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Great job of laying this out. It highlights how important the edge cases are. People wonder, why do we spend so much time on our financial code even though the

Great job of laying this out. It highlights how important the edge cases are. People wonder, why do we spend so much time on our financial code even though the base case is simple. It's that the amount of edge cases is insane.

cperciva 10y ago
It's not just that there are a lot of edge cases; it's also that a single edge case could allow someone to extract an effectively unlimited amount of money from you.
- brhsiao 10y ago
  I wonder how many people were already exploiting this by stealing $50 a day or something. With bitcoin it'd be nearly impossible to arrest them, right? So an unethical person would have tremendous incentive to abuse it?
  - problems 10y ago
    It's perfectly possible to arrest them, it just may be harder to track them down... or easier, the blockchain does sometimes reveal a lot and unless the attacker is fairly clever they may easily compromise their identity (ie: depositing to an exchange account tied to their name and verified). If they're smart and ran the exploit via Tor -> VPN (as to not get caught by automatic Tor filters) and then took the coins through a few mixers and onto a russian exchange, they could then sweep them back into a wallet in near-complete safety. Laundering bitcoins is challenging and risky due to the nature of the ledger - all transactions since mining must be known for all time - if you were to look at something like Monero or ZCash, things get a lot easier and you get cryptographically unbreakable anonymity rather than socially and legally difficult-to-break complexity.
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    - 3pt14159 10y ago
      If you have an offline wallet that has always been offline it is very, very, very easy to get away with criminal activity and take Bitcoin. After I read through the Satoshi paper and understood it completely I realized that Bitcoin was either going to be worth $0 in the future or $100k or more per coin, but it probably won't stay in between for the long term. The $0 case is the case where hostage taking starts to become mainstream. I'm actually shocked it isn't happening more in places like Brazil. Perhaps cyber criminals aren't smart to begin with and are (rightfully) wary of things like computers, but I expect that this will change over time. Once MPs in Canada start getting kidnapped and ransomed there will be public outrage to do something. The problem is that due to the decentralized nature the best you can hope for is to block it / make it illegal within the country. If every country does this it's value will go to 0 or just above. The other case is where Bitcoin solves the financial problem of our time: other Governments / financial institutions can't be trusted this provides (among other things) a way of transferring $100m securely for 0 cost. It also allows individuals to avoid exponential inflation. Just an unbelievably useful service that if you make illegal before other countries and it takes off leaves your economy in much worse shape since the appreciation of the coins has gone largely to other individuals. My pet conspiracy theory that I don't really believe, but I like to entertain, is that Bitcoin was an American intelligence operation to ensure currency dominance in an era of weakening US influence. Satoshi himself has quite a bit of Bitcoin (around 1M BTC / $100m USD) and it would be fairly easy for an NSA staffer to raise his hand in a meeting and say "Hey guys, we should mine this stuff because it will be useful for buying zero days from cyber criminals one day." But maybe I'm giving the NSA more credit than they deserve.
      - Buge 10y ago
        What do you mean by offline wallet? The only times I've heard of offline wallets is in the context of preventing your bitcoins from being stolen, not of avoiding being caught by police.
        3pt14159 10y ago
        You can generate a wallet on a computer that isn't connected to the internet and then get someone to send money to it. A wallet is just a bunch of fancy cryptographic tools, none of which need to be online. Once you are ready to spend your Bitcoins, then you'll need to communicate with the blockchain, but not before.
- sovietmudkipz 10y ago
  That's exactly what hit etherium in its early days. A bad actor programmed a contract that vaccuumed all VC money attached to the system. There was/is(?) a great debate on wether to invalidate the transaction (defeating the stated goal of "no central authority" in the system) or letting it ride, and allowing the bad actor his spoils. It happens; gotta look out for those edge cases.
  - adrianN 10y ago
    I still don't think that it was a bad actor. The Etherium guys explicitely said that the code is the contract. If the code allows you to get all the money, then it's not malicious to do so. It's like the tax code. Leaving your profits in a foreign country to avoid paying higher taxes at home is not malicious, it's just the best way for you to comply with the law.

cperciva 10y ago

It's not just that there are a lot of edge cases; it's also that a single edge case could allow someone to extract an effectively unlimited amount of money from you.

brhsiao 10y ago
I wonder how many people were already exploiting this by stealing $50 a day or something. With bitcoin it'd be nearly impossible to arrest them, right? So an unethical person would have tremendous incentive to abuse it?
- problems 10y ago
  It's perfectly possible to arrest them, it just may be harder to track them down... or easier, the blockchain does sometimes reveal a lot and unless the attacker is fairly clever they may easily compromise their identity (ie: depositing to an exchange account tied to their name and verified). If they're smart and ran the exploit via Tor -> VPN (as to not get caught by automatic Tor filters) and then took the coins through a few mixers and onto a russian exchange, they could then sweep them back into a wallet in near-complete safety. Laundering bitcoins is challenging and risky due to the nature of the ledger - all transactions since mining must be known for all time - if you were to look at something like Monero or ZCash, things get a lot easier and you get cryptographically unbreakable anonymity rather than socially and legally difficult-to-break complexity.
  - deleted 10y ago
    [deleted]
  - deleted 10y ago
    [deleted]
  - 3pt14159 10y ago
    If you have an offline wallet that has always been offline it is very, very, very easy to get away with criminal activity and take Bitcoin. After I read through the Satoshi paper and understood it completely I realized that Bitcoin was either going to be worth $0 in the future or $100k or more per coin, but it probably won't stay in between for the long term. The $0 case is the case where hostage taking starts to become mainstream. I'm actually shocked it isn't happening more in places like Brazil. Perhaps cyber criminals aren't smart to begin with and are (rightfully) wary of things like computers, but I expect that this will change over time. Once MPs in Canada start getting kidnapped and ransomed there will be public outrage to do something. The problem is that due to the decentralized nature the best you can hope for is to block it / make it illegal within the country. If every country does this it's value will go to 0 or just above. The other case is where Bitcoin solves the financial problem of our time: other Governments / financial institutions can't be trusted this provides (among other things) a way of transferring $100m securely for 0 cost. It also allows individuals to avoid exponential inflation. Just an unbelievably useful service that if you make illegal before other countries and it takes off leaves your economy in much worse shape since the appreciation of the coins has gone largely to other individuals. My pet conspiracy theory that I don't really believe, but I like to entertain, is that Bitcoin was an American intelligence operation to ensure currency dominance in an era of weakening US influence. Satoshi himself has quite a bit of Bitcoin (around 1M BTC / $100m USD) and it would be fairly easy for an NSA staffer to raise his hand in a meeting and say "Hey guys, we should mine this stuff because it will be useful for buying zero days from cyber criminals one day." But maybe I'm giving the NSA more credit than they deserve.
    - Buge 10y ago
      What do you mean by offline wallet? The only times I've heard of offline wallets is in the context of preventing your bitcoins from being stolen, not of avoiding being caught by police.
      - 3pt14159 10y ago
        You can generate a wallet on a computer that isn't connected to the internet and then get someone to send money to it. A wallet is just a bunch of fancy cryptographic tools, none of which need to be online. Once you are ready to spend your Bitcoins, then you'll need to communicate with the blockchain, but not before.
sovietmudkipz 10y ago
That's exactly what hit etherium in its early days. A bad actor programmed a contract that vaccuumed all VC money attached to the system. There was/is(?) a great debate on wether to invalidate the transaction (defeating the stated goal of "no central authority" in the system) or letting it ride, and allowing the bad actor his spoils. It happens; gotta look out for those edge cases.
- adrianN 10y ago
  I still don't think that it was a bad actor. The Etherium guys explicitely said that the code is the contract. If the code allows you to get all the money, then it's not malicious to do so. It's like the tax code. Leaving your profits in a foreign country to avoid paying higher taxes at home is not malicious, it's just the best way for you to comply with the law.