5 ms·

Slightly off-topic, but I don't understand how it can survive long-term. A 51% attack seems inevitable. The ability to short-sell bitcoins will eventually beco

Slightly off-topic, but I don't understand how it can survive long-term. A 51% attack seems inevitable. The ability to short-sell bitcoins will eventually become widespread. Weigh the estimated cost of building a 51% attack network versus the estimated gains of short-selling all the bitcoins in the world. Suppose you can make 10% of the market cap ($1.5B) of bitcoins by short-selling the entire market - a very low estimate. That's currently $150 million dollars. Is $150 million enough money to create a mass-production effort that builds enough ASIC miners to beat out half the network? (hint: yes it is)

fluidcruft 13y ago
> A 51% attack seems inevitable. So, what are you going to do with your 51% of the network? Somehow double spend $150m before everyone upgrades their clients?
- wmf 13y ago
  Just mine no transactions. After the network grinds to a halt the exchange rate will crater and then you can close out your short position.
  - ewillbefull 13y ago
    It will almost certainly cost more money to obtain 51% hashrate than you could gain from a short position, by the time mining rewards aren't enough of an incentive. Even the NSA doesn't have enough computing power to achieve 51%.
    - tlrobinson 13y ago
      I agree with the first sentence, but I'm pretty sure the NSA could do it. Until recently it would have only cost a few million dollars to fab enough ASICs for a 51% attack. I haven't seen a recent analysis, but it's probably still only in the 10s of millions (possibly 100s of millions)
      - ewillbefull 13y ago
        The NSA probably specializes in general purpose computational power, they couldn't afford to compete with ASICs at this point. But they probably could destroy any alt-coin alternative to bitcoin in a heartbeat, especially Litecoin which is designed to be mined by general purpose hardware.
        dragonwriter 13y ago
        > The NSA probably specializes in general purpose computational power, I would agree that this is likely in the sense that the bulk of their expenditures on computing power are likely directed at general purpose computing power. That doesn't really mean that they couldn't have expended fairly vast amounts on special purpose computing, as well. > they couldn't afford to compete with ASICs at this point. Given that the NSA is kind of concerned about monitoring things (especially things used by people who are particularly concerned about avoiding government monitoring), and given the degree to which people with that interest have been the focus of bitcoin, on what basis do you assume that they didn't get in on the ground floor with ASICS as they became available (or earlier)?
        tlrobinson 13y ago
        ASICs (or mining in general) aren't needed to monitor all Bitcoin transactions. A mining node is indistinguishable from a non-mining (full) node. The only reason for ASICs is mining (either legitimate or as an attack)
        johnnyanony 13y ago
        >The NSA probably specializes in general purpose computational power, they couldn't afford to compete with ASICs this is an absurd statement because the us military, nsa, and cia design their own custom chips and have a black budget to finance the operations and some of the most talented and experienced mathematicians, scientists, and programmers to back them up. when the central banks actually find bitcoin to be a threat they will crack the encryption, do a 51% attack, or conduct some other discrediting attack on its validity and security. I am short term bullish on bitcoin though I am hoping for the best for btc or other decentralized digital currencies.
    - kevinpet 13y ago
      This is naive. There's no natural process that ensures the network stays well distributed. If Bitcoin takes off, then why would the next hardware miner maker sell the product? Maybe they find it better to just run a significant portion of the market rather than deal with clients. 10 years from now, what if we have a handful of bitcoin mining firms, similar to the current role played by market makers like Getco or Knight? You can't just dismiss this point. You need to come up with some process that makes it more valuable for someone to be a small player in the network than to go all-in.
    - dragonwriter 13y ago
      > It will almost certainly cost more money to obtain 51% hashrate than you could gain from a short position If true, that means it wouldn't be an action of a rational attacker bent on financial gain, but not all attackers are rational, and financial gain isn't the only conceivable motive for an attack on bitcoin. > Even the NSA doesn't have enough computing power to achieve 51%. How, exactly, are you assessing the quantity of the relevant type of computing power available to the NSA in order to make this claim?
      - ewillbefull 13y ago
        NSA builds general purpose computing in massive scales. The bitcoin network is beyond the scope of all of the world's supercomputers combined. I don't have some irrational belief that the NSA has a bunch of ASIC SHA256 devices laying around. They're too late.
  - randyrand 13y ago
    This could solve that issue: http://gavintech.blogspot.com/2012/05/neutralizing-51-attack.html http://gavintech.blogspot.com/2012/05/neutralizing-51-attack...
- tlrobinson 13y ago
  I think fragsworth was suggesting one could short Bitcoin (a lot) then launch a 51% attack to erode confidence in Bitcoin, thus dropping the price, and profiting from your short position.
  - fragsworth 13y ago
    A 51% attack, compounded with a massive short-sell, could drop the price to effectively nothing.
netwerk 13y ago
I thought about how you would attack BitCoin and how to achieve that 51% of the work. My solution is basically to create network partitions (using some DDoS or something to prevent communication) and force a small number of good nodes to start working on your solution. Over time you can rejoin partitions where you will control 51% of the compute eventually converting all of the nodes.
deleted 13y ago
[deleted]
randyrand 13y ago
While I mostly agree with you - it's easier said than done. How exactly are you going to buy $150 million (or whatever the needed amount is) of ASICs without being noticed? The government could obviously do it - but at least in the near future that sounds far fetched. Like wise as soon as your attack is noticed your IP addresses would be blocked by the other clients preventing you from adding to the chain. Edit: after looking more into the 51% attack IP blocking wont really solve it since it only would take a handful of unique IPs to pull off. Edit2: Couldn't we prevent the double spend part of the 51% attack (or at least make it more like 90%) by doing 2 things: 1) Merchants would only accept bit coins that have been in the block chain at least 6 blocks ago (this already is the recommended case) 2) Nodes reject any blocks received if they receive it over an hour (6 blocks worth) past receiving the 'sister' block in the competing (true) chain. This would prevent an attacker from 'reversing history.' What would be the drawbacks to this? Edit3: like wise we could stop the "prevent other people from making transactions" part of it (the only other part) by doing this: http://gavintech.blogspot.com/2012/05/neutralizing-51-attack.html http://gavintech.blogspot.com/2012/05/neutralizing-51-attack... I would love it if someone responded to this.
- deleted 13y ago
  [deleted]
- wmf 13y ago
  There has been a lot of discussion about various heuristics to invalidate block chain reorganization. The developers have enough real problems on their plate that I don't think they're interested in working on it. Also keep in mind that a 51% attack may not rewrite history at all, in which case it wouldn't cause deep reorgs. It would cause some orphaning, but that would be mostly indistinguishable from the normal orphaning that goes on normally.
lectrick 13y ago
Why would you spend that much money to crash the network... only to lose the entire amount of your money? Also, knowledge about short-sells would help to stabilize the currency's value, NOT crash it. Just like it has for all other assets out there. A 51% attack would cost far more than 150 million at this point.

fluidcruft 13y ago

> A 51% attack seems inevitable. So, what are you going to do with your 51% of the network? Somehow double spend $150m before everyone upgrades their clients?

wmf 13y ago
Just mine no transactions. After the network grinds to a halt the exchange rate will crater and then you can close out your short position.
- ewillbefull 13y ago
  It will almost certainly cost more money to obtain 51% hashrate than you could gain from a short position, by the time mining rewards aren't enough of an incentive. Even the NSA doesn't have enough computing power to achieve 51%.
  - tlrobinson 13y ago
    I agree with the first sentence, but I'm pretty sure the NSA could do it. Until recently it would have only cost a few million dollars to fab enough ASICs for a 51% attack. I haven't seen a recent analysis, but it's probably still only in the 10s of millions (possibly 100s of millions)
    - ewillbefull 13y ago
      The NSA probably specializes in general purpose computational power, they couldn't afford to compete with ASICs at this point. But they probably could destroy any alt-coin alternative to bitcoin in a heartbeat, especially Litecoin which is designed to be mined by general purpose hardware.
      - dragonwriter 13y ago
        > The NSA probably specializes in general purpose computational power, I would agree that this is likely in the sense that the bulk of their expenditures on computing power are likely directed at general purpose computing power. That doesn't really mean that they couldn't have expended fairly vast amounts on special purpose computing, as well. > they couldn't afford to compete with ASICs at this point. Given that the NSA is kind of concerned about monitoring things (especially things used by people who are particularly concerned about avoiding government monitoring), and given the degree to which people with that interest have been the focus of bitcoin, on what basis do you assume that they didn't get in on the ground floor with ASICS as they became available (or earlier)?
        tlrobinson 13y ago
        ASICs (or mining in general) aren't needed to monitor all Bitcoin transactions. A mining node is indistinguishable from a non-mining (full) node. The only reason for ASICs is mining (either legitimate or as an attack)
      - johnnyanony 13y ago
        >The NSA probably specializes in general purpose computational power, they couldn't afford to compete with ASICs this is an absurd statement because the us military, nsa, and cia design their own custom chips and have a black budget to finance the operations and some of the most talented and experienced mathematicians, scientists, and programmers to back them up. when the central banks actually find bitcoin to be a threat they will crack the encryption, do a 51% attack, or conduct some other discrediting attack on its validity and security. I am short term bullish on bitcoin though I am hoping for the best for btc or other decentralized digital currencies.
  - kevinpet 13y ago
    This is naive. There's no natural process that ensures the network stays well distributed. If Bitcoin takes off, then why would the next hardware miner maker sell the product? Maybe they find it better to just run a significant portion of the market rather than deal with clients. 10 years from now, what if we have a handful of bitcoin mining firms, similar to the current role played by market makers like Getco or Knight? You can't just dismiss this point. You need to come up with some process that makes it more valuable for someone to be a small player in the network than to go all-in.
  - dragonwriter 13y ago
    > It will almost certainly cost more money to obtain 51% hashrate than you could gain from a short position If true, that means it wouldn't be an action of a rational attacker bent on financial gain, but not all attackers are rational, and financial gain isn't the only conceivable motive for an attack on bitcoin. > Even the NSA doesn't have enough computing power to achieve 51%. How, exactly, are you assessing the quantity of the relevant type of computing power available to the NSA in order to make this claim?
    - ewillbefull 13y ago
      NSA builds general purpose computing in massive scales. The bitcoin network is beyond the scope of all of the world's supercomputers combined. I don't have some irrational belief that the NSA has a bunch of ASIC SHA256 devices laying around. They're too late.
- randyrand 13y ago
  This could solve that issue: http://gavintech.blogspot.com/2012/05/neutralizing-51-attack.html http://gavintech.blogspot.com/2012/05/neutralizing-51-attack...
tlrobinson 13y ago
I think fragsworth was suggesting one could short Bitcoin (a lot) then launch a 51% attack to erode confidence in Bitcoin, thus dropping the price, and profiting from your short position.
- fragsworth 13y ago
  A 51% attack, compounded with a massive short-sell, could drop the price to effectively nothing.

netwerk 13y ago

I thought about how you would attack BitCoin and how to achieve that 51% of the work. My solution is basically to create network partitions (using some DDoS or something to prevent communication) and force a small number of good nodes to start working on your solution. Over time you can rejoin partitions where you will control 51% of the compute eventually converting all of the nodes.

deleted 13y ago

[deleted]

randyrand 13y ago

While I mostly agree with you - it's easier said than done. How exactly are you going to buy $150 million (or whatever the needed amount is) of ASICs without being noticed? The government could obviously do it - but at least in the near future that sounds far fetched. Like wise as soon as your attack is noticed your IP addresses would be blocked by the other clients preventing you from adding to the chain. Edit: after looking more into the 51% attack IP blocking wont really solve it since it only would take a handful of unique IPs to pull off. Edit2: Couldn't we prevent the double spend part of the 51% attack (or at least make it more like 90%) by doing 2 things: 1) Merchants would only accept bit coins that have been in the block chain at least 6 blocks ago (this already is the recommended case) 2) Nodes reject any blocks received if they receive it over an hour (6 blocks worth) past receiving the 'sister' block in the competing (true) chain. This would prevent an attacker from 'reversing history.' What would be the drawbacks to this? Edit3: like wise we could stop the "prevent other people from making transactions" part of it (the only other part) by doing this: http://gavintech.blogspot.com/2012/05/neutralizing-51-attack.html http://gavintech.blogspot.com/2012/05/neutralizing-51-attack... I would love it if someone responded to this.

deleted 13y ago
[deleted]
wmf 13y ago
There has been a lot of discussion about various heuristics to invalidate block chain reorganization. The developers have enough real problems on their plate that I don't think they're interested in working on it. Also keep in mind that a 51% attack may not rewrite history at all, in which case it wouldn't cause deep reorgs. It would cause some orphaning, but that would be mostly indistinguishable from the normal orphaning that goes on normally.

lectrick 13y ago

Why would you spend that much money to crash the network... only to lose the entire amount of your money? Also, knowledge about short-sells would help to stabilize the currency's value, NOT crash it. Just like it has for all other assets out there. A 51% attack would cost far more than 150 million at this point.