Bitcoin (Probably) Isn't Broken 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."
It is fundamentally broken (Score:1, Insightful)
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 (Score:5, Insightful)
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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 (Score:4, Funny)
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Value is not created out of thin air; it is individuals who decide whether something is valuable.
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Here are 1200 vendors selling hardware processors designed specifically to mine bitcoins [aliexpress.com]
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You do realize you are exhibiting typical attitude of an early adopter in a Ponzi scheme, don't you?
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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.
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The problem isn't value (Score:3)
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 secu
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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 (Score:4, Insightful)
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 (Score:4, Insightful)
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.
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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.
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Market Manipulation (Score:5, Funny)
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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.
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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.
I looked into this: nothing to fear. (Score:5, Informative)
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.
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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 mov
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If I can only get Micheal bay involved to screw it up the complicated plot and get virtual currencies to explode on screen...
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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
Game theory & Bacteria (Score:2)
you must be kidding (Score:1)
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.
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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.
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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.
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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
This is called an "academic break" (Score:3)
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.
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gee, another BItcoin article (Score:1, Troll)
Maybe we should just rename this site Bitdot.
Some words got mixed up (Score:1)
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 (Score:3)
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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.
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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 rel
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If you just bought it or mined it when it just started you'd be rich now, too.
You don't cut the branch you sit on. (Score:2)
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
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"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
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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.