Topic: Transactions Withholding Attack - page 12. (Read 27527 times)

I'm not sure you understand off-chain transactions. 

Lets interperate your sentence using what we have today:

1) I have bitcoins on MtGox.
2) I spend these bitcoins by sending them to another MtGox user or to MtGox themselves.  Lets say to buy a MtGox T-Shirt.  This transaction is recorded centrally on their systems.
3) I now send these bitcoins again (wat), but now using the blockchain.  I send them to Bitstamp.

How?

Eventually the 1 BTC would become too small as the 21M would become 42M, 84M, etc.. Yet that would help.

I am getting stoned (not the maryjane type) but still alive.

I think an altcoin is a more viable solution.

This issue isn't going to affect Bitcoin until most of you have long since made your fortunes and exited.

I have to concede that the mining reward will eventually drop to insignificant since I don't believe that Btc will double in value every four years once it reaches it's peak.

I have secretly wondered if maybe we should always reward at least 1 btc every block even though this would eventually lead to over 21M btc, but I won't say anything since I don't want to be stoned for blasphemy.

If the cartel records your spends offchain, then you can spend them again onchain to non-cartel merchants. The Bitcoin money supply would be in effect doubled, tripled, quadrupled, depending how many separate cartels do this.

But then how do the cartels spend this offchain money? Receivers of this money would only be able to trust it has value within the cartel members. So which copy of the money would be worth more? Depends which network has more value.

So it just adds chaos and risk to the cartel's outcome. It might be a way to destabilize Bitcoin, but it looks like customers and members of the cartel would revolt. So I don't think this would be attempted.


I already explained this to you upthread.

I didn't say they can withhold what you send from a non-cartel wallet.

I said they can withhold only transactions that their customers send on the cartel's wallet. The cartel will not permanently withhold these from the blockchain. They only withhold them from non-cartel miners. Once a cartel miner adds a block, then all these transactions get added to the Bitcoin blockchain.

The transaction you send from a non-cartel wallet client is affected because the cartel miners may refuse to include your transaction in the blocks they win. So depending on what percentage of the total network hashrate the cartel has, your transactions might be delayed. Eventually the cartel gains so much mass and has bankrupted the non-cartel miners, so then when you send from non-cartel client, your transaction never gets added to a block or very delayed.


Sorry for the delay but yours was the most difficult to explain because you were confusing some of the issues. So I responded to yours last.

I'm still waiting...

It declines asymptotically to 0 BTC. Eventually there comes a time when your argument is false. We could debate over when that time is, but you can not argue it never comes.

Your point is incorrect for another reason too. The difficulty did not decrease because if it did, the cartel can much more easily dominate the mining any way. So your income decreased while the difficulty did not. Therefor you go bankrupt. Your lottery point is irrelevant, because that lottery win still comes after a very long time and you are bankrupt by that time. Even though due to variance some miner might win the lottery before going bankrupt then certainly would stop mining, because the probability of winning it again before going bankrupt is astronomically unlikely. This is all in the math of probability.

Cartels have the incentive of cutting out their competition by offering lower transaction fees. They also have the other choice to keep transaction fees for themselves instead of trying to build market share.

Both of those are easy as doing nothing bad and both are more profitable.

Either way, they siphon from the Bitcoin mining network.

So now you are arguing that Bitcoin will not be popular for most mainstream commerce.

That is an insignificant cost. They just change the backend for the "1 click button" they have now. Customer has the option of adding a Bitcoin address account to their spending profiles.

Amazon spends money all the time on sprucing up their website. That is in their ongoing budget.


Cartels recapture promotion fees because they destroy their competition. Their competition has to join them, or end up losing customers. This is no different than predatory pricing of goods.


We already have whistleblowers trying to convince people not to use WalMart because it destroyed the decentralized small stores that used to exist in the USA. Failed.

We already have whistleblowers saying Amazon is centralizing commerce on the internet. Failed

Cartelization is the natural mode direction of commerce.

You can deny it if you want to. Study history.


Eventually asymptotically their revenue will be 0.

Then they don't have Bitcoins and aren't making Bitcoin transactions.   Problem solved.  Unless dominoes is also running an exchange (includin expensive MT license) I really doubt most users first interaction with  a Bitcoin wallet will be the dominoes website.

If I understand this right by 2033, the miner reward will drop to 0.78125 btc. If Bitcoin is as big of a success as the core believers expect, this may be in the neighborhood of a million dollars. I could imagine a lot of small timers taking a loss on mining just hoping to hit the jackpot. Even if Amazon holds transactions till they win a block reward, I think there will still be enough competition. Besides, if the world is headed towards decentralization, Amazon might be lucky to have 5% of the world ecommerce business.

Exactly.  So it's easier to keep selling them overpriced money making machines instead of running those machines yourself.

Well no.  Their gross revenue may increase 6% but then all of the costs in marketing their network killing centralized client, convincing the dumb masses to use it, promotional costs (like you said provide free txs), dealing with the whistle blowers and advocates convincing users to jump ship, etc, eat into that additional margin.

You also assume that other miners can't continue to operate profitably even with a reduction in revenue and will be forced out.

I am saying the masses don't know and don't care. They are not as paranoid as we are. They just want to click a button and order their Pizza. They have no clue how it all works behind the scenes. The go to Dominos Pizza and click the button the website. They don't go searching for a Bitcoin client.

That is a good point.

However:

1. If 6% is greater than their hashrate, it is still disporportionately siphoning revenue from the mining network. So over time it does build mass.

2. I think you underestimate the percentage of customers who would demand that amazon let them use any bitcoin client they want to. I rather think it would be 20% of global ecommerce and 100% of their customers (take it or leave it attitude since most of their customers don't know and don't care). So make that 15 - 20%, not 6%.

3. Cartels work together because that is the natural mode. I forget the scientific reason, but I can dig it up. So cartels in Europe, China, Japan and all over the world join together for mutual benefit. So this can be much larger than 20%. Don't forget your US History, Standard Oil and the way free "laissez faire" markets function.


Amazon can put their miners in Kuwait.


Refuted.

They can't.  He is saying you (and 99% of other Bitcoin users) will be stupid enough to use their fee withholding cartel wallet.  Of course the OP isn't stupid enough to do that, just everyone else in the world is.  The OP needs to save you from yourself.

Great argument.

How about you explain how a central off chain system can be vulnerable to double spends.  Explain to me like I'm a child, I don't care.

Also, if they are not doing it off chain as you say, how on earth they are able to withhold a transaction I send from my non-cartel wallet.

Well that would be great. But I don't think that is the way it will work out. If you are going to get that cooperation, you would do it now and if you can't fix it now, it will be more difficult to fix it later, because the vested interests will be so entrenched 20 years from now.

In short, the larger political systems are, the more difficult to get any consensus.


Eliminating which problems?

There is no building mass.   Say Amazon is someday 20% of global ecommerce involving Bitcoins and 30% of population is willing to use their centralized client.   Wow Amazon can withold a whole 6% of the mining revenue.   Margins for miners vary dramatically.   A server farm in kuwait (1 cent per kWh) may have a 30% gross margin when Amazon is subsiding their operation at a massive annual loss.

When you consider all the miners globally with low or subsidized power, I don't see it as a viable attack.  It is highly possible that "dual use" miners in the future providing home heating and hot water can operate at below electrical break even cost.   If anything they probably will starve the massive datacenter farms which simply can't compete.

No I don't think they will do it offchain. They will keep it onchain to maintain seamless interoperability while they attack.

I can see you are confused. Unfortunately I don't think you understand how Bitcoin works well enough for me to explain this attack to you. Maybe just let the experts debate me. I will try to reply to you, but seems you are really confused.