7 ms·

Cooperation among an anonymous group protected Bitcoin during failures

139 points by Anon84 4y ago

0daystock 4y ago
Interesting paper, but whether the early cooperation was necessarily altruistic in nature remains a mystery to me. The highly centralized structure which transpired to make Bitcoin popular and regarded as secure raises suspicion about its legitimacy and true intentions, in my mind. Over a decade later, digital currencies have become much more palatable and even attractive to people, that there's even talk of government-backed DC's, and this resulting Overton window shift has significant implications for individual freedom and society.
- nwah1 4y ago
  No central bank digital currency is planning to use a blockchain. A blockchain would add fundamental insurmountable drawbacks. Digital money using databases has been around since before the internet. Central bank digital currency is just a minor addition to our current digital financial infrastructure.
  - kriops 4y ago
    A central bank and blockchain technology are antithetical concepts, and if a central bank is ever offering you something blockchain it's probably a scam by means of sham decentralization.
    - NikolaNovak 4y ago
      >>A central bank and blockchain technology are antithetical concepts, I feel I need to screenshot this. It demonstrates more succinctly than I could write an essay on, how much we are muddying up technology, and purpose / politics / ideals when we start discussing this area (Crypto currency etc) How is a human institution in your mind "antithetical" to a technology? Is a government "antithetical" to 3rd normal form or airline antithetical to a b-tree? You are inserting a large number of undisclosed assumptions to even begin to make such a statement (whether aware of it or not). >>if a central bank is ever offering you something blockchain it's probably a scam by means of sham decentralization. I don't disagree with this... I just think it neatly extends fully to "if anybody is ever offering you something block chain" :-)
      - DasIch 4y ago
        Blockchain has a purpose: consensus without trust. Central banks are institutions that are trusted and cooperate with trusted institutions. In general as long as you have a mechanism to establish trust-based consensus by relying on people or a government there is really no advantage by using a blockhain and a huge number of disadvantages.
        NikolaNovak 4y ago
        I agree.frequently it seems I'm in twilight zone minority :-)
      - mintyDijon 4y ago
        >How is a human institution in your mind "antithetical" to a technology? It's not human institution vs technology, it's the very structure of central banking vs decentral banking. It's the concepts themselves that are antithetical. -Edit I couldn't remember the word, but I believe the term that applies here is 'diametrically opposed'
        NikolaNovak 4y ago
        But that's the unspoken assumption I'm talking about - that blockchain and decentralized banking are one and the same / that this is the only design use case for the technology. There are many people actively working in block chain space who do not believe these are identical concepts. They may yet win out long term.
        mintyDijon 4y ago
        I'm not claiming that blockchain is a one use concept. Yes it can be used for other things then banking. I personally feel that NFTs are a great example of that, and that they hold many possibilities for the future. But the main benefit that blockchain provides is a way to decentralize a network, it's quite inefficient from a performance standpoint. So to use it for anything other than that is a waste (at least currently). Centralized currencies are better than decentralized ones performance wise, and I don't predict that will change anytime in the near future. To quote Eldenwrong's perfect comment here "You can use a rock as a spoon but that just makes you retarded" Hense blockchain currencies (the ones that aren't scams ofc) are decentralized by their nature, since that's the only draw to using that method. Because of the Pareto distribution this should fail at some point, but with the innumerable amount of new currencies coming into existence, that shouldn't be a problem.
    - bozhark 4y ago
      Both are, always have been
  - rvz 4y ago
    > No central bank digital currency is planning to use a blockchain. f a l s e What is this then? [0][1] Where we have those same blockchain technologies from the likes of Stellar, XPRL, Algorand, etc that are compliant with the ISO 20020 standard? As I said before on what is really going on, both the crypto maximalists and the crypto skeptics are going to be very disappointed in achieving their unobtainable and extreme goals. [0] https://www.prnewswire.com/news-releases/ukraine-electronic-hryvnia-pilot-launched-by-tascombank-and-bitt-on-stellar-301443773.html https://www.prnewswire.com/news-releases/ukraine-electronic-... [1] https://www.businesswire.com/news/home/20210922005878/en/Royal-Monetary-Authority-of-Bhutan-Ripple-Partner-to-Pilot-CBDC-Using-Private-Blockchain https://www.businesswire.com/news/home/20210922005878/en/Roy...
    - ljf 4y ago
      That is not a central bank... From Wikipedia A central bank, reserve bank, or monetary authority is an institution that manages the currency and monetary policy of a state or formal monetary union, and oversees their commercial banking system. In contrast to a commercial bank, a central bank possesses a monopoly on increasing the monetary base.
      - rvz 4y ago
        > That is not a central bank... Assuming you read the entire press releases, so the Royal Monetary Authority of Bhutan as I previously mentioned [0], and the National Bank of Ukraine' NBU' mentioned in the press release and is part of the pilot program [2] are not central banks? What does this say here? [0] The Royal Monetary Authority of Bhutan is the central bank of Bhutan... And here [1] The National Bank of Ukraine is the central bank of Ukraine... It also says here [2]: The National Bank of Ukraine (NBU) selected the distributed ledger technology, in particular the private version of the Stellar protocol, to study opportunities of issuing e-hryvnia and to carry out the Pilot Project. The Reserve Bank of Australia have also implemented an Ethereum-based CBDC proof-of-concept which was successful. [3] So the claim 'No central bank digital currency is planning to use a blockchain.' is still false. I think there is a strange sense of denial with the commenter who created that unfounded and baseless absolute claim. [0] https://en.wikipedia.org/wiki/Royal_Monetary_Authority_of_Bhutan https://en.wikipedia.org/wiki/Royal_Monetary_Authority_of_Bh... [1] https://en.wikipedia.org/wiki/National_Bank_of_Ukraine https://en.wikipedia.org/wiki/National_Bank_of_Ukraine [2] https://bank.gov.ua/admin_uploads/article/Analytical+Report+on+E-hryvnia.pdf https://bank.gov.ua/admin_uploads/article/Analytical+Report+... [3] https://www.rba.gov.au/media-releases/2021/mr-21-30.html https://www.rba.gov.au/media-releases/2021/mr-21-30.html
  - 0daystock 4y ago
    > No central bank digital currency is planning to use a blockchain That's hilariously incorrect. You should revisit this comment later this year.
- lupire 4y ago
  It's not a huge mystery. "altruism" is author opinion not science. Double spending is a short term benefit, but risks destroying the value of your holdings by discrediting the whole system. Double spending only works in truly arms length transactions, where the victim can't retaliate AND trusts you enough to accept the transaction in the first place.
  - Ekaros 4y ago
    Also the gains for such action must be larger than resources spend. You are over spending the rest of the network in work, thus the transactions must be larger than possible gains from doing the same work in "main" chain.
- audleman 4y ago
  > The highly centralized structure which transpired to make Bitcoin popular What centralized structure?
  - deleted 4y ago
    [deleted]
  - 0daystock 4y ago
    Read the paper this thread is about.
ntoskrnl 4y ago
A 51% attack in those days would have made no sense. These were the days before exchanges or even an exchange rate. To trade you had to post on a forum or IRC and wait around for an answer. If the network was attacked, it would have been announced on those same forums. To pull off an attack you'd have to set up a room full of 100 computers CPU mining, hope that nobody noticed the hashrate suddenly doubling, and maybe get a few pennies worth of BTC for your efforts. There was a much easier way to get bitcoin back then: Go to the bitcoin faucet and type in your address.
- arealaccount 4y ago
  The internet button that gives you $150,000 of June 2022 money for free once a day every day.
  - bozhark 4y ago
    Oh, I saw $500/transaction. Thought that was the limit
    - DennisP 4y ago
      It was five bitcoins per day. I actually looked at it back then, and decided it wasn't worth the effort.
  - 0des 4y ago
    Gavin funded a lot of these personally in the early days.
Terry_Roll 4y ago
> we reveal that between launch (January 3rd, 2009), and when the price reached $1 (February 9th, 2011), most bitcoin was mined by only sixty-four agents. So who can work out which addresses were mine?
- bozhark 4y ago
  There were pools even then though
  - Terry_Roll 4y ago
    My addresses were never part of a mining pool.
Imnimo 4y ago
It's interesting that the centipede game experiment uses a high rate of appreciation - doubling the payoff every round. On the one hand, this offers strong incentive to defect if you strongly believe the next player will defect - you double your reward (this is the strategy game theory predicts). But if you are less confident, it doesn't take much cooperation before you profit significantly. If only the next two players also cooperate, you will have done better than if you had defected. It seems like rapid expected appreciation, combined with only a small amount of confidence that the other players will not defect (e.g. because you know they share your ideological preference for Bitcoin to succeed) is enough to stave off defection. I'd be curious to see what the human-player dynamics look like if the expected future price does not increase so sharply, or is even flat or expected to decline.
- danuker 4y ago
  The last halvening, the price increased less than what a lot of people expected (didn't reach $100k or $250k as per the Stock-To-Flow model). And the peak was much smoother.
  - cinntaile 4y ago
    Did anyone really believe that the Stock-to-Flow model would be a correct predictor of price? That seems awfully naive, it's just some pseudoscientific nonsense.
    - danuker 4y ago
      If you used the raw model, without any smoothing, it still predicted the $50k price correctly. I think the smoothing gave too much weight to S2F and not enough to plain time. But I am really curious what will happen after 2024. That is when S2F really diverges from a plain time power-law. https://danuker.go.ro/bitcoin-price-predictions.html https://danuker.go.ro/bitcoin-price-predictions.html
tylersmith 4y ago
This is exactly how it was predicted to work in the whitepaper. I've always been skeptical about it holding longterm, but this paper seems to be confirming that's held for now. > If a greedy attacker is able to assemble more CPU power than all the honest nodes, he would have to choose between using it to defraud people by stealing back his payments, or using it to generate new coins. He ought to find it more profitable to play by the rules, such rules that favour him with more new coins than everyone else combined, than to undermine the system and the validity of his own wealth
- timmg 4y ago
  What if he does it without being detected? There are probably a bunch of wallets from back in the day whose owner lost their key. Take some coin out of those. Then no one knows. Sell it. Move on.
  - wmf 4y ago
    A 51% attack cannot take other people's coins. It can only double-spend coins owned by the attacker and there's no way to do a 51% attack without people noticing.
    - pcthrowaway 4y ago
      A double spend would sort of be taking other people's coins though. Once you revert the first spend, the recipient loses their coins.
      - vincnetas 4y ago
        yes, but you cant take random coins from random walets, you can only take what you transacted recently.
100xdang 4y ago
toomim 4y ago
This paper acts like it's surprising that miners would cooperate and play by the rules: > Although bitcoin was designed to rely on a decentralized, trustless network of anonymous agents, its early success rested instead on cooperation among a small group of altruistic founders. But the Bitcoin whiteppaer says very clearly that it's designed to give miners and incentive to cooperate: > The incentive may help encourage nodes to stay honest. If a greedy attacker is able to assemble more CPU power than all the honest nodes, he would have to choose between using it to defraud people by stealing back his payments, or using it to generate new coins. He ought to find it more profitable to play by the rules, such rules that favour him with more new coins than everyone else combined, than to undermine the system and the validity of his own wealth. https://bitcoin.org/bitcoin.pdf https://bitcoin.org/bitcoin.pdf
- mw888 4y ago
  It also says, as you left out, that those early miners had the power to attack the network.
DennisP 4y ago
This is an interesting paper in a lot of ways. I think the least interesting part is what most media is reporting, that shockingly, Bitcoin didn't suddenly become a massively decentralized network in its first two years of operation. The most intriguing part to me is this: "game in which anonymous players can choose to exploit, and thereby undermine, an appreciating good...we show that, even when individual payoffs are unchanged, cooperation is more frequent when the game is played by an anonymous group."

139 points by Anon84 4y ago

Interesting paper, but whether the early cooperation was necessarily altruistic in nature remains a mystery to me. The highly centralized structure which transpired to make Bitcoin popular and regarded as secure raises suspicion about its legitimacy and true intentions, in my mind. Over a decade later, digital currencies have become much more palatable and even attractive to people, that there's even talk of government-backed DC's, and this resulting Overton window shift has significant implications for individual freedom and society.

nwah1 4y ago
No central bank digital currency is planning to use a blockchain. A blockchain would add fundamental insurmountable drawbacks. Digital money using databases has been around since before the internet. Central bank digital currency is just a minor addition to our current digital financial infrastructure.
- kriops 4y ago
  A central bank and blockchain technology are antithetical concepts, and if a central bank is ever offering you something blockchain it's probably a scam by means of sham decentralization.
  - NikolaNovak 4y ago
    >>A central bank and blockchain technology are antithetical concepts, I feel I need to screenshot this. It demonstrates more succinctly than I could write an essay on, how much we are muddying up technology, and purpose / politics / ideals when we start discussing this area (Crypto currency etc) How is a human institution in your mind "antithetical" to a technology? Is a government "antithetical" to 3rd normal form or airline antithetical to a b-tree? You are inserting a large number of undisclosed assumptions to even begin to make such a statement (whether aware of it or not). >>if a central bank is ever offering you something blockchain it's probably a scam by means of sham decentralization. I don't disagree with this... I just think it neatly extends fully to "if anybody is ever offering you something block chain" :-)
    - DasIch 4y ago
      Blockchain has a purpose: consensus without trust. Central banks are institutions that are trusted and cooperate with trusted institutions. In general as long as you have a mechanism to establish trust-based consensus by relying on people or a government there is really no advantage by using a blockhain and a huge number of disadvantages.
      - NikolaNovak 4y ago
        I agree.frequently it seems I'm in twilight zone minority :-)
    - mintyDijon 4y ago
      >How is a human institution in your mind "antithetical" to a technology? It's not human institution vs technology, it's the very structure of central banking vs decentral banking. It's the concepts themselves that are antithetical. -Edit I couldn't remember the word, but I believe the term that applies here is 'diametrically opposed'
      - NikolaNovak 4y ago
        But that's the unspoken assumption I'm talking about - that blockchain and decentralized banking are one and the same / that this is the only design use case for the technology. There are many people actively working in block chain space who do not believe these are identical concepts. They may yet win out long term.
        mintyDijon 4y ago
        I'm not claiming that blockchain is a one use concept. Yes it can be used for other things then banking. I personally feel that NFTs are a great example of that, and that they hold many possibilities for the future. But the main benefit that blockchain provides is a way to decentralize a network, it's quite inefficient from a performance standpoint. So to use it for anything other than that is a waste (at least currently). Centralized currencies are better than decentralized ones performance wise, and I don't predict that will change anytime in the near future. To quote Eldenwrong's perfect comment here "You can use a rock as a spoon but that just makes you retarded" Hense blockchain currencies (the ones that aren't scams ofc) are decentralized by their nature, since that's the only draw to using that method. Because of the Pareto distribution this should fail at some point, but with the innumerable amount of new currencies coming into existence, that shouldn't be a problem.
  - bozhark 4y ago
    Both are, always have been
- rvz 4y ago
  > No central bank digital currency is planning to use a blockchain. f a l s e What is this then? [0][1] Where we have those same blockchain technologies from the likes of Stellar, XPRL, Algorand, etc that are compliant with the ISO 20020 standard? As I said before on what is really going on, both the crypto maximalists and the crypto skeptics are going to be very disappointed in achieving their unobtainable and extreme goals. [0] https://www.prnewswire.com/news-releases/ukraine-electronic-hryvnia-pilot-launched-by-tascombank-and-bitt-on-stellar-301443773.html https://www.prnewswire.com/news-releases/ukraine-electronic-... [1] https://www.businesswire.com/news/home/20210922005878/en/Royal-Monetary-Authority-of-Bhutan-Ripple-Partner-to-Pilot-CBDC-Using-Private-Blockchain https://www.businesswire.com/news/home/20210922005878/en/Roy...
  - ljf 4y ago
    That is not a central bank... From Wikipedia A central bank, reserve bank, or monetary authority is an institution that manages the currency and monetary policy of a state or formal monetary union, and oversees their commercial banking system. In contrast to a commercial bank, a central bank possesses a monopoly on increasing the monetary base.
    - rvz 4y ago
      > That is not a central bank... Assuming you read the entire press releases, so the Royal Monetary Authority of Bhutan as I previously mentioned [0], and the National Bank of Ukraine' NBU' mentioned in the press release and is part of the pilot program [2] are not central banks? What does this say here? [0] The Royal Monetary Authority of Bhutan is the central bank of Bhutan... And here [1] The National Bank of Ukraine is the central bank of Ukraine... It also says here [2]: The National Bank of Ukraine (NBU) selected the distributed ledger technology, in particular the private version of the Stellar protocol, to study opportunities of issuing e-hryvnia and to carry out the Pilot Project. The Reserve Bank of Australia have also implemented an Ethereum-based CBDC proof-of-concept which was successful. [3] So the claim 'No central bank digital currency is planning to use a blockchain.' is still false. I think there is a strange sense of denial with the commenter who created that unfounded and baseless absolute claim. [0] https://en.wikipedia.org/wiki/Royal_Monetary_Authority_of_Bhutan https://en.wikipedia.org/wiki/Royal_Monetary_Authority_of_Bh... [1] https://en.wikipedia.org/wiki/National_Bank_of_Ukraine https://en.wikipedia.org/wiki/National_Bank_of_Ukraine [2] https://bank.gov.ua/admin_uploads/article/Analytical+Report+on+E-hryvnia.pdf https://bank.gov.ua/admin_uploads/article/Analytical+Report+... [3] https://www.rba.gov.au/media-releases/2021/mr-21-30.html https://www.rba.gov.au/media-releases/2021/mr-21-30.html
- 0daystock 4y ago
  > No central bank digital currency is planning to use a blockchain That's hilariously incorrect. You should revisit this comment later this year.
lupire 4y ago
It's not a huge mystery. "altruism" is author opinion not science. Double spending is a short term benefit, but risks destroying the value of your holdings by discrediting the whole system. Double spending only works in truly arms length transactions, where the victim can't retaliate AND trusts you enough to accept the transaction in the first place.
- Ekaros 4y ago
  Also the gains for such action must be larger than resources spend. You are over spending the rest of the network in work, thus the transactions must be larger than possible gains from doing the same work in "main" chain.
audleman 4y ago
> The highly centralized structure which transpired to make Bitcoin popular What centralized structure?
- deleted 4y ago
  [deleted]
- 0daystock 4y ago
  Read the paper this thread is about.

ntoskrnl 4y ago

A 51% attack in those days would have made no sense. These were the days before exchanges or even an exchange rate. To trade you had to post on a forum or IRC and wait around for an answer. If the network was attacked, it would have been announced on those same forums. To pull off an attack you'd have to set up a room full of 100 computers CPU mining, hope that nobody noticed the hashrate suddenly doubling, and maybe get a few pennies worth of BTC for your efforts. There was a much easier way to get bitcoin back then: Go to the bitcoin faucet and type in your address.

arealaccount 4y ago
The internet button that gives you $150,000 of June 2022 money for free once a day every day.
- bozhark 4y ago
  Oh, I saw $500/transaction. Thought that was the limit
  - DennisP 4y ago
    It was five bitcoins per day. I actually looked at it back then, and decided it wasn't worth the effort.
- 0des 4y ago
  Gavin funded a lot of these personally in the early days.

Terry_Roll 4y ago

> we reveal that between launch (January 3rd, 2009), and when the price reached $1 (February 9th, 2011), most bitcoin was mined by only sixty-four agents. So who can work out which addresses were mine?

bozhark 4y ago
There were pools even then though
- Terry_Roll 4y ago
  My addresses were never part of a mining pool.

Imnimo 4y ago

It's interesting that the centipede game experiment uses a high rate of appreciation - doubling the payoff every round. On the one hand, this offers strong incentive to defect if you strongly believe the next player will defect - you double your reward (this is the strategy game theory predicts). But if you are less confident, it doesn't take much cooperation before you profit significantly. If only the next two players also cooperate, you will have done better than if you had defected. It seems like rapid expected appreciation, combined with only a small amount of confidence that the other players will not defect (e.g. because you know they share your ideological preference for Bitcoin to succeed) is enough to stave off defection. I'd be curious to see what the human-player dynamics look like if the expected future price does not increase so sharply, or is even flat or expected to decline.

danuker 4y ago
The last halvening, the price increased less than what a lot of people expected (didn't reach $100k or $250k as per the Stock-To-Flow model). And the peak was much smoother.
- cinntaile 4y ago
  Did anyone really believe that the Stock-to-Flow model would be a correct predictor of price? That seems awfully naive, it's just some pseudoscientific nonsense.
  - danuker 4y ago
    If you used the raw model, without any smoothing, it still predicted the $50k price correctly. I think the smoothing gave too much weight to S2F and not enough to plain time. But I am really curious what will happen after 2024. That is when S2F really diverges from a plain time power-law. https://danuker.go.ro/bitcoin-price-predictions.html https://danuker.go.ro/bitcoin-price-predictions.html

tylersmith 4y ago

This is exactly how it was predicted to work in the whitepaper. I've always been skeptical about it holding longterm, but this paper seems to be confirming that's held for now. > If a greedy attacker is able to assemble more CPU power than all the honest nodes, he would have to choose between using it to defraud people by stealing back his payments, or using it to generate new coins. He ought to find it more profitable to play by the rules, such rules that favour him with more new coins than everyone else combined, than to undermine the system and the validity of his own wealth

timmg 4y ago
What if he does it without being detected? There are probably a bunch of wallets from back in the day whose owner lost their key. Take some coin out of those. Then no one knows. Sell it. Move on.
- wmf 4y ago
  A 51% attack cannot take other people's coins. It can only double-spend coins owned by the attacker and there's no way to do a 51% attack without people noticing.
  - pcthrowaway 4y ago
    A double spend would sort of be taking other people's coins though. Once you revert the first spend, the recipient loses their coins.
    - vincnetas 4y ago
      yes, but you cant take random coins from random walets, you can only take what you transacted recently.

100xdang 4y ago

toomim 4y ago

This paper acts like it's surprising that miners would cooperate and play by the rules: > Although bitcoin was designed to rely on a decentralized, trustless network of anonymous agents, its early success rested instead on cooperation among a small group of altruistic founders. But the Bitcoin whiteppaer says very clearly that it's designed to give miners and incentive to cooperate: > The incentive may help encourage nodes to stay honest. If a greedy attacker is able to assemble more CPU power than all the honest nodes, he would have to choose between using it to defraud people by stealing back his payments, or using it to generate new coins. He ought to find it more profitable to play by the rules, such rules that favour him with more new coins than everyone else combined, than to undermine the system and the validity of his own wealth. https://bitcoin.org/bitcoin.pdf https://bitcoin.org/bitcoin.pdf

mw888 4y ago
It also says, as you left out, that those early miners had the power to attack the network.

DennisP 4y ago

This is an interesting paper in a lot of ways. I think the least interesting part is what most media is reporting, that shockingly, Bitcoin didn't suddenly become a massively decentralized network in its first two years of operation. The most intriguing part to me is this: "game in which anonymous players can choose to exploit, and thereby undermine, an appreciating good...we show that, even when individual payoffs are unchanged, cooperation is more frequent when the game is played by an anonymous group."