Post in the series “bitcoin mistaken claim of the month”.

Bitcoin Wiki and 51%

I have today looked at the official Bitcoin wiki which is there to “document [bitcoin] problems openly”

and provide an open forum with “loads of discussion about bitcoin’s problems” according to an official and highly respected source.

https://en.bitcoin.it/wiki/Weaknesses

I have checked and ooops, sorry, in fact, there isn’t any discussion there whatsoever. This wiki is all about educating bitcoiners in a top-down way, and they can only discuss their doubts elsewhere in some forums.

So far so good, the wiki isn’t particularly bad, though it is looks a bit neglected.

According this wiki, there are no problems in Bitcoin whatsoever. Well, for sure there is a brief section about 51% attacks. This section however does NOT even get into the part entitled “Might be a problem“. It appears in the subsequent part entitled “Probably not a problem” and this under a highly misleading title:

“Attacker has a lot of computing power”.

Quite happily just below they correct it and say it is rather about temporary control not ownership. They explain that the exact scenario is when he “controls more than 50% of the network’s computing power” and they make it clear it can be temporary: “for the time that he is in control”.

Not so good, but not yet very bad.

In fact even controlling is still an over-statement… The attacker just needs to hack the communication: man-in-the-middle attack, super classical, yet the wiki does not even mention this term! Or he can trick miners to mine through his own malicious pool, or his own malicious crypto currency, and this for limited time like 1/2 hour. The cost of blocks mined during 1/2 hours is NOT large (maybe 75 BTC) and could much less than the potential gains (between 500 and 2000 bitcoins are at risk of double spending in each single block).

Now this official wiki at numerous places refers to another article about Bitcoin attacks reportedly written by David Perry for more general audience and this one is really very badly mistaken. It is a concentration of common archetypal misconceptions about 51% attacks. We hear that “the 51% attack is the oldest and best-understood attack in all of Bitcoin” and that “we all know how it’s supposed to work” and that “the “fix” is built right into the client – just wait for your 6 confirmations” (ignoring the fact that 6 confirmations are certainly not enough if a larger sum of money is at stake).

Are 51% Attacks Costly?

More importantly the author claims that 51% attacks are “so amazingly cost-prohibitive to perform that we’re basically talking about a government focusing the full power of every top-secret ridiculously expensive supercomputer they’ve got at us”.

Knowing that just 10 pools command some 75% of the hash power (possible coalition) and the attacker just essentially needs to subvert 10 computers and make innocent miners mine on a different block than they think they are mining, HOW does it make 51% attacks amazingly cost-prohibitive?

In fact the real ‘close to taboo’ topic which some people simply do not enjoy to discuss in the bitcoin community are NOT the hypothetical or possible attacks, but one simple hard fact about current bitcoin.

The fact that bitcoin is  excessively centralized, 1 person controlling 51% or 10 pools controlling 75% does not make such a big difference. This is simply a violation of the original idea of bitcoin by Satoshi Nakamoto.

Remark: Here is a longer presentation about 51% attacks.

Can Bitcoin be Improved and/or Reformed?

It is clear that bitcoin is under-developed and in a serious crisis. More generally, bitcoin needs to be reformed, basically fixed, in order to be saved from the EXCESSIVE centralization which is “a serious threat” to the very existence of bitcoin and its good reputation, and is also just contrary to the original idea of bitcoin by Satoshi Nakamoto which is expected to be decentralized.

A well-known bitcoin core developer Peter Todd has recently also become frustrated by this careless and easy-going attitude regarding to the 51% threat and centralization of bitcoin. He recently proposed to reform bitcoin in order to make it less centralized. He has said that: “it will take a system failure to get people to agree” and “it might take a disaster to get the consensus to fix it”.

Note: Peter was recently hired  to work on a specific alternative conception of Bitcoin 2.0 technology.

LINKS ADDED after this post was written:

• Some major bitcoin governance questions are discussed here.
• Here is another paper on the question of double spending.
• Bitcoin remain super-fragile and forks can occur. In July 2015 bitcoin core software has been been on a red alert, see here. Suddenly serious forks have occurred and we are told that “Please continue to wait 30 more confirmations than you usually would wait before accepting a transaction”. Yhese forks are actually due to bitcoin mandating a security upgrade maybe too quickly: strict signature validation rules. A good thing overall but it shows how super fragile bitcoin software is.