Post
Topic
Board Economics
Re: Hostile action against the bitcoin infrastructure
by
Innomen
on 27/12/2010, 02:14:34 UTC
Just to contribute a potential attack methodology...

Wallet eating viruses. Since there is a fixed number of bitcoins, the system in effect has hit points and consistent wallet attacks could crush the currency by attrition and give rise to something akin to a deflationary spiral.

The nature of the wallet is in my opinion the weakest link of the bitcoin system followed closely by the inability to readily exchange them to other currencies.

I would like to somehow store my wallet in the network itself, or dispense with the wallet entirely somehow, so if my computer is destroyed or I am prevented from accessing it, my money is not destroyed/lost.

This problem will only get worse over time when one realizes the majority of Internet connected devices on the planet are phones, this pretty much assures us that eventually we'll have mobile versions of bitcoin, making wallet loss and destruction ever more common.

Forcing end users to secure their wallet file in effect forces them to be techies to feel safe enough to use the currency. This is a non-trivial problem because perception is a huge part of any currency's value. And right now the number one biggest problem I would have in convincing family and friends to use the currency is when they realize they have to treat a file on their computer like a sock full of life savings.

Regardless of the reality of the situation the perception will be that your money could vanish at anytime and as a result of that adoption rate be pressured downward as the acceptance of the currency climbs. Or, as bitcoins become more worth stealing, the anxiety of the wallet file will increase.

to make matters worse there also seems to be a conflict of interest with regard to wallet files and this problem generally since the more coins that are destroyed the more the rest of the coins are worth. We've created a common good problem where it makes individual sense to encourage the destruction of wallets to inflate your own assets.

Wallets need to be made secure and permanent along with the rest of the system, and yet those most in a position to do this are most motivated not to.

In my opinion if bitcoin ultimately fails, this will be why and a cunning government will exploit that truth to disastrous effect.