Topic: My Response to Ben Laurie’s ‘Last Word’ on Bitcoin - page 2. (Read 7424 times)

I was addressing a claim that it would be lucrative to gain 50%+ of the network power and double spend. I wasn't claiming that people would only want to fraud bitcoin for personal profit.

Proponents of bitcoin have trouble grasping the fact that "evil empire" won't care about the lucrativity. Bitcoin is powered by fiat and probably always will be, there is almost no way to separate the two unless electric companies start taking bitcoins as payment. If someone wants to mess with bitcoin purely to mess with it, the resources required are far from insurmountable. Crashing bitcoin would be the endgame, not a side effect.

The author, Ben Laurie, is actually a software engineer and cryptographer.


If bitcoin is to be a successful currency, exchange rates and number of transactions will rise by orders of magnitude by the time coin generation per block has become negligible.


Once again:

The cost of producing hashs is not a short term cost. It requires a long term investment in the hardware that produces them, so unless there's a way to double spend for hundreds of blocks without crashing the value of bitcoins, it would not be worth it. It would be more lucrative to just be honest.

It's a response stating the conditions on which I will respond with respect to content.

I see now your motto is 'Usually right, but not polite.', and I'm wondering how far that'll get you. My motto would be: I'm happy to be proven wrong and I thank those who spend their time and effort to do so. But if you want me to return the favour, you'll have to ask nicely.

That's not actually a response.  Just a statement about your intention not to respond.

Actually I did respond:

http://forum.bitcoin.org/index.php?topic=14693.msg215507#msg215507

You didn't waste any time on mine.  I'm still waiting for you to respond to any of my criticisms.

I think the reason that PDFs like this evoke so much anger is that since they are camouflaged as peer reviewed research papers,
intelligent readers are expecting high quality. Reading the original Satoshi paper was VERY exciting and stimulating to the imagination! But when we go in with high expectations and then find drivel, we are understandably upset.

Oh...haha, ok. So pretty much all of my thoughts that came to mind as I read the original paper have already been expressed times ten by other people.

'Ridiculed' is exactly the right word. And the reason I choose to waste my time on such reactions.

With 'truly valuable' I mean value that can be depended on, no matter what that value is. I certainly don't want to speculate about whether that value be higher or lower, but if it were higher, transaction fees would be worth more than now. But if I do a rough guess of the transaction fees (by inspecting a few blocks on the blockexplorer), they're now about 0.05 - 0.20 bitcoins per block.

That means, if exchange rates wouldn't change, a ROI of 0.2% of what it is now and with that an expected difficulty of 0.2% of what it is now. A not so huge investment is necessary for that.

I know, fees could rise, the exchange rates could rise, the number of transactions per block could rise. However, it's always safe to assume fees will be much less than total transaction value in a block, and therefore it's lucrative to calculate hashes of an forked block-chain with double-spent transactions.

Oh, and Steve's paper has been refuted many times in many of the threads that he has posted it into.  Perhaps ridiculed would be a better word.

I wasted some time on it a couple of weeks ago.

This PDF is also rubbish. Every point in section #3 is incorrect, and demonstrates the author's lack of understanding of the system. For example:


Wrong...the payee saves a copy of the transaction. Just one of the numerous errors in the paper.

This article, thinly masquerading as a scholarly work, is full of crap. It is a clear example of what happens when a non-programmer, non-technical person combines a word processor with a PDF creation tool.

When they become truly valuable, transaction fees will be worth far more than they are now, which will increase difficulty, meaning the cost of attaining 50%+ of the hashing power will be far higher than it is now.

It would also never be lucrative to fraud the system through a 50%+ attack because it would reduce the value of the bitcoins you have.


The cost of producing hashs is not a short term cost. It requires a long term investment in the hardware that produces them, so unless there's a way to double spend for hundreds of blocks without crashing the value of bitcoins, it would not be worth it. It would be more lucrative to just be honest.

I like the idea of proof-of-existence, where you plug yourself into your computer, and one Satoshi is distributed for every heartbeat.

love this phrase.. that really does sum up so much of the bitcoin criticism that I've heard.. fixation!

The reason you have no idea how it could work is because it can't work.  We hash the chain directly because it is impossible to fake the effort.  Using anything else opens the door for forgery.

I tend to agree with the sentiment, if not the details, of lauries objection, i.e. that bitcoin should be made more efficient.

What I wish were possible is if proof-of-work could based on furthering some scientific endeavour – searching for life in space, folding protein chains, etc. I have NO idea how this could work technically, however. Perhaps something like, you chose which project you wish to support, and the open market trades that work into a fair amount of coins that you can then spend. Or something. I really haven’t though this through, it’s just a sentiment.

About one month ago, I wrote a little paper

http://www.newbitcoin.org/documents/newbitcoin.pdf

in which I stated that ‘Bitcoins are not truly decentralized’ and that developers should refrain from hard coding ’correct block hashes’ in a reference implementation.

At that time I didn’t fully realize the implications of what Ben Laurie now stated more formally. So the rest of the paper is an attempt to establish an improved decentralized currency, based on a ‘block-chain’ created by 50% or more cpu-power.

Meanwhile I have come to the conclusion that it can be easily proved that as soon as bitcoins would become truly valuable, it would be lucrative to ‘fraud’ the system by gaining more than 50% of that cpu-power.

1) Gain 50%+ of the computing power.
2) Generate transactions favouring you and have them included into the block chain.
3) In the mean-time, with your 50%+ power, start creating a forked chain, with your coins double-spended in different transactions.
4) Publish the fork when your original transactions are accepted and collect the benefits of your new transactions.

At the moment each block generates 50 new bitcoins, and it would take a huge investment already to gain 50%+ of the cpu-power involved.

In the long run however, blocks will only be rewarded with transaction fees and (a market equilibrium will form where) the cost of producing the hashing power needed to find a block will be equivalent to the total of transaction fees in that block.

Assuming transaction fees are much lower than the value of transactions in a block, the cost of forking a block are then much lower than the rewards of the double-spended coins.