50% attacks would require a miracle of cooperation among the botnet operators, and would break their own income. I'd certainly not be done for

Wow. These people took a known minor problem and blew it up to destroy the whole economy. The sheer amount of assumptions alone makes it hard to call it a paper, that and the lack of proper structure (or references). For the sake of argument (short version: I don't think botnets can reasonably USE that much power and even than it wouldn't likely break the network): They failed utterly to explain, and possibly understand, what a miner is. No miner is created equally. People have worried about cheap power country's taking all the mining, I've seen story's of very sad Americans who ended up with more gaming power than they'd ever wish for. The FPGA's will likely work out all GPU mining in the short run. The kind of people that would have a high performance videocard are not those that don't notice when a huge chunk of their system is being used. No one puts an FPGA to their system that can accelerate Bitcoin mining for any other reason than to actually do so. That doesn't change the fact that, to a botnet operator, it'd still be profitable to mine with botnets. But it drives down their impact on the hashrate drastically. They assume there is and will be a practically infinite amount of computers in a botnet. I'd say there's a damn lot. To say that there will be enough operators willing to risk their machines (Bitcoin mining heats the computer and slows it down, those two things people understand as "something's wrong") for the hashrate to become filled with botnets alone is quite a leap. Even than it wouldn't matter. The rate at which Bitcoins are exchanged is (or will be) higher than the rate at which they're mined. Using the Bitcoins legitmately effectively legitimizes them, the "paper" claims that the police forces wouldn't understand it so that fact doesn't matter. Usually a lack of arguments makes me feel like no conclusions have been reached, only speculation performed, but let's give a counter argument: valid and fair (not legal per sC)) use of bitcoins is far more visible than the mining process (something that is easily misunderstood) . Botnet operators would be wise to point their systems at mining pools, as they turn out the majority of profit made and the political power over the network will be donated to legitimate pool owners. Some operators won't, and that will spread control over the network. profit. Bitcoin banks (perhaps with their own pools) can mitigate any trouble of this kind. It might require some implementation details and would likely ruin a part of Bitcoins elegance, but it could work. I'll admit though, to one claim of theirs: if the network becomes mostly criminal, it will fall. 2012/2/23 Eugen Leitl <eugen@leitl.org>

----- Forwarded message from Jeffrey Walton <noloader@gmail.com> -----

From: Jeffrey Walton <noloader@gmail.com> Date: Wed, 22 Feb 2012 21:22:03 -0500 To: ianG <iang@iang.org> Cc: Crypto discussion list <cryptography@randombit.net> Subject: Re: [cryptography] Bitcoin in endgame Reply-To: noloader@gmail.com

On Wed, Feb 22, 2012 at 9:11 PM, ianG <iang@iang.org> wrote:

...

On the crypto topic that everyone loves to hate, Bitcoin, the expected attack has begun.

http://financialcryptography.com/mt/archives/001363.html

Philipp Guering and I wrote a paper that explains how this will fall out.

http://iang.org/papers/BitcoinBreachesGreshamsLaw.pdf

Although in the big picture, this is more about finance not cryptography, there is an engaging question - can cryptography be used to control this sort of issue? It didn't work for Bitcoin, but more judicious uses of crypto can do a lot better, and has done with other designs. The challenge is to get the balance right. Someone should have given Nancy Pelosi a chunk of BitCoin, or cut the Wall Street bankers in on it.

The IPO offering/insider trading to Pelosi by VISA worked wonders when legislation was on the floor to protect consumers. Pelosi happily blocked the legislation, and the value of her stake in IPO skyrocketed [1]. I would also argue the Wall Street Bankers would have been happy to legitmize BitCoin if they got a cut (confer: derivatives).

Jeff

[1]

https://www.google.com/#hl=en&sclient=psy-ab&q=nancy+pelosi+visa+insider+trad ing

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