Post
Topic
Board Bitcoin Discussion
When does it become fraud? The ethics of bitcoin mining and zero-confirm TXs
by
Peter R
on 05/03/2014, 20:28:54 UTC
Fraud is usually considered a detriment to a prosperous society, and most societies have laws and social pressure to discourage such behaviour.  A common definition of fraud is:

    fraud: wrongful deception intended to result in financial or personal gain

The poll question relates to the ethics of bitcoin miners facilitating double-spends for users for profit.  

BACKGROUND:  Successfully double-spending a zero-confirm transaction is difficult.  If a customer broadcasts a transaction to pay a merchant, and simultaneously double-spends those coins to an address under his control, the merchant's listening node will very likely detect the double spend attempt and the customer will not be successful.  If the customer waits until he has left the store with his merchandise before broadcasting the double spend, then most network nodes won't propagate this transactions and most miners won't add it to their memory pool, and again the customer will not be successful.  

However, if the customer can broadcast the double-spend transaction privately to a miner that controls, say, 10% of global hash power, over a non-public back channel, and if the miner agrees to replace the original transaction (the payment to the merchant in our example) with this new transaction, then the double spend will be successful 10% of the time.  

If a miner offers this service for profit and if customers use it to deceive merchants, would you consider the miner to be complicit in fraud?  


(This is not a discussion about enforcement, just whether or not this qualifies as fraud in your opinion)