Topic: Transactions Withholding Attack - page 4. (Read 27579 times)

Interesting idea OP.  

There is one disincentive to using this "attack". If Amazon used such a technique they could hurt the value of bitcoin and their own bottom line. Amazon does not want to hurt bitcoin it wants to profit from it. I suspect they will develop a bitcoin payment gateway that adds value with services such as escrow. That is where they can make a scalable percentage into perpetuity, rather than a short term mining trick that drives users away from BTC.

Which is of course why Amazon and Walmart have formed a cartel to control credit card payments, denying their fees to existing players like Visa and Mastercard, with such low payment costs that other merchants have been forced to join their cartel.
Oh wait, they haven't done that, have they?

The cartel starts with less than 50% of the hashrate, therefore their transactions are delayed on average longer than non-cartel transactions are, therefore, by your argument, customers should leave them for the non-cartel parties.
You have handwaved at this by saying that the cartel can just accept transactions without waiting for confirmation, but that non-cartel merchants can't, without giving any good reason why.


The cartel loses money because they refuse to process transactions (and thus take transaction fees) from other parties.
Other parties profit because they are (unwittingly) withholding their own transactions from the cartel.
The cartel has less than 50% of transactions, therefore they lose more fees than they withhold from the non-cartel parties.
Therefore, by your argument, the cartel mining hashrate will reduce due to lower funding.


Exactly the opposite.

Take away all the cartel fluff, and what you are basically saying is that someone who can fund a major portion of the network hashrate, and take constant losses due to refusing transactions, can delay transaction processing.
That isn't a new idea.
You've really failed to show any link between that, and a rational reason for Amazon et al to attempt such an attack.
The purpose of the attack would be to damage Bitcoin.
The purpose of Amazon is to make money.
Damaging Bitcoin does not make Amazon money.

jajansen,

The cartel profits along the way because customers leave the non-cartel because the transactions for non-cartel customers are delayed by an ever increasing delay as the cartel's % of the hashrate rises.

The cartel profits by keeping all their transaction fees to themselves starving the network of them, thus reducing the network hashrate due to lower funding for all the other miners, thus increasing the cartels % of the mining hashrate (did you forget to read upthread that the cartel is mining?).

I hope you see I just described a spiral in favor of the cartel.

Amazon and Walmart together control a large chunk of transactions in the USA. If they jumped in early (e.g. 2016 or so) before most other merchants had, they could command a huge percentage.

I agree some government force could destroy bitcoin, but not a cartel (this cartel is never gonna exist) of companies, they will never arrive to the attack, as for the members of the cartel, it would pay NOT to subsidize. (isnt it the same as opec cartel members completely not following opec policy, but going for own gain, at the cost of the other opec-cartel members. As to say, the opec-cartel, does not exist...or better said, the opec intends to be a cartel, but never was and never will)

As you state its a slow process where the cartel gains power, with in the back of their heads the idea of being able to raise prices later when the cartel-strategy succeeds...
Also please note that amazon transactions are and will be quite a small part of the transactions. It would really have to be some kind of supercartel like never seen before in history (and theoretically unstable, so it will never exist as the cartel how it was intended).
Total world production is like 70 trillion, so then (if all pay bitcoin), some 25 trillion stable cartel would have to come up.
Also most transaction in bitcoin will still be the cup of coffee in the morning in the small cafee (ok...starbucks....)

This economical attack I really see it not happening. (if governments have to be involved, I would rather call it a political attack)
If a cartel cant exist, then how can it make the attack?

Sigh.

So you have no answers, and just refer to your previous non-answers.
People can see that, you know?
(And you'll write 10 more pages, either in this thread or another, because you can't seem to help yourself)

murraypaul, read the thread. It has been covered already. Your replies are nonsense, and you will see it if you understand the upthread discussion well. You are not paying me to be your secretary. I refuse to rewrite all the prior discussion and distill it for you.


I am just shaking my head at how stoopid (or too lazy to read upthread) you are. It is hopeless for me to explain it to you. Would have to write 10 more pages and you still might not get it.

Sorry to have to be so frank, but I don't know how else to put it to you.

jajansen,

Why do you assume force and possibly government collusion won't be involved?

You can't win the debate by arguing that cartels have never existed.

You attempted to construct a strawman and say that if cartels don't use force or government collusion, they are unstable. And I agreed and said the cartel attack would thus destroy Bitcoin if the community creates an altcoin that is resistant to this attack, i.e. rendering the outcome unstable for the cartel in agreement with you. But that does not invalidate the attack (as it stands against Bitcoin and clones). And it would actually require the free market to create an altcoin that is not vulnerable to this attack.

What does that actually mean? Simply paying yourself fees that you could just pocket in the first place doesn't leverage anything.

That makes no sense. Generating empty blocks would delay other transactions just as much as generating blocks with their own transactions.


Of course they can. In the off-chain scenario, customers would deposit funds to addresses in a cartel wallet, and therefore would have no opportunity to later double-spend them. If you wanted to buy a dozen things from Amazon over the course of a week, rather than a dozen separate on-chain transactions, you would buy Amazon points up-front, with a single on-chain transaction, then spend those points off-chain.
This isn't exactly a new idea. It is how existing stored-value systems work, like Apple gift cards, Microsoft points, Sony PSN wallets, existing BTC exchanges...


They can take the fees from the customer either way, it makes no difference whether they then actually spend them as transaction fees.
(Plus, they would gain more customers by instead waiving the fees and offering cheaper processing than non-cartel merchants)

The above factors don't make sense, so this doesn't add anything.

the attack is technically incorrect i think, because cartels theoretically are inherently instable. (or an organisation that calls itself a cartel,really never exists as a cartel, unless they want to know them selves a cartel) (just anecdotical read something about opec cartel, http://edwardjayepstein.com/archived/opec3.htm)

I asked you for naming me 1 succesfull stable cartel, not thanks to governmenthelp (or even a government cartel).
I still did not get any reply for this.

The cartel you describe is simply trying to disrupt bitcoin, and is willing to pay a price for it.

You could make it more simple: what if amazon and some friends buy 1 million asics, and mine only their own transactions, others will loose business, because their blocks get mined too late, have double spends, etc etc

If Amazon-cartel does not subsidize its mining department, then how ever can they gain traction just because they get all the work from their own network? (even refuting others transactions so loosing business)
Amazon is here by doing this basically loosing money, as they give all transactions to their daughter company, where another mining company might be willing to do certain transactions at certain times for lower fees.

Anyway: amazon/cartel (which is inherently instable as all members of cartel could earn more money by not obeying the cartel-rules) will have to subsidize its mining activities, and thus invest in something, for which later the cartel should receive some kind of payout.

I dont see this attack happening really...

Do you realize how frustrating it is for me when you think you've discovered a flaw, yet you haven't read the thread carefully, because I have already refuted that 3 or more times upthread.

You can reread the discussion I had with JoelKatz about offchain transactions.

A few of the points against offchain:

* cartel can't scale up by leveraging the existing network
* cartel can't delay non-cartel transactions to force their customers to the cartel
* cartel can't prevent the customer from spending the BTC else where if cartel doesn't process onchain, thus doesn't deprive non-cartel of revenue
* transaction fees are paid by customers thus it is revenue
* they generate profit by growing the cartel, using the above factors

I think I made other nuanced points upthread on this line of thinking.

The only transaction fees they will receive are from transactions they generate. They are just paying themselves, that can't generate profit.
Exactly the same result would be achieved by just mining their own transactions for zero fees, or processing them off-chain.

I agree with your thought process and thus if this Transactions Withholding Attack is technically correct (which it is), then it means Bitcoin won't sustain in a free market (i.e. assuming no force).

Thus I hope you see your thought process does not invalidate my attack.

Question: can you come up with 1 successfull cartel/monopoly, which does not exist due to force( gunpoint, government)

Of course many times competing companies might make agreements to make higher prices etc, but i want to know of a successfull cartel existing over some period of time.

In an unregulated economy, there are no cartels ( my point of view)

So this discussion, as for me, can also be reduced to whether cartels really do ever exist anyway to start with. ( would like to hear some examples)

If not, then might bitcoin give rise to the possibility of successfull cartels?
Cartels is something from a static world i think, ours is very dynamic and ever changing.

And realize that because of those 2 things, this is horrific case where the cartel can both continue to profit on the transaction fees, i.e. it doesn't have to sacrifice by offering lower prices, and depriving the non-cartel miners of (increasingly greater share of) income while also depriving the non-cartel merchants and their customers of fast transactions.


They are also depriving the non-cartel miners of transaction fees too, so on balance they are still earning just as much before because the proof-of-work difficulty will decline (relatively speaking) as non-cartel miners lose income too.

Risk of double-spends against a cartel is basically nil since most everyone is a repeat customer. Cartels have mass.


But they can't gain mass by causing the non-cartel to have delayed transactions, which forces customers to switch to the cartel for faster transactions. And if they don't have mass, they can't be as safe from double-spends, since their repeat customers may be fewer.

Really this is about destroying the small merchants. Bringing everything into a few competing cartels. Then the cartels merge because they can raise prices.

I already wrote all of this upthread.


I don't understand. Please try to explain more clearly. I don't think so. But let me read your more lucid logic?


Political is one threat.

There are many hypothetical attacks emerging on Bitcoin, not just political:

https://bitcointalksearch.org/topic/m.3716861

So basically you say the cartel will for bigger future profits, now not reap the profits of non-cartel transactions. (that do give transaction fees, transaction without fees I now disregard, as i find it normal nobody wants to work for free...)

So analogy in the ´real´world in the sense that a cartel of shops somewhere lower their prices substancially, running losses, to outdo other shops to bankrupcy, and after that raise prices and earn a lot of money ?

Also I noticed you talk about 2 things: firstly a cartel not forwarding transactions to other miners, secondly a cartel not accepting transactions from non-cartel members.

The first thing I find completely OK, as they are running risks here for double spends I guess (if somebody double spends in other shop, and they find the block earlier), so up to them... The second not accepting transactions from non-cartel members (thinking about transactions that do pay fees, free transactions no need to be taken in blockchain anyway, as nothing is for free), then the cartel is refuting to earn money, and thus running less efficient than other miners / competing "cartels".

Basically another mini cartel (so not the big evil cartel being talked about) could mine its own transactions, and that cartel also accepting paying transactions from non cartel members will make more money, because they take up profitable transactions out of their own customerbase (out of their cartel).

Thats the whole thing, I dont believe too much in cartels.  Because as we see, the miner that would fake being part of the cartel, is gonna win.
(as the cartel is artificially lowering its turnover (not accepting certain offers on which they do make profit, read: not accepting transactions that do pay fees)

The only real cartel is Government itself (cartel by legislation, or by government making it difficult to enter a market due to excessive cost, etc etc), in a free market (without legislation) I just dont see cartels hold on any long....as each individiual member of the cartel is better of not being member of the cartel. (unless they think of in some future day being able to rule 100%...but they wont think that...)

Or do I completely miss the point you want to make?

What I see as a real threat to bitcoin, is not an economical attack but a political attack. (as to say, some group who thinks to profit from hurting bitcoin, simply ordering 1 million asics, and take 90% of the network.) (how difficult is that gonna be if all fees earned by miners are transaction fees....transaction fees not to be huge, to make a ultra secure network that cannot be overtaken with some billions of dollars.) So basically for bitcoin its a race against the clock i guess.

I received the following PM which I feel is very a good challenge to my hypothesis, so I want to answer it publicly. I maintain the anonymity of the author, as I want to encourage others to PM me if they don't feel comfortable to post their thoughts publicly. I normally won't quote a PM publicly, unless I overwhelming feel it warrants a public exposure.


Please refer to the upthread debate between MoonShadow and myself. I covered the stages of cartel from winning by increasing efficiency to the latter stages of hanging on past the point of being most efficient by use of (market mass and/or captured government) force, e.g. market force could be predatory pricing, exclusionary distribution contracts, etc.. I also wrote that so-called government breakups of cartel/monopolies are usually a farce.

Agreed the free market ultimately overruns them with a paradigm shift, e.g. Microsoft is entering its terminal decline now.


I am not omniscient enough to answer this question factually. I can only express an opinion. My current opinion is none of them, but I haven't studied them all deeply, so my opinion is more of an intuition based on what I do know about them.

Sorry I couldn't provide a more enthusiastic and satisfying answer at this time. I am working on finding the best answer to this question.

Interesting

Opinions are like assholes, everyone has one.