A Bitcoin battle is brewing
techcrunch.com
techcrunch.com
If anybody is claiming to take "block chain technology" and cram it into another system to make it decentralised, you ought to be showing them the door.
> Ripple disputes that they are affected, stating “All is fine and well with the Ripple protocol.
What Ripple/Stellar (same thing, different name) is a system which absolutely can not come to consensus under normal operational conditions. To solve this they have made the system entirely centralised, which isn't a problem for them but is for anybody who believes it to be decentralised. When you read things about Ripple know that there's two flavours: "Ripple", which is the original concept, and OpenCoin's "Ripple", which has a different technical underpinning. A lot of the early praise you'll see for Ripple was for the pre-OpenCoin version, which wasn't so heavily flawed as the one known today is.
I don't quite get why it's even mentioned in the parent article, it doesn't even have a block chain to begin with.
I've still not met anybody who can tell me what Ethereum is without using the words "turing complete" (which it's not due the halting problem, just like Bitcoin). Most of the information you can get from secondary sources seems to just mirror Bitcoin (you can do this awesome thing, but you'll need an oracle to do it..).
The idea with ethereum is that oracles will be able to have a much finer granularity; whether this allows for more useful apps still remains to be proven by us in the ethereum community.
(Also, there are plenty of folks like myself working on oracle-free apps, but since these are based on unproven economic models at this point, it would be negligent for us to promote them widely before we have evidence that such designs work in practice, on the live ethereum blockchain)
"Decentralizing the web" comes from bringing in other p2p protocols for messaging and storage. Eg., if you can use cryptocurrency contracts to pay for verified storage, you can make sure files stay available without using servers.
Oracles could be useful for contracts that depend on external data but aren't the only solution.
True for Stellar, untrue for Ripple. It's a stopgap while they work things out and reimplement the consensus algorithm; as the article said, distributed systems are hard. And I'd rather they try to replace mining with something not horribly energy-inefficient than assume that PoW is the only way to achieve consensus.
And yes, their ledgers are blockchains, they work in identical fashion, with consensus replacing mining.
If Bitcoin would gain widespread adoption and see transaction worth billions of Dollars every day, it could easily become a worthwhile attack target even at the mentioned attack costs. The only protection would be to use a lot more mining hardware worth billions of Dollars to make an attack to expensive but this in turn would also raise the energy consumption proportionally and in the end the costs per transaction. I think that in this regard Bitcoin is fundamentally flawed because - up to some limit - you want the transaction volume protected by a proportional amount of mining hardware causing proportional energy and transaction costs which then imposes a lower bound on the costs per transaction.
It's actually a lot cheaper to attack the network than you are stating, almost all mining uses Stratum which has been successfully redirected using BGP route hijacking in the past. It has no methods of authentication and does no way of integrity checking what it is mining against. A simple "mistake" in routing could have all of a countries hash power redirected to a malicious actor. You don't need power, datacenter or miners, a $5 wrench applied to the right head would do the trick just fine.
They don't have to be proportional but you want them to be. You neither want to transfer billions of Dollars only protected by mining hardware and energy worth a couple thousand Dollars, nor do you want to protect transfers worth a million Dollars with mining hardware and energy worth billions of Dollars.
The lack of possibility for a pricing feedback loop makes this all a little tricky too, as the system can't make any changes based on external influences.
I'm curious about this point. Is this true? Does the energy cost increase in proportion to the hardware cost? It seems like bitcoin mining hardware becomes much more energy efficient with each new generation.
Could you link to a source?
There's some background data in here: https://medium.com/@interdome/how-much-electricity-does-bitc...
Why cant bitcoin exist alongside them?
Someone with 51% of the network (as you say, costing $100M+ of mining equipment currently) could execute an arbitrary double spend attack. If they are financially motivated, they might try an attack like this:
1) Buy a large asset (say a publicly traded company, a huge tract of real estate, a closet full of gold) with bitcoin. 2) Wait for the transaction to clear. For a large asset purchase such as the above, this could take weeks. 3) Once the asset is in hand, use your mining power to reverse the transaction.
There is a critical flaw in this plan: you are obviously stealing, and the justice system will treat your actions as theft. If you try this for a reversible asset transfer, like real estate, they will reverse the transfer in addition to punitive measures. For gold, you might be able to hide the gold somewhere, but again at that point it is just common theft.
Attacks that are not financially motivated are a different story; a nation state or other party could try to 51% the network simply to destroy bitcoin. Of note here is the fact that nation states have more straightforward ways of hurting bitcoin, starting with outright bans.
"Blockchain technology" runs into one of the biggest problems on the Internet - identities are too easy to create, so anything based on voting has spam problems. Distributed identity is an unsolved problem. There's a long track record of failures, from Web of Trust to Facebook's "real names" policy. Bitcoin deals with this using "mining". The effect is to require operations the size of Google data centers to maintain a database and transaction rate one desktop machine could handle easily. Bitcoin isn't very distributed any more; there are about half a dozen big players. That wasn't the plan.
None of the alternatives look good. There's centralization (Ripple, Paycoin 2), proof-of-stake (the rich get richer), using algorithms unsuitable for ASIC or GPU implementation (big floating point matrix calculations, maybe), and various tweaks to make the block chain a tree so not everybody has to store the whole chain. So far, those are mostly talk, except for the centralized altcoins.
> using algorithms unsuitable for ASIC or GPU implementation
You don't want that. Give this a read.
http://coinmarketcap.com/all/views/all/
8 have a daily volume over $100,000: Bitcoin, Litecoin, Ripple, Dogecoin, Stellar, NewBits, Paycoin (XPY; there are two Paycoins), and Bitshares. Those, you might be able to sell without crashing the market. (Maybe not Paycoin, which looks like a pump and dump in the "dump" phase. See Reddit or any Paycoin message board for details.)
It's far from clear that will in fact happen - mined sidechains that aren't widely adopted by miners are insecure, just like small altcoins are vulnerable to 51% attacks. Even worse the 2-way-peg mechanism Blockstream proposes trusts hashing power to determine where coins go so an attacker not only destroys the sidechain, but has a direct financial incentive to do so because destroying the sidechain lets them steal all the money that has been moved to it. Equally even if a majority of miners support a given sidechain, they can always change their minds later and take the funds. (quite possibly due to a temporary problem, like a hack or a a court order)
To solve this problem Blockstream explicitly proposes that smaller or experimental sidechains without majority support use a "federated" model where one or more trusted authorities controls the sidechain. Of course, needless to say needing a trusted third party to keep the sidechain secure isn't a good solution in many cases - they're essentially acting as a bank and it's extremely difficult to design systems where that bank can't profitably steal all the funds.
Ultimately I think media coverage of this is really misunderstanding how sidechains are very far from a proven idea, except in the centralized model where you trust someone to maintain the sidechain. Equally it's pretty clear that they have a high risk of making the incentives behind Bitcoin mining even further tilted towards centralization of hashing power.
The blockchain could be used for many other things though that could be game changing, like a publicly distributed database with trusted data. but I don't think many really are able to understand how it really works, and I don't users would really trust it.
Uhhhhhh yeah, because the internet totally killed fax machines right? The last three fortune 500 companies I've worked for still actively used fax machines which were integrated into their copy machines. They're very much far from being extinct.
Bitcoins entered 2013 worth $14, a historic high at the time. By November 2013 it hit $1160 on the hype cycle. It has only fallen since then - it is <$320 currently, a historic post-high low.
It is going to keep sinking. It is worthless. It has no value. It is going to $0. All those who talk about bubbles and the dot-com bubble can see how the $5 billion Bitcoin market cap was created out of nothing. I mean, this is the central demonstration of a bubble, a scam, a Ponzi scheme in our time. Look at all the VC's and angels etc. shilling for this scam. Why not? They will make money, only the suckers who believe them and shell out $320 for these worthless hashes will lose money.
It's pointless to dwell on this too much, but the Bitcoin scammers are rampant on HN. They are trying every means to hype their worthless, valueless product, so this post will surely get downvoted to oblivion. Anyone who listened to me when Bitcoins were worth $460 and I said the same thing ( https://news.ycombinator.com/item?id=6753545 ) would have saved themselves a 30% loss. But the scammers here don't want suckers warned, this post will be downvoted to oblivion so people don't see it and the next round of suckers will get robbed by the scammers.