Quote from: itod on October 15, 2013, 07:57:45 PM

Quote from: Tehfiend on October 15, 2013, 07:05:22 PM

I haven't thought too much about it but one bad example would be the operator of a large pool like BTCguild would have the advantage of hiding their bids by including their transaction in their next block without transmitting it to the entire network. Or they could "bid up" their own auctions by transmitting a very high bid but then negating it by include a different transaction in their next solved block. Other bidders would see the high bid and try to outbid it while that transaction actually gets rejected, if that makes sense. I'm sure far more clever people could think of more sinister ideas Tongue

BTCguild can do all that, but only if they solve the next block. It's very risky to broadcast fake high bid, if you don't solve the block that amount will be included in the blockchain and forever gone from BTCguild's wallet. I don't believe they would do such things for just any auction. It's questionable also if they have software solution to play with such a things, remember you would have to send fake Merkle tree hash to all your pool miners, different from the publicly broadcasted tree. Members of your mining pool may notice that. I seriously doubt they would risk such things, their reputation and pool earnings a worth to them much more.

If you are bidding up your own auction and don't solve the next block then your only risk is winning your own auction and you can just try again. I agree these examples are not very feasible but only including bids in solved blocks removes a lot of possible exploits along these lines IMO.