Why Bitcoin is a Prime Target for Hackers | Hacker News Reader

Why Bitcoin is a Prime Target for Hackers

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30 pointsExtremeML20 comments

Whenever I see reference to bitcoin mining botnets, I wonder if this couldn't be implemented on a legitimate level. Call it "mineware", and the way it works is that you get a piece of software for free, but while it runs, it mines bitcoins for the developer.

This would be particularly well suited for professional graphics software. There you have customers with high end hardware, but that hardware is sitting idle for a large chunk of the time. The mining could be tuned to conservatively curb its CPU/GPU usage when other processes needed it. The end result is that you fully utilize a resource you have in order to get software for free.

The biggest problem, of course, is that this kind of breaks down if more than one developer does it.

This is similar to what CoinLab is doing. Gamers run the the CoinLab mining client in exchange for in-game currency.

That's cool to see that the idea is being explored, although I think gaming is absolutely the wrong market for it. My understanding is that GPU processing is really where the money is for mining, and while a gamer's system likely has idle CPU cores to exploit, GPU is a rather precious resource for a game.

The idea is to mine when not playing the game. I know that some people seem to play games 24x7, but most people don't.

This is one model we've explored. There are a few like this. What we're finding is that it comes down to distribution, really.

Also, tuning GPUs to work 'conservatively' is a non-trivial engineering challenge.

It does repeat the no-fee meme, which is an odd one. As I understand it there is a default fee and the mining/validating crowd are under no obligation to process your transaction if they don't want to.

And it's such a good target for a few reasons, the irreversible nature of transactions is one thing, another is that the authorities don't really care to get involved.

The default fee is currently very small (0.01 BTC) per transaction. Compare that with credit card fees of $0.35 + 2.5% per transaction, and you will see the draw of Bitcoin for large businesses with lots of credit card transactions.

The transaction fee mechanism is a helpful free market tool that gives more freedom to Bitcoin spenders: for low-importance transactions, the spender may choose to save on fees at the expense of a long, uncertain confirmation time.

Of course the miners have no obligation to anyone, and at this point in the game, block rewards are high enough that transaction fees do not really factor into the decision on the transactions to include in the block. As block rewards shrink, transaction fees will become the miners' main source of income, so fee-less transactions will take much longer to be confirmed.

Sure, there are low and/or optional fees. However these will likely increase in practical terms in the long run. Whether they ever increase to the level of credit card fees, for a fast transaction, is unknown.

This is still not 'no transaction fees and taxes in the least'. I would anticipate that if it ever gets wider traction we'll start seeing attempts to tax commerce in Bitcoin , just like real money. Bitcoin income should probably already be declared in many countries.

Bitcoin transactions are taxable in both the U.S. and Europe, regardless of whether Bitcoin is a currency or asset.

Not reporting Bitcoin transactions is income tax fraud. In the U.S., at least, that potentially means that the statute of limitations for when the IRS can go after you for back taxes and penalties never expires.

Out of curiosity, what would be a motivation for not including a non-fee-paying transaction in the block that you are trying to generate?

I mean, theoretically, for each transaction that you are including in the block, the longer it would take to hash the block with the appropriate nonce (I believe that's what the 'extra random number' is called?), but is that the only reason for not including them? ie. the less transactions, the less time it takes to test each nonce?

I seem to understand the basics of BTC... it's the deeper, sometimes less technical, concepts that trip me up.

The Bitcoin protocol itself has remained largely unattacked though. Of course, it's quite likely that the only reason for that is that there's no instant and irreversable way to convert Bitcoins to some other currency and withdraw them in large enough amounts to make the attack worthwhile. Other, smaller Bitcoin clones which can be exchanged for Bitcoins have had double spending attacks against them and all sorts.

There is a default fee but not a mandatory or built-in one. And the most popular clients will process any transaction with or without a fee.

The answer: Money.

The more answer: Anonymous, digital money.

The strengths of Bitcoin are its weaknesses. If you stash thousands under your mattress and your house burns down, you're out of luck (sort of. The Secret Service will replace bills if you can send them mostly burned versions.) If you completely delete your Bitcoin wallet, you're out of luck. If a robber breaks into your house and steals your cash stash or a hacker gets into your computer and steals your Bitcoin stash, you're out of luck.

It's not that easy though.. Bitcoin transactions are public, and the community is relatively tightknit. Eventually a thief has to use a payment processor to get real dollars from their heist, and from that point onwards look over their shoulder in public.

Really?

I thought the general consensus was just to let it all go, spend maybe a little effort tracking the coins as they get moved, but eventually lose them in the system, and then forget about the whole thing.

Correct me if I'm wrong, but AFAICT nobody's watching the coins that got stolen from (say) bitcoinica so that they can either refuse to transact with them or go beat them up. In fact quite the opposite, the community as a whole seems entirely resistant to the idea of any sort of coin blacklist. AFAICT.

Bitcoins are pseudonymous. Not anonymous.

Answer:

1) Money 2) Vulnerable

Doh!

QFT.

I mean why even waste the time writing an article about it? The answer is obvious.

If you do double-spending in a short period of time (while it hasnt' propagated yet), won't both people claim you paid them? I think people's reputations for this sort of thing should be in the system and somehow managed as well.

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