In part 1 of this friendly neighbourhood guide to killing a proof-of-work cryptocurrency, we looked at the myth of ‘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.
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 has to be banned because it appears to be making a significant net-negative contribution to society, disproportionately generating undesirable/criminal utility for little, if any, observable benefit to businesses and consumers. …
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 though the risk of harm in this direction may not be as immediately obvious to the senses as deaths from a contagious disease, it is no less real and it needs to be taken every bit as seriously. …
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 provides no meaningful assurances around double-spends. Under private conditions, 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 “wide and shallow” strategy…
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. …
Bitcoin is a Peer-to-Peer Electronic Cash System.
Its value to me as a person — as an end user ⼈ — is that I can use it, like cash, to pay someone. Like cash, I am free to create a transaction any time I want, with no-one else overseeing or handling the process.
Compared to cash, the unique value of Bitcoin is that I can use it on the internet. Compared to other electronic payment systems in existence today (e.g. …