[Cryptography] Incentive Politics

[Ray Dillinger]

On 10/4/23 11:59, Phillip Hallam-Baker wrote:
>
> I don't think the trusted role bug was solved, it was merely deferred. 
> The end game of the cryptocurrency world will be mining consortiums 
> trying to stave off bankruptcy by unwinding the chain.
>
That may be true but I doubt it.  Unwinding the chain would destroy the 
market value of any coins stolen in the attack - along with the value of 
all the other coins in the chain.  Picture "success" as a huge disaster 
visible to the entire world, setting off a million simultaneous sell 
alarms. Picture rats attempting to outrun not just each other but also a 
hypersonic shockwave, in a race to be the first to yeet themselves off 
an exploding ship. Picture the attackers selling their coins at an 
exchange one second after stealing them, but all the exchanges being 
closed (and absolutely crushed under sell orders that can never be 
executed) before the next block ever arrives.

Nobody wins.  All the rats get pulverized in the explosion, including 
the attackers.

There's really no upside for the attackers unless they want to kill the 
system completely.  When a chain more than six blocks deep gets unwound 
because of a blatant mining attack, one minute later the price of BTC 
will be zero.  The value of BTC is predicated on people's belief that 
the financial motives of the mining consortiums are aligned with chain 
security.  The INSTANT the consortiums demonstrate that belief false, 
the value vanishes.  Which, in an odd 'meta' way, does in fact help to 
align their financial motives with chain security.

The real problem with the trusted role bug isn't the miners, though 
they're certainly problematic enough.  The real problem is that the 
solution didn't scale because of the bandwidth limitation of blocks.  
All the keys are held by - wait for it - people in TRUSTED ROLES at 
exchanges, because there's not enough transaction bandwidth for 
individuals to transact in small amounts.

And there is - to put it MILDLY! - less reason to trust that newly 
created infrastructure than there is to trust the conventional banking 
infrastructure.  Every trusted role that Hal and Satoshi objected to in 
banking, credit, and regulatory agencies has been recreated by 
cryptocurrency exchanges and traders, along with an entire menagerie of 
entirely new obstacles to the privacy and security of users that have no 
parallels in the world of conventional banking.

Bear

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