Topic: how %51 attacker can double spend ? (Read 1067 times)

http://bitcoin.stackexchange.com/questions/5540/what-does-the-term-longest-chain-mean

what is the longest chain ?

Ok but after quick panic, mining pools readjust, and everything goes back to normal

While the sudden price drop only profits speculators/opportunists who want to buy up coins cheaply.

There may be mining pools who already plan such things, and go for a quick manipulation, who knows.

From my point of view, Bitcoin becomes unreliable and deeply flawed. This is unacceptable for a currency.
Not everyone will agree but I'll jump off the boat.

So after the network size gets back to normal, price wont go back?

I think it will be the ultimate FUD, where opportunists can load up on tons of bitcoins ultra cheap.

I guaranteed you Bitcoin will become effectively worthless as soon as a 51% attack occurs. Price may not go down to 0 instantly, but Bitcoin will lose its essence.

As for the second point, all it takes is 1 person to notice and it will start a shitstorm.

ChainExplorer.com and Amph are correct. However, there are some misconceptions.

Someone with more hash power than the rest of the network combined (more than 50% of the total) has the ability to create a longest chain all by himself and replace the end of the chain with his own version. Here is a simplified version of how it works:

1. Attacker sends bitcoins in a transaction as part of a trade for something (e.g. cash), and the transaction is included in block X.
2. Once the attacker receives the item in the trade, after perhaps 6 confirmations, the attacker begins secretly re-mining blocks starting at block X, but replaces the original transaction with another transaction that spends the same coins.
3. Because the attacker can mine blocks faster than everyone else, eventually his version of the block chain catches up and become the longest chain. Once the attacker's version is longer, he publishes it and it become the "official" chain.
4. The original transaction is now unconfirmed because it was left out of the attackers chain, and it is rejected as a double-spend. The attacker keeps both his bitcoins and whatever he received in the trade.

First misconception: A 51% attack is not economically viable.
Note that in a 51% attack, the attacker gets all the block rewards, so if regular mining is profitable, then so is a 51% attack, assuming that a 51% attack does not reduce the value of a bitcoin. If the attacker does not continue to mine selfishly after doing the double-spend, then the value of the double-spend would have to be some fraction (less than 50%) of the value of the mining equipment in order to pay for the sudden increase in difficulty.

Second misconception: A 51% attack will destroy bitcoin.
What happens to bitcoins to Bitcoin as a result of a 51% attack really depends on how the people holding bitcoins feel about it. If they feel that the attack is not malicious and doesn't hurt them or the value of their bitcoins or their ability to spend bitcoins, then nothing will happen.

Note that in a 51% attack who's sole purpose is to do a double-spend, most people won't even notice. The only people that might notice would be the miners, the victim of the double-spend, and the various people that monitor the block chain.

1. The attacker mines or buys 2 Bitcoins worth of victimcoin

2. The attacker sets up a few nodes in a private network and start mining with more than 51% of the network hashrate on his own chain. Telling nobody else about it

3. The attacker on the main chain send his 2 bitcoins worth of coins to an exchange. Then sells them. And withdrawals his bitcoin

4. Once the attacker has his bitcoin from the sale of victimcoin in a address controlled by him, He creates a transaction on his own chain where he never sent the coins to the exchange. Sending those same coins to another address he owns (to prevent his tx to the exchange from slipping back into the blockchain).

5. The attacker verifies his blockchain is longer than the main blockchain. And has more work than the main chain. If so the attacker tells the rest of the network about his blockchain.

6. The main blockchain is reorganized. Everything since the attacker started mining his own chain is invalidated. And overwritten with the attackers private chain. Because the attacker had more mining power on his chain. he had more proof of work. Making this possible.

7. The attacker now has his vicitmcoin and the bitcoin he got from selling them at the exchange.

He spent them once going to the exchange. And second time to himself. The exchange is now short 2 bitcoins worth of victim coin and the attacker has gained 2 btc at their expense

This is how one would double spend an altcoin. Double spending bitcoin would cost hundreds of millions of dollars in mining equipment and your actions would directly devalue said equipment. But the same steps apply. Replace BTC with USD and victimcoin with Bitcoin

i'm not entirely sure in the details but going by logic, one possible way could be that he can spend on the real chain and then spend again on the chain he created that now it's the longest chain

he can also prevent transactions from being confirmed, this mean his own transaction too

They could have millions in coins but before they could exchange them to cash the double cash would be caught.   And most likely all BTC they got would be useless.

Also some of the big pools were talking about millions.  So why give up a constant revenue for a possible 1 time thing that destory's future. ... It will not happen.

They won't be able to make much as people will realize soon and stop

Of course it would make them money. They would be able to make millions in a very short period of time. but would destroy bitcoin in the long run. 51% Is only possible if the top 3 pools become very greedy or have a government/bank agreement

You need so much hash it is not going to happen.  People will argue but yes if top 3 pools got together they have enough hash...

But it would not make them money in long run.  They would be destroying the very thing that made them money.  I feel safe it will not happen.

https://www.youtube.com/watch?v=bi2thGzzNSs

how can it be ? i understand he may not include the coming transactions to the block but how he can double spend his bitcoins ?