Topic: Transactions Withholding Attack - page 10. (Read 27544 times)

Sorry I still am the first person to write about this attack, unless someone cites for me a specific written prior art.


No that is not the attack described in the OP. You've entirely missed the point of what makes pools different from a cartel of retailers such as Amazon et al (all the small shops that sell through Amazon).

What makes it different is the customer never interfaces with a pool and a pool interfaces with the actual miners.

I am writing about the customer interfacing directly with the miner at the miner's website or POS terminal, i.e. Amazon could have its own mining farm of computers.

The point is then Amazon can start to delay the transactions of those who are not in its cartel (also starving the rest of the mining network of transaction fees). This can eventually force customers away from non-cartel stores and to cartel stores (where store means website and/or POS terminal). Which thus increases the cartel's relative mining power over time, thus increasing the delay for the non-cartel stores. Thus it spirals until the cartel has 100%.

Sorry your rebuttal failed. Your pool and miner game theory points make no sense in my described attack.


Indeed! That is why the attack I described happens.

The cartels will take over the mining.

I mentioned the 0% transaction fee aspect of this attack upthread.

Slow down and re-read the thread more slowly and reflect it on it for a while before you post again.

Don't make noise here please. I will get angry. Be professional.

I've decided to respond to this theory in as much detail as I can muster, since it seems to be a perversion of my 'Walmart versus Target mining cartels' concept from two years ago....



Indeed, it does make no difference.  I makes no difference now, however the miners are funded.  Mining has always been intended to be a competitive function that tends towards a zero markup.  I'll get there soon....


No, we could do it sooner than than that, and I expect it will happen within the next two years.  However, I don't consider it an attack, I consider it a feature.  I'll explain why shortly....


Not even close to being the first.  This is one of the set of memes that pops up repeatedly under the many "I'm a noob, but I alone am so smart that I have discovered the Great Bitcoin Flaw!" posts.  

Let me summerize the root of this (assumed) attack vector, for clarity.  If I miss a fine point, I'm sure that you will point it out, and we can adress it then.


As I understnad it, the thoery is that a greedy mining pool could choose to withhold fee-paying transactions that it has received, and retain them until it has solved it's own block; with the implication of boosting it's pool payouts relative to other pools. In turn attracting pool miners away from other pools, until such point that the first pool controls more than 50% of the total mining power, functionally owning the Bitcon network.

There are many counter-economic effects that would contradict the leverage that such a mining pool could gain over the network, so I'll only go over a few of the most significant.

First and foremost; the mining pools, nor any other miner, are not significant contributers to the fee paying transactions on the bitcoin netowrk.  Said another way, it's not in the interest of merchants to only submit their transactions to one mining pool, even if it's the largest.  It's in the interest of merchants to spread any transactions intended for themselves as far and wide across the bitcoin network as possible, as that reduces the risks involved in a well timed double-spend attack.  And being a p2p netowrk, there is no way for a mining pool to prevent any valid transaction from spreading regardless of whether or not that particular mining pool forwards said traansaction to it's competitiors or not.

Second, the largest miners have an economic incentive to cooperate with one another with regard to the bandwidth and information flow across the network, since working together they have a small, but notable, speed advantage over small mining outfits that must rely on slower Internet connections.  The more and faster peer connections major miners have to one another, the faster that they (as a group) can include those fee paying transactions into their own queues.  The faster they can do that, the more likely that whichever miner (among themselves) to solve the next block will have all of the fee paying transactions available at the moment.  Any effort to corner the market on transactions would be regarded as not playing square with the rest of the major players, and will end up getting that pool cut out of the core of the network, and edge connected miners have a slightly higher rate of orphaned blocks as well.

Third, one unstated premise with this kind of attack vector theory is that the fees and block rewards are the only way that professional mining operations can make money.  This has never been the intended result of a mature bitcoin network.  Since mining profits are desinged to trend towards zero, the protocol permits 'out-of-band' methods of paying for transactions.  For example (and this is where we get to my Walmart verus Target theory from two years ago), it's expected that as Bitcoin matures, major retail outfits will not only start accepting bitcoins for meatspace purchases, they will also start supporting mining themselves.  Likewise, one such advantage that Walmart could offer over it's competitors is free transactions accepted at the counters.  Since it's not safe to accept such transactions without confirmations, it then becomes highly in Walmart's own interest to sponsor a mining outfit that will process free transactions intended for Walmart's own wallet of addresses as quickly as possible.  Said another way, it's in Walmart's interest to pay a mining out fit (be it a mining pool, a seperate company, or an internal group to Walmart corporate) to process transactions at a loss.  Of course, it's also not in Walmart's interest to process a competitors' free transactions (i.e. Target) in the same way, so Walmart is also paying to keep Target's free transactions out of their own mining pools.  This sets up competing cartels, that each serve different players in each industry.  Say, as an example, that BTC Guild took contracts to mine for Walmart, McDonalds & Sears; while Eglius took contracts to mine for Target, Burger King & JCPenny's.  While this certainly is consolidation of the market for mining services, and consistant with the dirve towards driving the profit margin for mining to zero (or perhaps lower, under certain conditions) it's also impossible for there to be only one, because if any single mining pool were to gain more market share over the others, the others would suddenly be able to offer these out-of-band services for much cheaper to unrepresented merchants.  The cartels are, thus, self limiting in scope with regard to the bitcoin network itself, which is all that we really care about on the macro scale.

And fourth, there will always be a minority of small and sigular miners that mine at less than zero profit for various reasons.  One such reason is simply that mining produces heat in the winter, and thus a mining rig, once you already own it, is nothing more than an elector-resistive heater.  If you live in a area with both a high heat demand & relatively chaep electricty (i.e. Iceland) any actual coins your mining rigs produce become secondary profit.  No mining pool will ever be able to compete with that, if for no other reason than bandwidth consumptionbecomes a greater burden than solo mining in this context.

Questoins?  Objections?

That is incorrect. A cartel grows because the competitors have no economic means to deny joining it. For example, with Rockefeller's Standard Oil he gained economies-of-scale that were impossible to compete with if you weren't larger than his operation. So you couldn't compete on price, so you had to sell your operation to him or join in the cartel.

Cartels are only unstable when the government breaks them up. But the government doesn't really break them up of course, they just pretend to. For example, they broke up the telephone monopoly, but then why does the USA have the worst price-performance internet in the developed world? Because the monopolies were sustained via a cartel of the entities created from the break up of the former monopoly. This is because cartels and government sleep in bed together.

Perhaps you missed the following quote which I wrote upthread:

Actually the situation is precisely the opposite of what you assert. In a free market cartels tend to be unstable because it in the interests of members to cheat.

Sorry but you don't understand the technology well enough. The reason most readers dismiss my posts, is because they lack knowledge to ascertain how correct I nearly (as in 99.9%) always am if I've studied some matter for a sufficiently long time.

The attack as described in the OP is for example the customer issues a spend with his her private key to the cartel for example on the cartel's website or POS terminal. The customer would either give the private key to the cartel or sign in a client-side application provided by the cartel which would send the spend only to the cartel's server. Either case supports the attack. The masses do what they are told to do when visiting a retail website or storefront, as they just want to pay and be done with it. They don't care about your technological nirvana idealism. It is irrelevant to their purchase at that moment where they want their pizza and be on their way.

You raise an irrelevant point about double-spends (which incidentally I have also refuted in the preceding paragraph), because the offchain strategy was JoelKatz's idea and has nothing to do with the attack described in the OP. And I resoundly refuted JoelKatz's technical points as pertains to this attack.

This attack can't be disproven. I've thought out it for months and debated all comers in my Bitcoin : The Digital Kill Switch thread, as well in this thread. You can bet that none of the core devs will come here and debate me, because they know they will lose. And it is the sure way that any crypto-currency without perpetual debasement ends up as the government coin.

The only reasonable counter-point upthread was from DeathAndTaxes. Which I believe I also refuted because the cartel punishes competitors and thus takes a larger and larger market share over time, but everyone is free to make their own estimates on his point.

P.S.  JoelKatz is apparently a Bitcoin developer, but not a core one.

In your 'cartel' situation, who controls the private key for the customer's wallet?
If it is the customer, then the cartel website cannot sign a spending transaction, and so cannot withhold it from the network, it would have to be send by the customer.
If it the cartel, then the customer cannot sign a double-spend transaction.

Agreed on your first sentence which is support of my theory.

Disagree on the second sentence. Please re-read my last reply to JoelKatz on the profits cartels make by eliminating the competition.

But as long as it clears before Amazon ships, nobody will be the wiser.  And if Amazon is putting that much processing power into the network to save a few measly fees, I still think it's a net loss for Amazon (in our hypothetical).

I guess I am not so stupid after all, the author the selfish-mining paper took an interest in my proposed fix.