GBP etc is that those currencies are backed by governments that have popular support, extensive administrative operations and fully-fledged armies. Last time I checked nobody had given the Bliebers nuclear weapons).

Re: It is fundamentally broken (0)

Anonymous Coward | about 9 months ago | (#45385547)

People don't need pogs or Beiber to survive, belieber me on that. But a large number of people Need btc to transfer funds across the globe or store money away from the banking system of their communist or otherwise country

Re:It is fundamentally broken (3, Insightful)

wonkey_monkey (2592601) | about 9 months ago | (#45379675)

Yes, yes, we're all bummed out that we didn't join the wagon when it started rolling. Get over it.

Re:It is fundamentally broken (3, Insightful)

Escogido (884359) | about 9 months ago | (#45380033)

But that's exactly the point: too many people were left out early, so they would never accept it as their form of payment. Where it stands today, bitcoin is your run of the mill Ponzi scheme.

Re:It is fundamentally broken (0)

Anonymous Coward | about 9 months ago | (#45380195)

Where it stands today, bitcoin is your run of the mill Ponzi scheme.

Au contraire, in a Ponzi scheme you need to add currency from new members. Here, it may have started with stark deflation of value -- benefiting early adopters, so I can see your analogy --, but now the mill has stopped and it is just a currency.

Re:It is fundamentally broken (0)

TeknoHog (164938) | about 9 months ago | (#45382183)

I was left out when FED was founded. Therefore I think the USD is a Ponzi scheme and I don't want any part in it.

No really, this actually applies to any modern national currency. Money is created as debt out of nothing, but in order to pay back the debt, you need to do some actual work. In other words, to keep the system running it leeches off your real investment.

It it hadn't been for Bitcoin, I probably wouldn't have learned half of what I know about traditional money/banking/finance.

Re:It is fundamentally broken (0)

Anonymous Coward | about 9 months ago | (#45385223)

There is nothing stopping you from buying coins right now if you think it's so great and feel left out. I think it was at around $388 per coin at the last close.

Yeah, yeah, I know what you mean. I mined half a dozen coins or so back when it first started, which I promptly forgot about and eventually erased. That's thousands of dollars I lost (sort of).

Like I said though, if you think it's so great then go buy coins. If you don't think it's great and won't buy coins then you're not missing anything (in your eyes).

Re:It is fundamentally broken (0)

Anonymous Coward | about 9 months ago | (#45393003)

How did this shit get modded up to 4?

Re:It is fundamentally broken (1)

TheTurtlesMoves (1442727) | about 9 months ago | (#45382291)

Speak for yourself. I am now the proud owner of 1000s of tulips!

Market Manipulation (5, Funny)

Dialecticus (1433989) | about 9 months ago | (#45379409)

I presume this means that whoever was behind the previous bitcoin story has now finished buying them up and wants their value to go back up.

Re:Market Manipulation (2)

QuasiSteve (2042606) | about 9 months ago | (#45379631)

The release on Nov 1st had no noteworthy impact on the Bitcoin market;
http://bitcoincharts.com/charts/mtgoxUSD#rg10zig6-hourzczsg2013-10-28zeg2013-11-11ztgSzm1g10zm2g25zv [bitcoincharts.com]
( You can check other exchanges if you'd like. )

It had a huge impact on the number of Redditors panicking (or trying to cause panic), on the other hand.

Re:Market Manipulation (1)

Joce640k (829181) | about 9 months ago | (#45381637)

I think this new story is meaningless:

a coalition of ES-miners [selfish miners] would not be stable, because members of the coalition would have an incentive to cheat on their coalition partners

Sure, if they're all small-time miners. If a really big player gets into the market they could destroy it.

Like our banking system? (-1)

Anonymous Coward | about 9 months ago | (#45379413)

Sounds a lot like our banking system.

Hey! Invest In My Security. (0)

Anonymous Coward | about 9 months ago | (#45379425)

You should definitely invest in my security product. It's (probably) not a ponzi scheme.

I looked into this: nothing to fear. (5, Informative)

Anonymous Coward | about 9 months ago | (#45379439)

Just to be clear, all this attack accomplishes is a small advantage (or none, depending on how other respond) for mining pools that don't immediately disclose solved blocks, but instead wait until someone else solves one, then release. This causes some miners to mine on each of the competing blocks, wasting effort, while the selfish pool occasionally gets 2 blocks ahead without wasting effort when mining the second block. Its a small gain, that can be better exploited by flooding the the network with tons of nodes to delay/control who finds out about which blocks when.

So, this attack can give one mining pool a slight advantage, and thus encourage others to join it to get a share of the higher profits. This continues and they get some real control of of which transactions are verified, who learns about what, etc. A nearly identical attack could be done by a regular mining pool that simply pays some extra money to bribe people to mine in it.

However, this attack, even if possible and implemented would not let any one steal your bitcoins, nor really do much to regular users, and it would be obvious if someone performed this attack (higher than chance orphaned block rates). If you accept bitcoins, and don't wait for > 1 confirmations, or you are a mining pool operator, this might be worth paying attention to (but not panicking over). Everyone else (which is nearly everyone) wouldn't lose anything to this attack, which might not even be practical.

Re:I looked into this: nothing to fear. (2)

Bill, Shooter of Bul (629286) | about 9 months ago | (#45380523)

Huh, that's not a bad idea at all, just bribe your way into controlling bitcoin mining. A long con, but quite possible for a movie plot. You set up a bunch of seemingly unrelated mining pools that pays out more than the value of the mined bitcoins. Then when you get to the appropriate threshold of control, combine forces and take judicious control over the block chain. No, wait actually that sounds like a terrible movie plot that would take forever to explain to the audience. Luckily there are terrible movies made all the time, and are in fact the majority of movies made today. So there is a chance... Screw bitcoins, I'm writing a script!

Re:I looked into this: nothing to fear. (0)

Anonymous Coward | about 9 months ago | (#45381477)

Please include some businessman who just lost out big to a double spend attack raging about how the dammed orphans stole all his money.

Oh, and reckless forking makes orphans.

Anyway, why are orphan blocks ones with a parent, but without children? The punnery is fun and all, but the terminology seems wrong.

Re:I looked into this: nothing to fear. (1)

Bill, Shooter of Bul (629286) | about 9 months ago | (#45392671)

If I can only get Micheal bay involved to screw it up the complicated plot and get virtual currencies to explode on screen...

Re:I looked into this: nothing to fear. (1)

martin-boundary (547041) | about 9 months ago | (#45381943)

I think you're wrong. You're treating this as if each bitcoin being mined costs a fixed amount of resources to produce, so if I make you waste your resources on a single bitcoin that you won't be getting, then your losses would be bounded.

But each successive bitcoin takes more and more effort to produce. Suppose the next bitcoin takes 1 year to produce. Right before the year is up, you lose all the work you put in. That's a whole year's worth of resources. And when you start work all over again, the next one takes 2 years to produce. But meanwhile, the other guys have had 1 year head start on your bitcoin, so they'll have it mined when you're only half way there. And they'll make sure you waste the effort on that one, too. You might never mine another bitcoin (successfully) again.

Re:I looked into this: nothing to fear. (0)

Anonymous Coward | about 9 months ago | (#45387309)

The difficulty of minting bitcoins is proportional to the network hash rate: its dynamically adjusted to keep the block rate at about 1 per 10 minutes. This attack effectively lowers the difficulty by wasting some of the work.

Saying something like "Suppose the next bitcoin takes 1 year to produce." makes no sense. New blocks, which mint an exponentially decaying amount of bitcoins. The amount of point coins produced over any given period of time was set at the beginning, and is not effected by new minng hardware, price changes, additional miners or attacks like this.

Also, production is probabilistic. There is no such thing as making half a block then losing it. Working on a block either produces a solution (new block) or nothing. You don't make progress. The only way you lose work is is you mine a block that ends up getting orphaned (not in the eventual longest block chain). Thats what this attack is built around, and it works by keeping your solved blocks secret so you can try and build a 2 long set to release when someone else release a single new block, so you can waste their work mining that block. There is the risk that you lose (it will be orphaned) the block you mined but kept secret, but the attack suggest mitigating this by attacking the network to prevent nodes from finding out about other blocks quickly.

Cartels (Oligarchies) are broken (0)

Anonymous Coward | about 9 months ago | (#45379521)

Confirming what is already known about cartels. Nothing to see, move along...

Game theory & Bacteria (1)

j-stroy (640921) | about 9 months ago | (#45379551)

I'm wondering if this correlates with what I recall about greedy vs generous bacterial colonies, that they tend towards a specific equilibrium regardless of initial conditions. Also similarly the snowdrift dilemma suggests least work is achieved by doing the opposite of other participants.

you must be kidding (0)

Razgorov Prikazka (1699498) | about 9 months ago | (#45379637)

A system that has a flaw? You! Must! Be! Kidding me!
There is no such thing as a flawless system, never has been, never will be. One could say that a flaw is an intrinsic part of any system.
When AES256 is in place and people use 12345 as a password for example.
Usually the flaw = human failure.

Re:you must be kidding (-1)

Anonymous Coward | about 9 months ago | (#45379707)

A system that has a flaw? You! Must! Be! Kidding me!
There is no such thing as a flawless system, never has been, never will be. One could say that a flaw is an intrinsic part of any system.
When AES256 is in place and people use 12345 as a password for example.
Usually the flaw = human failure.

Re:you must be kidding (-1)

Anonymous Coward | about 9 months ago | (#45379809)

A system that has a flaw? You! Must! Be! Kidding me!
There is no such thing as a flawless system, never has been, never will be. One could say that a flaw is an intrinsic part of any system.
When AES256 is in place and people use 12345 as a password for example.
Usually the flaw = human failure.
.

Re:you must be kidding (1)

VortexCortex (1117377) | about 9 months ago | (#45380001)

There is no such thing as a flawless system, never has been, never will be.

Consider the system of mathematics. Now prove that the number system has a flaw. Your argument is refuted.

Re:you must be kidding (1)

Razgorov Prikazka (1699498) | about 9 months ago | (#45380107)

Math is not a system, it is a abstract study of several topics.

Re:you must be kidding (1)

Anonymous Coward | about 9 months ago | (#45380241)

Math is not a system, it is a abstract study of several topics.

Which is why the British refer to it as Maths - a contraction of Mathematical Sciences - not one subject.

Re:you must be kidding (0)

Anonymous Coward | about 9 months ago | (#45380429)

I think it's more just a contraction of mathematics.

Re:you must be kidding (1)

Anonymous Coward | about 9 months ago | (#45380229)

There is no such thing as a flawless system, never has been, never will be.

Consider the system of mathematics. Now prove that the number system has a flaw. Your argument is refuted.

Consider Gödel's incompleteness theorems (specifically the second one)

"For any formal effectively generated theory T including basic arithmetical truths and also certain truths about formal provability, if T includes a statement of its own consistency then T is inconsistent."

Gödel's second incompleteness theorem proves that your theory, which assumes math is valid (aka "including basic arithmetical truths") and assumes itself to also be true, is inherently inconsistent. Burn! Math has been proven to be incomplete. Live with it.

In some ways its a pain in the ass that "any consistent effective formal system that includes enough of the theory of the natural numbers is incomplete: there are true statements expressible in its language that are unprovable within the system" (Gödel's first incompleteness theorem). It does however mean that its impossible to prove mathematicians have nothing left to prove, so maybe its good for job security for them.

This is called an "academic break" (2)

gweihir (88907) | about 9 months ago | (#45379971)

In crypto, an academic break is one that weakens the system, but does not transfer to a practically implementable break. The two get confused regularly by people without a clue about crypto, which is the standard. Many of these clueless people feel nonetheless qualified to comment.

Re:This is called an "academic break" (0)

Anonymous Coward | about 9 months ago | (#45381061)

An academic break would be something like reducing the cost of finding a block collision from 2^128 to to 2^100.

I wouldn't call this an academic break for two reasons.

First, it doesn't attack the cryptography at all. It reveals a flaw in the incentive system that in some cases encourages non-cooperation among the miners.

Second, it is actually very practical. You don't need any special resources or hard calculations. All you need is control of a reasonably large share of the total hash power, which several mining pools already have. Any of the top mining pool operators could do this today.

I also doubt the refutation in TFA. If the pool gets an larger share, the miners in it get a larger share as well, so why would these "fair-weather" miners defect?

Re:This is called an "academic break" (0)

Anonymous Coward | about 9 months ago | (#45383377)

It seems odd that no one seems to be considering the possibility of a mining pool consisting of resources from, say, all of our major government institutions - you know, the ones that also commandeer bitcoins by raiding people they track into Tor's seedier nooks. And so on, and so on...

Probably not now, but may be in 2 years (0)

Anonymous Coward | about 9 months ago | (#45380341)

The idea with the paper is if the bitcoin miners start coordinating, they can game some transactions.
If you look at the situation today, the miners are decentralized. But can you mine a bitcoin now on your i7 home PC? Not at all, it will take 3-4 years. Instead those with specialized GPU farms are mining all the coins today.
Next year, it will take better hardware to mine the bitcoins, so only those with the capital and resources invested today will reap the gains tomorrow. A year later, same story. The ones with the most mining capabilities will start to dominate and consolidate.
It is quite possible to reach a point when only a few players with huge data centers will be able to validate bitcoin transactions and mine, and this paper is pointing out a flaw if we get to that scenario.

Re:Probably not now, but may be in 2 years (0)

Anonymous Coward | about 9 months ago | (#45384153)

Hey, 2011 called and asked for their bitcoin miners back. (It's ok, I warned them about Miley Cyrus).

All miners sold currently use ASICs. In 2012, FPGA was the best you could use. Nobody mines with GPUs anymore - the electricity cost is higher than the revenue.

Re:Probably not now, but may be in 2 years (1)

umdesch4 (3036737) | about 9 months ago | (#45385795)

Geez, again in the same set of comments? I mined 0.05 BTC with a Radeon HD 7870 over the last 30 days in the off hours when I'm not using it to play games/watch videos on this machine. My monthly electricity bill since I started mining has increased by around $6 USD/month. 0.05 BTC is exchangeable for $18 USD as I type this. I agree that the revenue vs. electricity vs. difficulty level is getting closer and closer to parity for those mining with GPUs on home computers, but we're still not there. When, based on my own math and experience, it becomes unprofitable for me to be mining as I currently am, I will stop.

gee, another BItcoin article (0, Troll)

murdocj (543661) | about 9 months ago | (#45380443)

Maybe we should just rename this site Bitdot.

Some words got mixed up (1)

jmd (14060) | about 9 months ago | (#45380613)

Instead of this: "Bitcoin protocol that could allow a small cartel of participants to become powerful enough that it could take over the mining process and gather a disproportionate amount of the value in the system,"

It should have read: Federal Reserve/Wall St. protocol that could allow a small cartel of bankers to become powerful enough that it could take over the printing process and gather a disproportionate amount of the value in the system,

also it wouldn't work, period (2)

slashmydots (2189826) | about 9 months ago | (#45381323)

They're burying the lead to cover their ass. First of all, this "flaw" is 3 years old and even I've heard of it. That should give you a good insight on the intelligence and research level of the person writing that article. If a pool purposely doesn't submit a solved block, it has zero advanced warning that another block solves it. Since work is non-progressive, they'd have to solve a 2nd block faster than the rest of the network. Probability states that it would happen less than 50% of the time so they'd actually lose money attempting to cheat. Let's say it's a 33% of all volume pool. It has a 33% chance of finding a block solution first. If it doesn't reveal it and holds it until it solves another block so it can double dip for free, that's a 33/100 x 33/100 probability with an extremely high likelihood that in the meantime, the other 67% of the mining power finds an alternative solution to the block and turns it in, getting the cheating pool absolutely zero.

Re:also it wouldn't work, period (1)

Time_Ngler (564671) | about 9 months ago | (#45382615)

They did address that point. In the actual paper, not the article they admitted their plan included the pool using the sybil attack to increase the chance that its block would be accepted at a greater percentage rate than the other.

Re:also it wouldn't work, period (1)

JesseMcDonald (536341) | about 9 months ago | (#45393767)

In the actual paper, not the article they admitted their plan included the pool using the sybil attack to increase the chance that its block would be accepted at a greater percentage rate than the other.

Yes, but an effective Sybil attack was perhaps the least believable thing in the original paper. To begin with, the larger mining pools connect directly to each other, so the other pools are among the first to find out about each new block. The "selfish" miners wouldn't have a chance to intercept the announcements and forward their own blocks first no matter how well-connected they were. By the time they find out about the new block, the pools already know as well.

As others have already said, the attack relies on it being easier to suppress information than to spread it, which is why it will ultimately fail.

Translation: (0)

Anonymous Coward | about 9 months ago | (#45381693)

Please don't panic, we need time to get all our money out of the system before it crashes and your coins become worthless.

Mathematical Model in Orig Paper is Deeply Flawed (0)

Anonymous Coward | about 9 months ago | (#45381713)

http://www.scribd.com/doc/182399858/Cunicula-s-game-theory-primer-pdf

Concept is not sound. Authors do not understand game theory or economics. See pdf.

Very funny blog comment by one of the authors' peers working in this area:

>Ah, but if you're going to let parties try to detect others' behavior and respond with >retaliation or shunning, then you have to worry about whether the ordinary miners >will do the same kind of thing to the selfish miners. Once you set off down that road, >you're going to have to make a real game-theory argument.

What is the point of this anyway if the research proceeds without 'real game-theory arguments.'

I don't know what to say. It's just embarrassing.

That depends on who wants it broken. (0)

Anonymous Coward | about 9 months ago | (#45381771)

There are governments and financial institutions that may see an advantage in breaking the system using this weakness, not for gain but just to destroy the reputation of the system.

IF only (0)

Anonymous Coward | about 9 months ago | (#45381875)

If I had a bitcoin for every conjecture about bitcoin I'd be rich, or at least hashably wealthy.

Re:IF only (1)

Time_Ngler (564671) | about 9 months ago | (#45382623)

If you just bought it or mined it when it just started you'd be rich now, too.

Game theory (0)

Anonymous Coward | about 9 months ago | (#45382119)

Sure, if all the selfish people banded together and worked for the good of their group... oh wait...

Peercoin offers far better protection (0)

Anonymous Coward | about 9 months ago | (#45382241)

Peercoin offers far better protection with it's PoW/PoS:

http://www.coindesk.com/peercoin-vault-of-satoshi-deal/

Re:Peercoin offers far better protection (0)

Anonymous Coward | about 9 months ago | (#45385163)

PPCoin isn't well protected against double-spending because of PoS. To alleviate this, it requires frequent checkpointing from a centralized control - i.e. it has a single point of failure. Maybe the FED could offer to do it...?

You don't cut the branch you sit on. (1)

SharpFang (651121) | about 9 months ago | (#45385213)

Once existence of such cartel is known, the value of bitcoin would plummet right to the bottom.

The cartel would be able to produce disproportionate amounts of worthless currency.

Note wealth in BTC you have is [number of BTC you own] x [price of BTC in USD]. You could cheat the first but as result you'll destroy the second. You'll be stuck with tons of useless hardware that cost millions of real money, and a bunch of useless data signifying you have a lot of worthless currency.

Moreover, the "big players" of the market know this already. Any bets why the manufacturers of BTC ASIC hardware sell it instead of earning BTC on their own farms? The answer is spreading the computing power keeps BTC healthy and exchange rates high. They prefer to get some cash directly, from sale of hardware, than to try to earn that much in BTC, create impression that they dominate the market, and have the prices collapse.

Cheating at this game costs all, but it costs the cheater the most.

Re:You don't cut the branch you sit on. (1)

Adam Ricketson (2821631) | about 9 months ago | (#45389097)

"Once existence of such cartel is known, the value of bitcoin would plummet right to the bottom."

What if that's what the "cheater" wants.

Could this be used as an attack by some outside group (a government?) that wants to control or disrupt the Bitcoin system?

If I'm reading this right, they could drive all of the "free market" miners out of business. At which point, I'm not sure what they would do with this power. Could they commit Bitcoin fraud? Could they just refuse to validate any transactions and cause the system to collapse?

Re:You don't cut the branch you sit on. (1)

SharpFang (651121) | about 8 months ago | (#45441615)

The problem is this requires enormous investment in hardware that will be useless afterwards. I doubt there are many entities willing to invest that much into killing Bitcoin.

I will (0)

Anonymous Coward | about 9 months ago | (#45389121)

accept that bitcoin is not a scam when ALL of the local businesses accep it as a form of payment. Until then its worthless as a phony $3 dollar bill.

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