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Bitcoin Protocol Vulnerability Could Lead To a Collapse
First time accepted submitter stanga writes "Cornell researchers unveiled an attack on the Bitcoin mining protocol
that enables selfish mining pools to earn more than their fair
share. In a technical
report the authors explain this
attack can be performed by a pool of any size. Rational miners
will join this pool to increase their benefits, creating a snowball
effect that may end up with a pool commanding a majority of the
system's mining power. Such a pool would be able to single-handedly
control the blockchain, violating the decentralized nature of the increasingly
successful Bitcoin.
The authors propose a patch to the protocol that would protect the
system from selfish mining pools smaller than 25% of the system. They
also show that Bitcoin can never be safe from selfish mining pools larger
than 33% of the network, whereas it was previously believed that only
groups larger than 50% of the network were a threat to the system.
The question is — can the miners operating today adopt the suggested fix and
dismantle too-large pools before a selfish mining pool arises?"
Bitcoins are the wild west...and that's why they're so exciting.
I missed the gold rush, but there's still money to be made selling shovels and pans to those who think they didn't...
Did the "selfish mining pools" us a Greedy algorithm?
much of left-wing thought is a kind of playing with fire by people who don't even know that fire is hot - George Orwell
There's a finite number of Bitcoins that can be mined.
So this problem will eventually disappear, right?
Start with an intense desire to building your own private empire that you control.
Hiding information from others to gain a competitive advantage.
Populating other groups with spys to see what progress they are making.
Eventually giving rational people no choice but to join your team or be crushed.
I propose to call this the middle manager attack.
The reason that Bitcoin will collapse because it's an underground currency that doesn't have any reliable defining body. It's speculative at best and a gamble.
This attack would be very, very difficult to achieve. Doesn't seem very worrying and I'm sure it'll be fixed well before it becomes an issue. There are already some pretty good discussions on /r/Bitcoin/ covering why it's not as big a deal as the sensational headline here makes it out to be.
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So that's what the NSA datacenter is for...
Custom electronics and digital signage for your business: www.evcircuits.com
At the moment it seems DDoS is a bigger problem for things related to bitcoin, such as coinchat.org, inputs.io, etc.
Get free satoshi (Bitcoin) and Dogecoins
I fairly understand that for there to be value in bitcoin there must be scarcity and that this scarcity is created via the mining mechanisms. But what I wonder is if there be any other way to create value for a virtual currency?
I ask because to me the most interesting thing about virtual currencies and specifically bitcoin is NOT the mining aspect, but rather the distributed database. The fact the hosting or provision of the database is fundamentally bound to the value-creation process seems to be the problem here. The problem seems not to necessarily be virtual currency or distributed databases themselves. The problem seems to be that value creation is based on artificial scarcity which can be manipulated through collusion.
There has to be another way to establish value for a virtual currency.
Date and Time stamp the creation of the block. If the network notices that blocks have been delayed, this new longer block gets dumped.
No more selfish miners.
You can't establish value in a distributed fashion any better than with proof of work (that we know of right now). For a stupid alternative, look at ppcoin, which plans to eventually rely on "proof of stake" but currently relies primarily on proof of work.
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Well it could be BTC Guild anyway.
All it would do is result in a new proof of work for Bitcoin which is probably a good thing anyway.
The real question is whether or not it will effect Mastercoin?
Sigh.... boring example of two generals problem/byzantine fault tolerance/byzantine generals is boring.
A byzantine attack on a network through collusion is... uninteresting. You pretty much provably can't function in a network with > 1/3 collusion in any world without introducing an oracle or similar powerful assumptions.
You can do a LOT with crypto, but you can't cheat distributed consensus problems.
Sorry... it's math and elementary replay attacks.
To all the naysayers -- no, you can't handle it with a simple open vote. Really. If you have a perfect broadcast channel you might have room. Of course, I've just cheated by introducing the absurdly powerful assumption of perfect broadcast channel.
Maybe it's neat that somebody discovered how to beat bitcoin at 33.3..3 % -- but it was guaranteed to exist previously.
Bullshit headline of the year... so far.
Someone trying to buy some bitcoins for cheap?
Here is the commentary from one of the Bitcoin core developers: https://bitcointalk.org/index.php?topic=324413.msg3476697#msg3476697
This is an old known attack which is boring, made a little more interesting by also assuming that the attacker has sybil attacked the network and inserted itself between every node. The result is that they can mine a disproportionally large share of coins. Academically interesting, but not terribly significant.
Mostly it's just another example that overly large pools are bad for the network, and that preventing sybil attacks (e.g. by miners setting up additional trusted peerings between each other) is useful.
Gold, salt, silver, greenbacks, plastic, bitcoin. Take your pick, None of it cures society of thieves, bank robbers, or scoundrels. And anyone who guarantees your money is secure is probably complicit in its theft. There will always be ways to steal your coin. Bitcoin just limits who might steal it.
You can't establish value in a distributed fashion any better than with proof of work (that we know of right now). For a stupid alternative, look at ppcoin, which plans to eventually rely on "proof of stake" but currently relies primarily on proof of work.
Take a look at Timekoin then, basically flies in the face of that logic, even offers a $10,000 bounty if you can prove them wrong. Many think it is trivial to break but none have been successful. Proof of work in bitcoin is not really any proof of work either because it's just a guessing game, no actually complex math with complex outcomes comes out of bitcoin.
"Proof of work in bitcoin is not really any proof of work either because it's just a guessing game" -- it seems you don't understand proof of work. If you don't do the work to guess, you don't get the right answer very many times.
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Sounds like the author wants to buy some cheap BTC.
Are there any virtual currencies yet that don't suffer from the deficiency of having to be "mined"?
The idea of wasting energy to "mine" virtual money is just silly. It's time for a better system.
We take the "sense" out of "sensational".
...at least we know what Catherine Zeta-Jones will be doing this newyear...
AKA Gold.
If someone has found a way to hack gold, they have had the good sense to keep quiet about it.
How is this modded interesting?
It a currency is not scarce, it is not valuable.
HAHA!
Serves you idiots right. Now get this Bitcoin crap off my front page.
Maybe you don't? Proof of work is something you do that requires work and there must be an easy way to check that the work is done. Proof of work is suppose to be consistent. So if you want your work to be find a prime number larger than 1 trillion, after the number is found; then checking it is fast and easy. But finding it may have taken a long time. Finding it will take a long time if an identical machine tries the same work. So that is proof of work, two machines can confirm that finding that prime number takes work.
Bitcoin is, for lack of better terms, pseudo-proof of work. The work is to guess a random number + some other bits of info and make a hash. Then keep trying random numbers until you find a hash with enough zeros in the front to meet the target. Two identical computers guessing numbers will end up with a different proof of work. One computer might guess the answer before the other. So how to do you gauge which machine really did the work? Well, the machine that won claims to be the winner and has a way for the other machine to check quickly. If the other machine had continued working, it might find a different answer that is also correct, but took longer. Why is its proof work any less valid than the machine that by luck found an answer first?
So again, bitcoin is not proof of work in the true sense. It is proof of luck. The paper basically shows that proof of luck is really no good when you get people involved because it is just like the lottery. You can play the billion dollar powerball all by yourself and never win. But what if you could gather everyone in the country together into one large lotto pool, the winner would share the winnings with everyone. So even if everyone only got $1 from the lotto, you still got something right? No one would play the lottery if the "mega-pool" of people are always going to win. Bitcoin by contrast suffers from the exact same human produced issue. Case closed.
Why 25%? This appears to be a violation of the Zero-One-Infinity Rule.
Any sufficiently unpopular but cohesive argument is indistinguishable from trolling.
when the tulips start to bloom again.
"But remember, most lynch mobs aren't this nice." (H.Simpson)
-- Joe
my pool of size 0 will become rich
How is this any different from physical currency?
They keep changing the money to make it 'harder' to counterfeit, but I don't think they're succeeding...
Hacking bank accounts or investment portfolios and adding ten zeroes to the balance would have the same effect, no?
There has to be another way to establish value for a virtual currency.
Er, the only way of creating value for a currency, or for anything really, is through scarcity.
I don't think you quite understand how prime numbers work. If it's easy to check that a number n (known to be larger than some m, for example 1 trillion) is prime, then it's also easy to find the first prime after m, due to the distribution of primes. For example, you only have to expect to test about 14 odd numbers greater than 1 trillion to find one that is prime. So if the test for primeness is "easy," then finding the first prime number larger than 1 trillion is only 14 times as much work — i.e., still "easy."
The time to buy bitcoin as a money-making venture for all but the people who are wealthy enough to not need to use it in the first place is past.
File under 'M' for 'Manic ranting'
Maybe you don't? Proof of work is something you do that requires work and there must be an easy way to check that the work is done.
What sha1 hash salted with ABCDEF ends in the hex: 01234? 01235? 01236? Please show your work, and explain why your average workload to solve this type of problem will not be consistent?
You gotta get the miner first. Then when you get the miner, you need the power. Then when you get the power, then you get the bitcoin.
Of course, there is no way to acquire Bitcoins other than mining for them, right? And, there is also no better use than as a store of value, as savings, or as an investment. Is that what most seem to be saying. There is no way of using bitcoin that couldn't give a s* about it's mining process.
On June the 12th I got myself 2 bitcoins. More to see how it works with the vendors than anything else. I understand the crypto side of it. I had forgotten all about it.
Then along comes this article. It reminded me that I had a couple. So I check the bitcoins and they've doubled in value, look peaky and there's a story of impending collapse.
So I just sold them and I'll wait patiently for the collapse.
Yay for unstable currencies.
I should use this sig to advertise my book ISBN-13 : 978-1501515132.
Most proof-of-work systems are probabilistic. Can you cite one that isn't?
Anyway, if you're doing a lot of proof-of-works, then the average amount of work is pretty consistent.
Looking over Timekoin quickly, it looks like it restricts currency creation by network addresses. That seems trivially exploitable by someone with a lot of proxies, or many IPv6 addresses. lol
And yet Japan's been trying to devalue its currency by making it less scarce, but investors keep valuing it higher. I guess your quantity theory of money fails.
So the more wikipedia readers there are, the less valuable wikipedia gets?
The headline is just plain FUD. The ideas presented in that paper are merely theoretical. Not only would it be extremely difficult to achieve the right conditions to execute the attack (at the expense of losing money when you fail), but the paper makes vast assumptions about the social response to it working. Basically, the conclusion was "if this works [which it probably won't], then everyone will collectively make decisions that destroy the network because that's the rational thing to do." Obviously, it's not so rational if people don't want to see the system collapse.
This doesn't mean it should be ignored. It's an interesting "attack" that should be kept in mind as the protocol is developed further, but it's not even close to "bitcoin collapse". The headline is perhaps just wishful thinking of the submitter.
Fundamentally, I can't think of anything aside from bitcoin that would serve its purpose.
Real mining creates the scarcity by the fact that mining gold or silver is work and fairly rare. That said, it is pretty wasteful and costly to the environment... all to create a currency of scarcity.
Fiat currency are essentially virtual currency with the 'database' controlled by central bankers / government. They control the scarcity. Basically though, whoever is in charge gets to manipulate the currency directly. This turns a lot of people off this method. In my view, the 'miners' in this case is the financial services sector (bankers, debt...).
Some have suggested tying the monetary base to a set level of inflation or something like that. But still controlled and highly susceptible to politics...
Something like bitcoin that essentially makes scarcity a function of computing power. At least the miners will advance and utilize computing power. Better than mineral mining in my view. Unfortunately, trust is pretty hard in this kind of distributive system. I have no idea if I can trust it.
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Did you read the paper? It clearly shows that there is no such thing as "the right conditions," nor are they hard to achieve.
People will want to join the mining pool which pays the most. That's going to be a selfish mining pool as long as it's below 50%. When it reaches 50% and above, it is the only game in town.
It looks like there is some wishful thinking here, but it's not in the paper, it's in the Bitcoin community. I'd much rather have us acknowledge and fix problems, instead of pretend that they don't exist.
To see a prof of mine on Slashdot
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Could this be a NSA back door disguise as a vulnerably fix?
If economic value could be created without the need for scarcity, you and I would be paying for air.
That's called Alchemy. It's been done for centuries. ;)
Yes; Precisely.
The more wikipedia readers there are, the higher the bandwidth bills wikipedia pays.
Since wikipedia has no advertising; they have to resort to groveling to get their money.
Groveling makes people hate wikipedia - therefore it is worth less.
QED
Oh, there's lots of ways to "create value" out of nothing. BTC so far is a bit too small to really attract the attention of the big money guys (except say, the Winklevoss twins who claim to own about 2M BTC themselves).
Once the finance guys figure it out, you can expect BTC will be used to create monetary value by the big guys who can play the exchanges off each other and other things.
Another way, though, is to use an $80 Unity plugin attached to your game to mine bitcoins using mobile CPUs. Yes, developers can now embed a BTC miner with their mobile app to earn Bitcoins using your phone's CPU. Naturally, the company behind it fails to tell you the impact to your battery life...
A currency has value only from what people will trade for it. Scarcity is only important in so far as it informs that. The US dollar isn't really scarce any more, as the Fed has established what amounts to an infinite pool, but that's a slow-motion effect and locally it still works.
Socialism: a lie told by totalitarians and believed by fools.
Do you believe the supply of US$ has any but the weakest connection to the amount of paper money? Do you believe bitcoins any different if banks ever care about it?
If banks ever start offering BTC-denominated savings accounts and loans (I supposed we'd call them euro-bitcoins at that point) then scarcity is right out.
Socialism: a lie told by totalitarians and believed by fools.
Oh, the bitcoin community is perfectly OK with misconceptions (bitcoin is anonymous, you need to control 50% of the mining pool to cheat) as long as they prop up the price.
xkcd is not in the sudoers file. This incident will be reported.
How much to control Bitcoin? I.e.
How many computers is that? Or should I ask how many hashes/s or something else? How much would this cost?
vs.
How much are all Bitcoins worth at the moment?
Somebody in the know, please make a crude estimate. If the later figure is much larger, only then does such a finding spell trouble.
The distributed nature of the blockchain means that bitcoin doesn't scale. Without the blockchain you cannot validate a bitcoin, this means that as the numbers of users increase, the blockchain will become increasingly centralised with small numbers of gatekeepers who have the necessary capacity to process the chain. Think hundreds of millions of people trying to make transactions over wide area networks.
Whether Bitcoin itself is deflationary or not is completely irrelevant. The bubbles and crashes we see are related credit creation and destruction by banking institutions, not the underlying currency. I.e credit/debt bubbles.
What needs to be controlled and limited is banking institutions abiltily to create credit. Bitcoin doesn't even prevent banks from creating Bitcoin accounts and creating credit based on Bitcoins as an underlying currency.
Does anyone REALLY believe the NSA hasn't had the computing power to overthrow bitcoin at the drop of a hat ever since bitcoin's inception? Tour the cryptologic museum and behold we had boxes in the gulf war that still far surpass our standard desktops/laptops of today.
The FBI 'siezed' some bitcoins by taking control of Silk Road, but what if the US government did what they did with gold during the New Deal in 1933 with Executive Order 6102.
Imagine, "All your BTC belong to U.S."
There has to be another way to establish value for a virtual currency.
Virtual Bernanke
Go FISH!
Somebody please warn the Winklevii. Didn't the buy a lot of bitcoins ? Otherwise they're gonna sue someone, and lose. And I don't want to hear about these two guys any more.
Most currency is fiat currency, and the value arises due to the fact it is the only form the government will accept in payment for taxes. Hence, you need to get your hands on some, and that's the value.
[FUCK BETA]
It's effectively a poisson distribution, in which case the standard deviation is significant in comparison to the average.
Of course, the law of large numbers will converge a large enough number of individual poissons (or anythings) onto a normal distribution, but for bitcoin the proof of work is not for "a large enough number of" results, but for a single one. That single tweak - asking for 16 results that are 16 times easier, say - would increase the fairness, and decrease the luck aspect, significantly. Likewise it would make the generation rate far more predictable. Alas, I suspect it would have some other unwanted side-effects too
Also FatPhil on SoylentNews, id 863
"Rational miners will join this pool to increase their benefits, creating a snowball effect that may end up with a pool commanding a majority of the system's mining power. Such a pool would be able to single-handedly control the blockchain" Sounds like a description of feudalism (at least the economic side). Im not sure that the system can escape being transformed in the same ways economies and currencies have throughout history.
I was under the impression that it still described exponential growth in transistor density. For an embarrassingly parallel problem like the hashing involved in "mining" (blockchain validation), transistor density does in fact correlate well with overall throughput.
UK prices
There's the problem. Just as minerals are more plentiful in one part of the world than in others, energy is more plentiful in one part of the world than in others. Mining happens where the resources are plentiful. So move the mining out of Great Britain.
I don't see where the math adds up here. Let's say you have 33% of all mining at your pool. You have a 1 in 3 chance of finding a valid block solution before anyone else. So, you win it and hold it and secretly work on a 2nd block since blocks are based on the data before them. Now you happen to find a 2nd block that works before anyone else does. Finding one valid solution is unlikely but finding two before anyone else finds one is exponentially harder. Then they expect them to find 3? It would happen less than 1% of the time.
Now the other problem is they claim "as soon as another pool is about to find a valid block, you release yours." That's impossible. As soon as another pool broadcasts that it found a solution, the others check it, and it's already too late. Work is non-progressive so you can't tell if another pool is "getting close." So then it'd be a gambling thing. If you find a solution and start working on a second one without telling anyone and claiming your 25 BTC reward, you're more likely to lose to another pool before you find a 2nd valid block value. So you'd be holding it, holding it, holding it, oops you lost it and got 0 BTC.
I did further research on this, since it sounded really familiar, and it's exactly what I thought. Not only does the exploit not work in reality but we've known about it for 3 years and nobody has exploited it, mostly since it doesn't work.
Let me summarize it: It's a >50% attack except less than 50% and it just relies on probability and luck and the purpose isn't to fake data. In reality, it doesn't actually work reliably.
But what I wonder is if there be any other way to create value for a virtual currency?
The ONLY, not 'other', way to give currency value is to create an economy with it. That goes not just for BTC, but for $ or gold or anything else. It only has value when you can exchange it for something you value more. To that end, you can find many people who are adding value to the Bitcoin economy simply by accepting it for goods and services, sometimes at a greater exchange rate than the cash equivalent. The people who mine, in contrast, are leeching off that value; fortunately their impact is limited, unlike the value that can be drained by institutions like the Federal Reserve.
there is an alternative that doesn't use Proof Of Work that is a distributed database: Confidence Chains
This is a well known fact and always has been. That is why manufacturers choose to sell their units instead of using them to mine. It's also why people don't allow pools to grow beyond 50%.
I think this is the beginning of bitcoin becoming useless. Time to reboot it.
Everyone into the pool!! Isn't the solution to simply make everyone a member of the same pool?
and at the moment the only real reason that anyone can [exchange BTC for USD or any other tax currency] is because there's a lot of idiots thinking BitCoin will make them rich
This is little different from any other currency, commodity, or security. Speculation drives liquidity whether or not a government accepts a currency for tax payments. You can exchange dollars for euros because some forex day trader is exchanging euros for dollars.
the future of the currency will depend on whether you can pay for gas or your electric bill with them. Since these companies don't need BitCoins, they're unlikely to accept them.
That depends on whether by "gas" you mean "petrol" for fueling a vehicle or "natural gas" for heating a home. If Bitcoin catches on among the public, petrol stations might try to draw customers away from the station across the street by accepting BTC payments from mobile wallets, just as they started accepting credit cards at the pump. Natural gas and electric power, on the other hand, are special cases. Utilities like these tend to hold exclusive franchises with a city, which is a taxing authority, so they have an incentive to accept only the same currency that the city accepts.
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