How so? If the NSA really hated bitcoin, what would they do? Even if it were made illegal in the US, the United States are not the world, and it would be extremely hard to enforce.
Edit: gavin has a plan (http://gavintech.blogspot.com/2012/05/neutralizing-51-attack...) but my guess is if they did the work to start an attack in the first place they'd have planned for gavin's plan and acquired enough older coins to foil it. It'd be nice if more thought went into other ways to thwart a possible attack but I'm not sure there really are any. Most people seem to discount and completely avoid the issue.
The people who do black ops don't generally do so to help the financial sector. They do so for national security. While the economy (and monetary system) is arguably a national security issue, I can't see them all being on the same page. The guys in treasury would probably rather talk to regulators than intelligence.
Simply banning them, and enforcing that ban would work though.
http://www.washingtontimes.com/news/2012/dec/19/north-korea-...
1) Bitcoin is a p2p distributed network with nodes all over the world. Even if a nuclear attack took out the entire US, the network would continue to work as long as segments of the Internet did (and recall that the Internet was originally designed to protect US data networks from nuclear attack).
2) It's quite simple to spend Bitcoins as long as you have access to a Bitcoin node (see above) and a copy of the 32-byte private key string corresponding to the public Bitcoin address the coins were sent to. This short string of characters can be written on paper, etched into stone, whatever.
Given that the BitCoin community/industry has been getting hacked lots and there is widespread ignorance of security ("unsalted md5s for passwords!"), I don't have faith this'll change.
Blacklist the Bitcoin exchanges and any foreign financial institution that transacts with them from the U.S. financial system. The script was updated with the twin salvos against online gambling and Iran.
But heres the question: how long would it take for governmental bureaucracy to amass the resources to execute such an attack without raising a flags from other nodes who then will take proactive measures to not only mitigate such attacks but also alert others nodes on the network?
Do you really thing that purchasing a hundred million dollars worth of ASICs would alert anyone? The government spends far more than that in a given year, and there are government agencies that are good at keeping secret operations of that size secret. I would not rely on the inefficiency of bureaucracy when it comes to equipment procurement, certainly not as a security measure.
Also, what exactly would the honest nodes do to mitigate the attack? They can only buy more computing power to try to maintain control of the block chain. That is the real problem here: the effort needed to run the Bitcoin network is proportional to the effort needed to attack the system.
"It's trivial for an attacker to fill the network with clients controlled by him. This might be helpful in the execution of other attacks. For example, an attacker might connect 100,000 IP addresses to the IRC bootstrap channel. You would then be very likely to connect only to attacker nodes. This state can be exploited in (at least) the following ways: The attacker can refuse to relay blocks and transactions from everyone, disconnecting you from the network. The attacker can relay only blocks that he creates, putting you on a separate network. You're then open to double-spending attacks. If you rely on transactions with 0 confirmations, the attacker can just filter out certain transactions to execute a double-spending attack. Low-latency encryption/anonymization of Bitcoin's transmissions (With Tor, JAP, etc.) can be defeated relatively easy with a timing attack if you're connected to several of the attacker's nodes and the attacker is watching your transmissions at your ISP. Bitcoin makes these attacks more difficult by only making an outbound connection to one IP address per /16 (x.y.0.0). Incoming connections are unlimited and unregulated, but this is generally only a problem in the anonymity case, where you're probably already unable to accept incoming connections. Looking for suspiciously low network hash-rates may help prevent the second one. "
One could even go further to do signal analysis on the network looking for nodes whose hash rates are more similar than others and hash rates per period of time (which will happen if such a large scale operation were in process), point them out to other nodes, and require that that node verify themselves with information which could allow for an independent audit by others before unflagging the node(s) in question.
EDIT: if anyone is interested in possible working on an open source project for rogue node mitigation that miners can install on their rigs, im game :P besides i think it would be more fun than going solo with my algos on the BTCUSD cross exchanges :P
The NSA is one of the largest employers of mathematicians in the world. They don't sit around doing Sudoku all day.
Well, the NSA couldn't do much, but the federal government could. The CIA could set up Bitcoin exchanges then have them "hacked" for one thing.