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Bitcoin War: The First Real Threat to Bitcoin?

74 points by rasengan 15y ago

tobiasSoftware 15y ago
Upon opening it up, I am shown the only picture in the article: a computer with a photoshopped on scumbag hat and a caption - Scumbag Bitcoin Miner. While I understand the use of this on Reddit, in an article it seriously makes me question the quality, some sort of diagram explaining what is actually going on would be so much better.
- someone13 15y ago
  Here's a plain-text mirror of the article, since I'm not a huge fan of the whole "scumbag whatever" meme: http://pastebin.com/raw.php?i=XVdWpv53 http://pastebin.com/raw.php?i=XVdWpv53
- SquareWheel 15y ago
  I have to agree, and I see it as a trend that's continuing. http://www.seomoz.org/blog/how-to-use-memes-to-build-easy-backlinks-traffic http://www.seomoz.org/blog/how-to-use-memes-to-build-easy-ba...
  - runn1ng 15y ago
    I am a heavy 4chan user, and this physically hurts to read.
  - chadzawistowski 15y ago
    I think this could be worthy of its own submission.
- JVIDEL 15y ago
  That's no computer, that's a space sta.....I mean a GFX card...
skrebbel 15y ago
And there was me thinking that the first real threat to bitcoin was already back when everybody lost interest.
- SkyMarshal 15y ago
  For certain definitions of 'everybody'. ;) Relevant: https://en.wikipedia.org/wiki/Hype_cycle https://en.wikipedia.org/wiki/Hype_cycle https://en.wikipedia.org/wiki/Technology_adoption_lifecycle https://en.wikipedia.org/wiki/Technology_adoption_lifecycle
mmaunder 15y ago
85.214.124.168 is in Berlin and belongs to a german hosting company, Strato Rechenzentrum, Berlin. The website http://www.jas-transport.com/ http://www.jas-transport.com/ is hosted there. It's a trucking company, so guessing the server might be hacked.
- hughes 15y ago
  I'm not sure if you're aware of the scale of computing that would require. A lone server contributing 15% of the network would have to have the equivalent power of about 6,000 high-end GPUs.
  - Dylan16807 15y ago
    This server is just the connection to the bitcoin network, not the calculation point.
stevear 15y ago
The threat to Bitcoin is it's adoption by nefarious entities-- money laundering, paying for drugs, DDOS extortion, etc. This creates an incentive for the government to step in and disrupt the Bitcoin system. I would not be surprised to hear that a government project is in place to shut down or otherwise reduce the effectiveness of it. Bitcoin could have dilluted this problem by really running with the unique strength Bitcoin has: micro-transactions. All of the sudden it was conceivable and somewhat simple to send someone $.05. Instead of focusing on this the Bitcoin community was more interested in creating an anarchic currency that was anonymous and beholden to no-one. I personally like to believe that if they had instead focused on ease of use, wide spread adoption through micro-transactions (tip jars, content that costs less than $0.75, etc) that it would have really gotten a lot more traction with the mainstream.
- DrCatbox 15y ago
  "The threat to Bitcoin is it's adoption by nefarious entities-- money laundering, paying for drugs, DDOS extortion," You forgot to add the most nefarious entity to that list. Government.
- runn1ng 15y ago
  You can use bitcoin for any amount you want. And yet, except for the drug sellers on silkroad, almost no one does. I, personally, see the biggest disadvantage of bitcoin (1) the price unstability - it jumps up and down like crazy, and (2) the still unclear legality - from the tax endpoint, and the like. And (3) - also its biggest strength - it's as safe as your PC is safe. When someone steals your Microsoft Word documents or your Excel tables, who cares. If someone steals your wallet.dat, you are screwed. Period. It may seem like a moot point, but both Mt.Gox - the largest exchange of bitcoins - and Slush - second largest miner - has had its servers compromised. And those are the highest end-points. Now think of all the users - the lowest end-points, who have "password" as their PC password. You want THEM to have all their money on their wallet.dat files, on their disks? Now, drug sellers on silkroad really don't care about the second point, but much of the regular businesses do. On the other hands, the regular users have their lowly secured PCs as the only gateway to their money. I am not sure if Bitcoin will ever get off, given all these circumstances.
Devilboy 15y ago
Would it be possible to hire a large number of servers just for a short time and take control of the whole chain? Is it just a matter of time before this happens? You could combine various cloud providers' servers and black market zombie machines. If Bitcoin continues to grow in popularity at a sufficient pace it should be safe, but the minute it becomes cost-effective to attack it, it will fall.
- vessenes 15y ago
  So, the network has generally become much more expensive to fail. It currently employs something like 10x the K computer (Top 1 in the Top 500) worth of compute. There are probably a few organizations that could get that compute power together for a while, but you'd have to ask 'why?' and 'for what reason?' If you want to send a lot of money through Bitcoin transactions, I suggest you estimate expected compute cost of subverting the number of validating transactions you are going to wait to secure it, and using that as a baseline. E.g. subverting 10 transactions in a row with > 50% likelihood (but doing so without anyone noticing, that is, timed appropriately) would take something like 10x the current compute power for about an hour, = close to a million dollars? hundreds of thousands certainly. Ergo, wait a day for a $1mm bitcoin transaction to clear, and similarly, don't worry about a $500 transaction at all.
  - Devilboy 15y ago
    Only a million dollars? That means the government can shut down Bitcoin any time it wants.
    - erikpukinskis 15y ago
      Except that forensics will allow us to identify the fraudulent block chain, and ban all the relate computers. "Shut it down" really just means "force the Bitcoin community to step it up".
      - dfc 15y ago
        How do you ban all the related computers?
speedracr 15y ago
I felt like I knew a little about Bitcoin, but I fail to grasp whatever this article is saying. Can anyone translate the "empty blocks" and 15 vs. 51% part and its implications? Also, wouldn't 15% of the network computing power require more than a simple webserver? Thanks.
- palish 15y ago
  This is my rough understanding: As you're aware, Bitcoin uses certain cryptographic guarantees in order to publish a public and immutable "block chain", which is essentially a public list of all Bitcoin transactions since the beginning of time. Each block in the block chain is essentially a list of transactions which occurred between the time frame "after the previous block was discovered, but before this block was discovered". (A block is 'discovered' by searching the hash space brute-force, searching for a valid code.) When a new transaction is initiated, it is an interesting situation because it needs to be done in a way where neither party can somehow cheat the system. I believe this is accomplished by sending the transaction to many Bitcoin peers simultaneously. When, say, 5 or more peers have "acknowledged" this transaction, then you can be fairly confident (>99.9%) that your transaction will be encoded into the next block in the block chain. The only reason this works is because it's assumed that each peer in the Bitcoin network is following the protocol in an unbiased way. E.g. it's assumed that peers aren't "going out of their way to do shady things". What kind of things? One example: acknowledge a transaction, but then discard/ignore that transaction, thereby attempting to trick you into thinking your transaction was processed when it wasn't. Right now it doesn't matter if only a few people are doing shady things. This is because the majority of people are known to not be cheaters. Therefore, by the law of large numbers, you can assume that by waiting for N acknowledgements then you can become exponentially more confident that your transaction will be encoded into the public block chain, rather than maliciously ignored. The only reason this works is because less than 50% of the Bitcoin peers are attempting to cheat. If more than 50% were cheaters, then you'd have no way to "verify that your transaction will definitely make it into the public block chain". Thus, the system would cease to be useful. Now, notice I'm talking in terms of "more than 50% of peers", but the article is talking about "more than 50% of processing power". I think the argument for "why 50% of the computation power needs to be non-malicious" is the same or very similar to my argument which I presented above. But I'm not positive on that. (Essentially, if you control more than 50% of your "new block-finding capability", then you would have control over which transactions will/will not make it into the public block chain. Thus, we would lose our cryptographic guarantee that "if my transaction was acknowledged by at least N peers, then it will definitely be entered into the public block chain un-tampered.")
vessenes 15y ago
This article is silly and wrong. Probably those blocks are mined by a new mining pool, one that someone hasn't implemented transaction handling into. There is a free market for transaction fees built into Bitcoin, and any miner is free to ignore transactions as they will, it's always been that way. It's not an 'attack', it's just an economic system built in. Miners will almost certainly demand more bitcoin for their work in the future than they do now; the way I think of it, the network itself is pre-emptively fronting a baseline transaction value to miners right now. Eventually that will be phased out, and people who wish to transact will pay the burden of getting their transactions secured. C'est la vie. Until then, move along, the article does not, in any way, detail a 'real threat' to bitcoin. It is annoying (in that it slows transaction acceptance and validation) that someone doesn't wish to mine transactions, but if it ever became a large threat, clients could adjust to ignore blocks from known bad-behavior miners, bringing them into line. Or, I suppose, miners could value same-height blocks with more transaction fees in them. I'm not sure if this would impact other attack vectors, though.
a3_nm 15y ago
An interesting idea. Bitcoin seemed secure at first because it seemed silly to think that an individual user could hold >50% of the total processing power of the network, but now that miners are assembling in mining pools, the risk of a pool achieving >50% of the processing power is much higher.
rdssassin 15y ago
Perhaps if the fees were higher, they would want them.
ericb 15y ago
Bitcoin could be viewed as an elegant system to transfer wealth to botnet owners.

74 points by rasengan 15y ago

Upon opening it up, I am shown the only picture in the article: a computer with a photoshopped on scumbag hat and a caption - Scumbag Bitcoin Miner. While I understand the use of this on Reddit, in an article it seriously makes me question the quality, some sort of diagram explaining what is actually going on would be so much better.

someone13 15y ago
Here's a plain-text mirror of the article, since I'm not a huge fan of the whole "scumbag whatever" meme: http://pastebin.com/raw.php?i=XVdWpv53 http://pastebin.com/raw.php?i=XVdWpv53
SquareWheel 15y ago
I have to agree, and I see it as a trend that's continuing. http://www.seomoz.org/blog/how-to-use-memes-to-build-easy-backlinks-traffic http://www.seomoz.org/blog/how-to-use-memes-to-build-easy-ba...
- runn1ng 15y ago
  I am a heavy 4chan user, and this physically hurts to read.
- chadzawistowski 15y ago
  I think this could be worthy of its own submission.
JVIDEL 15y ago
That's no computer, that's a space sta.....I mean a GFX card...

skrebbel 15y ago

And there was me thinking that the first real threat to bitcoin was already back when everybody lost interest.

SkyMarshal 15y ago
For certain definitions of 'everybody'. ;) Relevant: https://en.wikipedia.org/wiki/Hype_cycle https://en.wikipedia.org/wiki/Hype_cycle https://en.wikipedia.org/wiki/Technology_adoption_lifecycle https://en.wikipedia.org/wiki/Technology_adoption_lifecycle

mmaunder 15y ago

85.214.124.168 is in Berlin and belongs to a german hosting company, Strato Rechenzentrum, Berlin. The website http://www.jas-transport.com/ http://www.jas-transport.com/ is hosted there. It's a trucking company, so guessing the server might be hacked.

hughes 15y ago
I'm not sure if you're aware of the scale of computing that would require. A lone server contributing 15% of the network would have to have the equivalent power of about 6,000 high-end GPUs.
- Dylan16807 15y ago
  This server is just the connection to the bitcoin network, not the calculation point.

stevear 15y ago

The threat to Bitcoin is it's adoption by nefarious entities-- money laundering, paying for drugs, DDOS extortion, etc. This creates an incentive for the government to step in and disrupt the Bitcoin system. I would not be surprised to hear that a government project is in place to shut down or otherwise reduce the effectiveness of it. Bitcoin could have dilluted this problem by really running with the unique strength Bitcoin has: micro-transactions. All of the sudden it was conceivable and somewhat simple to send someone $.05. Instead of focusing on this the Bitcoin community was more interested in creating an anarchic currency that was anonymous and beholden to no-one. I personally like to believe that if they had instead focused on ease of use, wide spread adoption through micro-transactions (tip jars, content that costs less than $0.75, etc) that it would have really gotten a lot more traction with the mainstream.

DrCatbox 15y ago
"The threat to Bitcoin is it's adoption by nefarious entities-- money laundering, paying for drugs, DDOS extortion," You forgot to add the most nefarious entity to that list. Government.
runn1ng 15y ago
You can use bitcoin for any amount you want. And yet, except for the drug sellers on silkroad, almost no one does. I, personally, see the biggest disadvantage of bitcoin (1) the price unstability - it jumps up and down like crazy, and (2) the still unclear legality - from the tax endpoint, and the like. And (3) - also its biggest strength - it's as safe as your PC is safe. When someone steals your Microsoft Word documents or your Excel tables, who cares. If someone steals your wallet.dat, you are screwed. Period. It may seem like a moot point, but both Mt.Gox - the largest exchange of bitcoins - and Slush - second largest miner - has had its servers compromised. And those are the highest end-points. Now think of all the users - the lowest end-points, who have "password" as their PC password. You want THEM to have all their money on their wallet.dat files, on their disks? Now, drug sellers on silkroad really don't care about the second point, but much of the regular businesses do. On the other hands, the regular users have their lowly secured PCs as the only gateway to their money. I am not sure if Bitcoin will ever get off, given all these circumstances.

Devilboy 15y ago

Would it be possible to hire a large number of servers just for a short time and take control of the whole chain? Is it just a matter of time before this happens? You could combine various cloud providers' servers and black market zombie machines. If Bitcoin continues to grow in popularity at a sufficient pace it should be safe, but the minute it becomes cost-effective to attack it, it will fall.

vessenes 15y ago
So, the network has generally become much more expensive to fail. It currently employs something like 10x the K computer (Top 1 in the Top 500) worth of compute. There are probably a few organizations that could get that compute power together for a while, but you'd have to ask 'why?' and 'for what reason?' If you want to send a lot of money through Bitcoin transactions, I suggest you estimate expected compute cost of subverting the number of validating transactions you are going to wait to secure it, and using that as a baseline. E.g. subverting 10 transactions in a row with > 50% likelihood (but doing so without anyone noticing, that is, timed appropriately) would take something like 10x the current compute power for about an hour, = close to a million dollars? hundreds of thousands certainly. Ergo, wait a day for a $1mm bitcoin transaction to clear, and similarly, don't worry about a $500 transaction at all.
- Devilboy 15y ago
  Only a million dollars? That means the government can shut down Bitcoin any time it wants.
  - erikpukinskis 15y ago
    Except that forensics will allow us to identify the fraudulent block chain, and ban all the relate computers. "Shut it down" really just means "force the Bitcoin community to step it up".
    - dfc 15y ago
      How do you ban all the related computers?

speedracr 15y ago

I felt like I knew a little about Bitcoin, but I fail to grasp whatever this article is saying. Can anyone translate the "empty blocks" and 15 vs. 51% part and its implications? Also, wouldn't 15% of the network computing power require more than a simple webserver? Thanks.

palish 15y ago
This is my rough understanding: As you're aware, Bitcoin uses certain cryptographic guarantees in order to publish a public and immutable "block chain", which is essentially a public list of all Bitcoin transactions since the beginning of time. Each block in the block chain is essentially a list of transactions which occurred between the time frame "after the previous block was discovered, but before this block was discovered". (A block is 'discovered' by searching the hash space brute-force, searching for a valid code.) When a new transaction is initiated, it is an interesting situation because it needs to be done in a way where neither party can somehow cheat the system. I believe this is accomplished by sending the transaction to many Bitcoin peers simultaneously. When, say, 5 or more peers have "acknowledged" this transaction, then you can be fairly confident (>99.9%) that your transaction will be encoded into the next block in the block chain. The only reason this works is because it's assumed that each peer in the Bitcoin network is following the protocol in an unbiased way. E.g. it's assumed that peers aren't "going out of their way to do shady things". What kind of things? One example: acknowledge a transaction, but then discard/ignore that transaction, thereby attempting to trick you into thinking your transaction was processed when it wasn't. Right now it doesn't matter if only a few people are doing shady things. This is because the majority of people are known to not be cheaters. Therefore, by the law of large numbers, you can assume that by waiting for N acknowledgements then you can become exponentially more confident that your transaction will be encoded into the public block chain, rather than maliciously ignored. The only reason this works is because less than 50% of the Bitcoin peers are attempting to cheat. If more than 50% were cheaters, then you'd have no way to "verify that your transaction will definitely make it into the public block chain". Thus, the system would cease to be useful. Now, notice I'm talking in terms of "more than 50% of peers", but the article is talking about "more than 50% of processing power". I think the argument for "why 50% of the computation power needs to be non-malicious" is the same or very similar to my argument which I presented above. But I'm not positive on that. (Essentially, if you control more than 50% of your "new block-finding capability", then you would have control over which transactions will/will not make it into the public block chain. Thus, we would lose our cryptographic guarantee that "if my transaction was acknowledged by at least N peers, then it will definitely be entered into the public block chain un-tampered.")

vessenes 15y ago

This article is silly and wrong. Probably those blocks are mined by a new mining pool, one that someone hasn't implemented transaction handling into. There is a free market for transaction fees built into Bitcoin, and any miner is free to ignore transactions as they will, it's always been that way. It's not an 'attack', it's just an economic system built in. Miners will almost certainly demand more bitcoin for their work in the future than they do now; the way I think of it, the network itself is pre-emptively fronting a baseline transaction value to miners right now. Eventually that will be phased out, and people who wish to transact will pay the burden of getting their transactions secured. C'est la vie. Until then, move along, the article does not, in any way, detail a 'real threat' to bitcoin. It is annoying (in that it slows transaction acceptance and validation) that someone doesn't wish to mine transactions, but if it ever became a large threat, clients could adjust to ignore blocks from known bad-behavior miners, bringing them into line. Or, I suppose, miners could value same-height blocks with more transaction fees in them. I'm not sure if this would impact other attack vectors, though.

a3_nm 15y ago

An interesting idea. Bitcoin seemed secure at first because it seemed silly to think that an individual user could hold >50% of the total processing power of the network, but now that miners are assembling in mining pools, the risk of a pool achieving >50% of the processing power is much higher.

rdssassin 15y ago

Perhaps if the fees were higher, they would want them.

ericb 15y ago

Bitcoin could be viewed as an elegant system to transfer wealth to botnet owners.