Money must be either scarce or based on the credit of the issuer (LETS, ripple) to work.

This is like saying that we all should be allowed to counterfeit dollars and there would be no inflation because no one would print them if their price goes below the production costs.

Also, bitcoin miner's calculations are the source of the bitcoin security. What those generating calculations are for? Just wasted resources?

The 10 year timespan is reasonable because the the coins don't become worthless after 10 years (at 6.25BTC/block), just twice more prone to a theoretical attack that is still very hard to pull off. There's plenty of time to fix the system and change the block rules for example to impose a minimal fee, thus making the "mine for fee model" sustainable.

Maintaining that bitcoins will be worth still 15$ in 6 years time (when the bonus drops to 12.5) is not actually "keeping all other things equal". It implies a major source of liquidity on the market in order to displace those miners that are currently cashing out. So I think a revenue lower bound of 1500$/hour is highly probable for the mining revenue in the next 10 years. On the other hand most of the buyers are currently motivated by hype and speculative mania, and they will be long gone if the price stays rock solid for years. This is why extrapolation for the next decades are useless, the pyramid monetary scheme will long destroy it before double spend becomes a major threat.


Frauding a few bitcoins, once discovered, is irrefutable evidence that someone has gained ownership of the 50% hashrate underpinning the security of the system. Since that someone can launch a devastating attack at any moment, aimed not at double spending but at disruption, and the same someone can rewrite history to assign ownership of all coins to himself, informationally efficient markets will drive the price very low to counteract that possibility.


That does not mean your trades are not subject to the law of the country where they are performed. Since bitcoins have a fair market value they are taxable and fraud will attract criminal responsibility. People have been indicted for stealing WoW gold. If you barter for a house with bitcoins and fail to deliver them the contract is void, and if you do it with intent you are committing fraud. Intent can easily be proven with your ECDSA signature on two transactions with the same source.

Firstly I don't find any relevance in speculating what will happen in a few decades from now. The block bonus will stay above 12.5 BTC for the next decade, and it's entirely possible that bitcoin will run it's course during this decade and fail for unrelated reasons. This is the internet after all. I've expressed my doubts that the "mine for fee" model is sound from a game-theoretical perspective: it seems the users are incentivized to pay a fee as small as possible (maybe 1 satoshi) since there's no way miners can differentiate on the market.

For the purpose of our discussion, in the foreseeable future and without massive growth of the number of transactions, the main motivation of the miners is the block bonus. At current prices the block bonus is over 500$/block and all other things equal it should maintain that $ value even if it drops to 12.5BTC: the miners that don't hoard are the main source of liquidity and if they inject less BTC the price will rise proportionally. So in order to rent 50% of the network you need to pay at least 1500$/h

Secondly, you assume you will be able to amass this hashing power surreptitiously and use it repeatedly without being detected. That's not realistic. Honest miners are unlikely to rent you the hashpower since it's obvious why you needed it. Furthermore, if the average player is small, you will incur a high price in contacting many of them, and you will need to pay way above market rates to attract them. You will need to advertise and attract further suspicion upon yourself. It seems highly unlikely that your criminal endeavor reach the same economy of scale and efficiency the open network has. You will either build your own hardware, a capital intensive task, or buy it off the black market at very high prices in order to maintain discretion, from a handful of players (Large conspiracies inevitably fail). An hour of 50% hashpower will then cost maybe 150.000$, not 1500$

Assuming you finally get to 50%, using it for a whole day will quickly attract the suspicion of the community. It's not reasonable to expect to use it more than a few times without crashing the bitcoin price and halting most bitcoin trades. You can't double spend a few bitcoins many times, you need to double spend many bitcoins a few times in order to recover your fixed costs, and before your attack tanks the exchange rate due to panic.

Assuming you manage to do all of the above and successfully double spend 1 million $ in BTC, the fraud becomes apparent quickly. If you buy a large house you will get caught and be indicted, I have no doubt about that. You need to launder the money quickly and maintain anonymity to pull a double spend. I believe it's much more effective to simply short the market and attack the network directly, assuming you have 50% hash rate (borrow BTC and sell out, then buy back in at pennies, no need be anonymous, just make sure the attack can't be traced back to you).

I was referring to the specific attack described in the paper, rewriting history from block one and assigning to yourself all bitcoins, which is clearly a stupid way to steal bitcoins - they instantly become worthless.

Regarding merely double spending your bitcoins that's even less of a concern: you still need to amass millions of dollars worth of hardware and millions dollars worth of bitcoins - so that you can double spend them a few times and recover your hardware costs. It also means you need to find a trading partner willing to sell you millions of dollars worth of merchandise for bitcoins, and do so in an anonymous fashion preferably over the internet so as to not get caught. Good luck with that plan.

The temporary mining revenue of 50 BTC/block and later 25 or 12.5 BTC will be worth much more if the bitcoin network is regularly used for multi-million dollar transactions as opposed to buying a few grams of hash or an alpaca sock.

This is all reason why profit-oriented attackers are implausible, or at least their profit will be derived from the failure of bitcoins: speculators, governments, banks etc.

It's pretty clear that rewriting the history is not equivalent with stealing everybody's money, rather it means destroying the system and making the coins worthless, so the likely attackers will not be profit-motivated by any definition of profit expressed in bitcoins.

The hashing power of the network already surpasses what could be accomplished by ~10 million commodity PCs, excluding even the largest botnets as worthy attackers.

I don't think the attack could be pulled off multiple times. Either the value of bitcoin would plummet, or the network hashrate would increase significantly prevent future such attacks. The attack can't be a recurring source of income.

So after all that effort in getting 23 GH/s, you only make $2,000?

But the ratio of cost to transaction value stays the same regardless of what the value of bitcoin is, since the cost of pulling it off increases at the same rate as the transaction value does, as the value of bitcoin increases.

Also, your claim seems to assume that all the transaction value in a block can be confiscated by the person doing the double spend attack, when in reality, the only thing they can steal is the money they transferred to others, by reversing those transactions, and NOT the entire transaction value.

It would definitely be much easier to attack bitcoin if transaction volume doesn't increase by the time coin generation becomes negligible, but your calculation of cost doesn't take into account the long term investment required to acquire a large amount of hashing power, not just purchasing the hardware, but getting the facility, setting it up, etc all of which have a huge fixed cost, and therefore the need to double spend for many blocks, to make back the cost of the investment.

So, you want them to assume that neither the transaction fees nor the exchange rates increase in the future?  Huge coincidence that both of those assumptions favor your side in the debate?

Thanks for conceding that.

But difficulty, and therefore cost of a double spend attack, is also proportional to bitcoin value, so the rise in the potential reward of a double spend attack, is canceled out by the rise in cost in pulling it off, as bitcoin value increases.

Tens of millions of dollars for hardware, and millions more for manpower is expensive for most groups in the world.

You couldn't even start on something like this with less than $2,000,000.

Several orders of magnitude more computing power than the rest of the world combined to manipulate the chain? Hmmm. One thing is clear, you only need 50% or less of the total mining capacity (supposedly currently worth 50 million dollar or less) [...]

If bitcoin is to be a successful currency, exchange rates and number of transactions will rise by orders of magnitude by the time coin generation per block has become negligible.

However, it's always safe to assume fees will be much less than total transaction value in a block, and therefore it's lucrative to calculate hashes of an forked block-chain with double-spent transactions.

Once again:

The cost of producing hashs is not a short term cost. It requires a long term investment in the hardware that produces them, so unless there's a way to double spend for hundreds of blocks without crashing the value of bitcoins, it would not be worth it. It would be more lucrative to just be honest.

That's not actually a response.  Just a statement about your intention not to respond.

You didn't waste any time on mine.  I'm still waiting for you to respond to any of my criticisms.

Oh, and Steve's paper has been refuted many times in many of the threads that he has posted it into.  Perhaps ridiculed would be a better word.

I wasted some time on it a couple of weeks ago.

When they become truly valuable, transaction fees will be worth far more than they are now, which will increase difficulty, meaning the cost of attaining 50%+ of the hashing power will be far higher than it is now.

I already asked a similar question in the newbie zone, and I got a yes answer, but I am still not totally convinced. I want to be sure that some people won something before placing my orders.