Quote from: bulanula on November 20, 2011, 08:36:57 PM

Quote from: Meni Rosenfeld on November 20, 2011, 06:52:28 PM

This attack isn't the only thing you can do with high hashrate, though.

What else can you do ? Please share. Thank you !

You can reject all blocks which do not belong to you, to make sure you get 100% of the block reward rather than your hashrate proportion.

You can reject all blocks which do not belong to you and not include any transactions in your own blocks, to prevent any transaction from being confirmed.

Quote from: pointbiz on November 21, 2011, 01:40:00 AM

I think there are many misunderstandings about a 51% attack. There isn't much you stand to gain by using 51% of the hashing power to double spend. Let me explain...

There can only be one entity at a time who is in a position to do a 51% attack. It's not like everyone you transact with is suddenly going to burn you with a double spend. All the honest miners will focus their efforts on identifying who this 51% attacker is and not doing trades with them. Once it's known the network is under a 51% attack, the honest nodes will quickly start blacklisting addresses that performed double spends and limit the attackers ability to spend his coins. He would essentially be destroying all his coins.

Identifying addresses involved in double spending isn't trivial, especially if you consider that future advanced transaction schemes could make use of legitimately superseding one transaction by another.

Even if you could detect them, I for one disagree with the idea to blacklist addresses. And my own disagreement is indicative of the fact that it will be very difficult, if at all possible, to obtain consensus to do this, and even if so, the client software isn't set up for this and a lot of work would be required to enable this feature. Also, for this to work the entire network needs to agree which addresses are blacklisted which is also difficult, so you're guaranteed to have chaos.

The main misunderstanding is to think that the only reason to carry out a hashrate attack is to profit from a double-spend. More likely a hashrate attack will be carried out by someone who wants to destroy Bitcoin, or at least to profit from short-selling bitcoins. Generally, mechanisms to protect against profitable double spending will amplify the chaos that ensues during such an attack, making us more vulnerable to a malicious attack.

Also, once this starts happening the bitcoin rate will probably drop, and depending on the attack miners will have their blocks rejected so it won't be profitable. Miners will quit and then it will be even easier to continue the hashrate attack. And since the difficulty targeting algorithm doesn't handle sudden drops in hashrate well we have a whole new set of problems.

This is a problem which hasn't been solved yet. It is probably solvable, and I've written occasionally on some pieces of what I think the solution will be. And I'm sure you could respond with some additional protection mechanisms. But these all have their own pros and cons, and need to be carefully considered, agreed upon and implemented. We need to prepare in advance for the contingency of a hashrate attack. Otherwise the chaos of the event could radically shake the faith in Bitcoin.