Researchers Locate Flaw In Bitcoin Protocol

An anonymous reader writes "Researchers at Microsoft Research and Cornell identified a potential flaw in Bitcoin's transaction propagation. In a recent paper they show how miner nodes in the Bitcoin network have an incentive not to relay transactions to the rest of the network, and propose to implement a scheme that rewards nodes [PDF] for relaying messages."

Comments

Yes but

[koan]

It still sounds like a better system than our current financial institutions.

Re:Yes but

[somersault]

As someone said before, Bitcoin would be a lot more valuable if your currency held the promise of something. For example selling your computer time makes much more sense than doing calculations designed to waste computing power. I've wondered before if there was anything to Bitcoin, but I really can't think of it as a currency. I think of it more like the stock market, and how I can abuse it to make a profit. In the end I'm better off just making money doing real work.

Re:Yes but

[Talderas]

It's currency in the sense that pinto beans are a currency.

Re:Yes but

[seanadams.com]

Bitcoin would be a lot more valuable if your currency held the promise of something. NO, this is exactly why government money fails. Whichever authority is responsible for that "promise" will simple renege after the currency has gained acceptance. They debase the money, becoming extremely powerful in the process, until eventually it becomes worthless. Then after everyone else is broke and they have all the real money, they do it again. When you mine bitcoins you aren't exactly "selling computer time", you are using your computer to produce a product. The person who buys your coins wants the coin as proof of work, not the cpu time itself. This is exactly the same model as gold mining, the point is that nobody can get more gold without incurring the cost to mine it. Gold doesn't have to "promise" anything except its inherent promise of being scarce (and its other monetary properties such as durability, divisibility, etc). Yes bitcoin is volatile but only because it is new. As it gains acceptable, the real promise that you will care about is the market in which people will let you trade it for stuff (even just forex is a great start). That does NOT require any authority to back the money. The whole point of bitcoin is that it is a scarce commodity, as opposed to a token or note.

Re:I'm starting to want to work at Microsoft Resea

[somersault]

You're the guy that said he worked in marketing yesterday. Why is it that all UIDs over 2,000,000 seem to do marketing for MS?

Irresponisble headline

[Anonymous Coward]

Only a small fraction of bitcoin nodes (e.g. 1%) are mining nodes, and they all relay transactions as relaying transactions is very cheap to do. The problem they're describing clearly does not exist. If it did someday turn out to be an issue you can address it by users handing their transactions directly to various miners, you don't need some crazy complicated reward scheme.

It's also not news— their contribution isn't insight on incentives but a complicated sibyl resistant reward scheme for trees (which the bitcoin network is not) which requires doubling the cost of forwarding a transaction every two hops it takes. (By making every node perform a great many additional cryptographic signatures and checks in order to track the reward)

summary

[petermgreen]

If a LARGE proportion of bitcoin nodes are run by assholes who refuse to distribute transactions then the network may fall apart.

This system seems to add a lot of complexity to solve something that has not proven a problem.

Re:And what's the Bitcoin Forums response?

[Anonymous Coward]

when you wrote "denial" did you mean "in a discussion involving several dozen people, one participant denied the existence of the problem while everyone else discussed whether the flaw is a practical problem or how it could be solved"?

Understandable typo, the keys are right next to each other.

Re:Another flaw found in Bitcoin protocol

[Bert64]

The value of a good is actually whatever a third party is willing to give you in exchange for that good... This value is completely arbitrary, and allows products with no physical value (eg software) to be sold for huge amounts of money or other goods...

Similarly, money itself has no real value, only the value that others are willing to give in exchange for it.

The advantage of bitcoin, is that while its effectively a worthless token system, just like regular cash, it is a finite supply and thus not subject to the whims of a central authority.

Personally i use bitcoin a lot, primarily as an intermediary currency because i can buy bitcoins with money i hold in one currency, and then draw it out again in my local currency without incurring fees levied by existing currency exchange establishments.

Re:And what's the Bitcoin Forums response?

[serviscope_minor]

If people stop mining bitcoins now, the people at the top will stop winning, so of course they are going to deny. You know, kind of like global warming

A bad analogy is like a leaky screwdriver and that analogy has covered the floor in so much water that it is like a really tricky crossword puzzle.