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Bitcoin is mathematically flawed. There are at least two attack vectors that someone with a million bucks or less could pull that would require manual overrides

Bitcoin is mathematically flawed. There are at least two attack vectors that someone with a million bucks or less could pull that would require manual overrides on the code, which, as nobody likes to talk about, is possible. edit: Disclosure: I made a bunch of money getting in on bitcoin early and then selling out at around $22. It was at that point where I looked at the whole system and determined the attack vector. Also the only way to get bitcoins securely is to buy and sell them for cash. And even then there are ways of figuring out who is who. The next thing will be the right thing, but this isn't it. The long term picture for bitcoin, unless completely overhauled, is bleak.

sgornick 15y ago
Care to describe further this attack vector? A 50% + 1 attack is about in the $10+ million range, but still doesn't "override the code".
- 3pt14159 15y ago
  You don't need majority. And the attack isn't about stealing money, its about taking down the system and making people lose faith in it. Remember: to make money all you need is some unlikely put options and for knowledge of market instability.
  - keen 15y ago
    It sounds like you're talking about market manipulation. So, please enlighten us: how is Bitcoin "mathematically flawed"?
mrb 15y ago
You are off by an order of magnitude. It would take $9M of FPGAs to have a clear probability of performing a majority attack https://bitcointalk.org/index.php?topic=67969.msg821634#msg821634 https://bitcointalk.org/index.php?topic=67969.msg821634#msg8... This is without even counting hosting costs: power, cooling, space.
- 3pt14159 15y ago
  It isn't a majority attack. Infact, today, it would probably be cheaper since bitcoins are a third of what they were when I found it. All you need to do is crash the market and buy put options against it, you don't need to create nonvalid transactions.
  - ewillbefull 15y ago
    Why would you call this a "mathematical" flaw? Your original post implied there was some algorithmic issue, when you're really just proposing dumping the exchange market -- which is a completely independent mechanism of trade. > Also the only way to get bitcoins securely is to buy and sell them for cash. And even then there are ways of figuring out who is who. This is ridiculous. The psuedoanonymity of bitcoin allows for laundering services which enhance your plausible deniability. You can't practically figure out "who is who" if I send a delayed transaction through a popular laundry service.
    - stevenwagner 15y ago
      I buy and sell bitcoins for cash from people on craigslist. No identifying information is given. Guess its not the "only way."
  - mrb 15y ago
    Why does this make Bitcoin "mathematically flawed" and different from other markets? If you find a way to crash any market, be it a penny stock or a type of commodity, for example by spreading terrible rumors, you can always profit with put options. Is your point that the Bitcoin market is still very small and can be manipulated?
  - steve8918 15y ago
    Put options? On Bitcoins?? Who is going to be the counter party to those options? The reason why options work is because there are clearinghouses that will guarantee the transaction. Without a regulated clearinghouse, you're subjecting yourself to counterparty risk, which as we discovered in 2008, is a significant risk especially during market crashes.
unimpressive 15y ago
The cost of such attacks will go down as bitcoin ages. As I understand it the bitcoin rewards of mining go down over time. If the rewards go down over time, eventually it won't be profitable to mine bitcoin. So the speed of transactions goes down and the network becomes weaker because theres less cooperating computer time on it. Maybe I just don't get bitcoin. But if true that seems like a fundamental problem.
- ewillbefull 15y ago
  Block rewards are not the only way to earn from mining bitcoins. You also earn transaction fees of processed transactions. As block rewards dissipate, transaction fees will naturally increase to compensate.
  - unimpressive 15y ago
    This is the answer I was looking for. Thank you.
  - lordgilman 15y ago
    Fees won't naturally increase. If I can mine profitably at the minimum amount of transactions enforced by the protocol I'll raise the difficulty as I bring on more miners and squeeze out people relying on transactions to profit. Eventually someone will come along who does mining as a loss leader (a bank?) and will offer transaction fee-less transactions to customers which will squeeze out the last of the profitable miners. Competition will only push the mining profit lower and lower. Alternatively, a really busy Bitcoin network will be limited by the maximum block size and people will pay for priority inclusion in a block. However, this limitation is totally artificial and doesn't scale with the increasing amounts of bandwidth and disk space available. Miners have an incentive to "suck up" to Bitcoin users - without them their mining has no point. If the Bitcoin users demand bigger block sizes so they don't have to pay transaction fees I think miners will have to take the partial hit from bigger blocks rather than the total hit of lack of blockchain use.
- skylan_q 15y ago
  "If the rewards go down over time, eventually it won't be profitable to mine bitcoin." Yes. The idea is the following: If the amount that can be mined per unit of computation is decreased, then fewer will be created. And if there are less of them being created and more of them demanded, then their value increases. So this balances out. Also, computational power gets cheaper with the passage of time. The largest caveat I see there is the part about more of them being demanded. (or equivalently, the market equilibrium of demands for bitcoin holdings shifting towards greater demand)
dfc 15y ago
So you are sitting on two closehold, major 0days in bitcoin? I do not mean any disrespect but why would we believe you? Unrelated Question: Why do you have a pgp cast5 encrypted message in your profile?
PsyVisions 15y ago
Tits or GTFO!

sgornick 15y ago

Care to describe further this attack vector? A 50% + 1 attack is about in the $10+ million range, but still doesn't "override the code".

3pt14159 15y ago
You don't need majority. And the attack isn't about stealing money, its about taking down the system and making people lose faith in it. Remember: to make money all you need is some unlikely put options and for knowledge of market instability.
- keen 15y ago
  It sounds like you're talking about market manipulation. So, please enlighten us: how is Bitcoin "mathematically flawed"?

mrb 15y ago

You are off by an order of magnitude. It would take $9M of FPGAs to have a clear probability of performing a majority attack https://bitcointalk.org/index.php?topic=67969.msg821634#msg821634 https://bitcointalk.org/index.php?topic=67969.msg821634#msg8... This is without even counting hosting costs: power, cooling, space.

3pt14159 15y ago
It isn't a majority attack. Infact, today, it would probably be cheaper since bitcoins are a third of what they were when I found it. All you need to do is crash the market and buy put options against it, you don't need to create nonvalid transactions.
- ewillbefull 15y ago
  Why would you call this a "mathematical" flaw? Your original post implied there was some algorithmic issue, when you're really just proposing dumping the exchange market -- which is a completely independent mechanism of trade. > Also the only way to get bitcoins securely is to buy and sell them for cash. And even then there are ways of figuring out who is who. This is ridiculous. The psuedoanonymity of bitcoin allows for laundering services which enhance your plausible deniability. You can't practically figure out "who is who" if I send a delayed transaction through a popular laundry service.
  - stevenwagner 15y ago
    I buy and sell bitcoins for cash from people on craigslist. No identifying information is given. Guess its not the "only way."
- mrb 15y ago
  Why does this make Bitcoin "mathematically flawed" and different from other markets? If you find a way to crash any market, be it a penny stock or a type of commodity, for example by spreading terrible rumors, you can always profit with put options. Is your point that the Bitcoin market is still very small and can be manipulated?
- steve8918 15y ago
  Put options? On Bitcoins?? Who is going to be the counter party to those options? The reason why options work is because there are clearinghouses that will guarantee the transaction. Without a regulated clearinghouse, you're subjecting yourself to counterparty risk, which as we discovered in 2008, is a significant risk especially during market crashes.

unimpressive 15y ago

The cost of such attacks will go down as bitcoin ages. As I understand it the bitcoin rewards of mining go down over time. If the rewards go down over time, eventually it won't be profitable to mine bitcoin. So the speed of transactions goes down and the network becomes weaker because theres less cooperating computer time on it. Maybe I just don't get bitcoin. But if true that seems like a fundamental problem.

ewillbefull 15y ago
Block rewards are not the only way to earn from mining bitcoins. You also earn transaction fees of processed transactions. As block rewards dissipate, transaction fees will naturally increase to compensate.
- unimpressive 15y ago
  This is the answer I was looking for. Thank you.
- lordgilman 15y ago
  Fees won't naturally increase. If I can mine profitably at the minimum amount of transactions enforced by the protocol I'll raise the difficulty as I bring on more miners and squeeze out people relying on transactions to profit. Eventually someone will come along who does mining as a loss leader (a bank?) and will offer transaction fee-less transactions to customers which will squeeze out the last of the profitable miners. Competition will only push the mining profit lower and lower. Alternatively, a really busy Bitcoin network will be limited by the maximum block size and people will pay for priority inclusion in a block. However, this limitation is totally artificial and doesn't scale with the increasing amounts of bandwidth and disk space available. Miners have an incentive to "suck up" to Bitcoin users - without them their mining has no point. If the Bitcoin users demand bigger block sizes so they don't have to pay transaction fees I think miners will have to take the partial hit from bigger blocks rather than the total hit of lack of blockchain use.
skylan_q 15y ago
"If the rewards go down over time, eventually it won't be profitable to mine bitcoin." Yes. The idea is the following: If the amount that can be mined per unit of computation is decreased, then fewer will be created. And if there are less of them being created and more of them demanded, then their value increases. So this balances out. Also, computational power gets cheaper with the passage of time. The largest caveat I see there is the part about more of them being demanded. (or equivalently, the market equilibrium of demands for bitcoin holdings shifting towards greater demand)

dfc 15y ago

So you are sitting on two closehold, major 0days in bitcoin? I do not mean any disrespect but why would we believe you? Unrelated Question: Why do you have a pgp cast5 encrypted message in your profile?

PsyVisions 15y ago

Tits or GTFO!