And The General Theory of Destroyment of Interest in Money

“But Joe, surely you don’t think Bitcoiners would just sit there and allow the attack described in Part 2 to unfold, do you? They will do something, they will innovate, the swarm of cyberhornets will defend their hive!”

Yes, agreed, true believers in the cause won’t go down without a fight and they will naturally look for a way to defend the network and their economic interests. This article is about what happens when they do.

Previous articles:

← How To Kill Bitcoin (Part 1): Is Bitcoin ‘Unstoppable Code’?
← How To Kill Bitcoin (Part 2): No Can Spend


In part 1 of this friendly neighbourhood guide to killing a proof-of-work cryptocurrency, we looked at the myth of ‘unstoppable code’.

← How To Kill Bitcoin (Part 1): Is Bitcoin ‘Unstoppable Code’?

Recap: We don’t need to stop the code. We’re going to exploit the Bitcoin protocol exactly as it is, break its guarantees, and render it useless instead.

Fire In The Hole…

You’re Steven Mnuchin, US Secretary of the Treasury. You’re good at numbers and economic astrophysics. Your star sign is ‘$’ and your spirit animal is the Federal Reserve.

Your team conducts an investigation into Bitcoin and concludes that it should be…

They say Bitcoin can’t be stopped. Just like there’s no way you can stop two people sending encrypted messages to each other, so — they say — there’s no way you can stop the Bitcoin network.

There’s no CEO to put on trial, no central server to seize, and no organisation to put pressure on. …

“When you know your enemy, and know yourself, you need not fear the result of 100 battles.”
— Sun Tzu, The Art of War

This is a war. The coronavirus (SARS-CoV-2) has invaded our way of life and forced us into a brutal double bind where we have to navigate two highly destructive threats simultaneously — one biological, one economic.

The people sounding the alarm on the economy are not wrong. The lockdown destroys jobs, businesses, livelihoods, and lives. The speed and scale of disruption caused by widespread adoption of this strategy is like nothing we’ve ever seen before, and…

This is a follow-up to my last post which was about understanding how double-spend attacks work in practice and why they matter.

tl;dr — 1) Nakamoto consensus via proof-of-work doesn’t provide meaningful assurances around double-spends. The proof-of-work your full node sees guarantees almost nothing about the finality of transactions. 2) It’s not a safe assumption that the sunk cost of ASICs (non-repurposable mining equipment) represents a fixed deterrent to attacks.

To my knowledge, every article and economics paper that has looked at 51% attacks and the security of Bitcoin’s proof-of-work mining game has assumed single transaction attacks, overlooking the following…

How double-spending works in practice and what must be done to prevent it

Trust minimisation is the idea.

That’s what Bitcoin is all about — being able to hold and use money without relying on custodians, intermediaries, or central planners.

You, by yourself, have everything you need to validate every single bitcoin and transaction that impacts your life, and the total money supply. You can know in an instant — with certainty — that the bitcoin you own is real and represents a precise fixed proportion of all bitcoin in existence.

No-one can stop you spending your bitcoin however you want, and it works the same everywhere on Earth. …

Why do people say Bitcoin is a pyramid scheme?

Answer: Because people who own bitcoin (or PWOBs) are so often found trying to convince other people who don’t own bitcoin that they should.

And because it’s easy to see there’s a self-serving incentive in play which might explain why — PWOBs make money whenever more of the world decides it wants to buy bitcoin.

As new people buy into the game, the whole structure gets lifted higher and higher, making the earlier buyers richer and richer. …

Joe Kelly

The map is not the territory •

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