[Cryptography] Fun and games with international transaction settlement (was Re: IBM looking at adopting bitcoin technology for major currencies)

[Ray Dillinger]

On 04/14/2015 08:50 AM, Ben Laurie wrote:
> On 14 March 2015 at 20:18, Robert Hettinga <hettinga at gmail.com> wrote:
> 
>> Bitcoin, which amounts to registered unforgeable certificates with a
>> distributed, and also unforgeable, certificate registry.
> 
> 
> It really doesn't. 51% (more properly, 34%) attacks show that it doesn't.

How does the 34% attack work, exactly?

> If it were done properly, i.e. with verifiable append only logs run by a
> known set of entities, then it would. It would also be many orders of
> magnitude cheaper. Stupidly cheap, in fact, instead of eye-wateringly
> expensive.

The problem is figuring out what known set of entities in a way
that diverse people can trust and are satisfied with.  So far
every attempt at digital cash which relied on a central authority
or central registrar or verifier or someone running a server at a
particular network location etc, has failed - some due to lack of
trust in that entity, some due to lack of trustworthiness or
reliability by that entity, and  some for other reasons.

In an era where an actor responding to a lawful order under
threat of imprisonment is indistinguishable from an actor
performing a breach of trust, there is no authority or group
whom the people interested in cryptocurrencies trust enough
to allow that authority, or that set of authorities, a
privileged or pivotal role with respect to securing their
assets.

The fact that demands for private information, which demands
may or may not be legal in the first place, now come with gag
orders to prevent anyone from talking about getting such a
demand on threat of prosecution, undermines everyone's ability
to trust *ANYBODY* *EVER*.

Bear

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