[Cryptography] Incentive Politics

[Phillip Hallam-Baker]

On Fri, Oct 6, 2023 at 1:44 PM Ray Dillinger <bear at sonic.net> wrote:

>
> 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.
>

That is precisely the outcome I expect.

The unwinding will begin as a mechanism to clear smaller coins out of the
market. It will end as a mechanism to cover the tracks of a massive fraud.

Arguments that rely on the self interest of large numbers of people tend to
fall apart because there is insufficient imagination in  considering what
the true self interest of the parties might be.


My designs do assume people will mostly follow self interest, but I do not
rely on every actor always following what I imagine to be their self
interest. Hal never anticipated the possibility someone might want to
attack their scheme for the pure pleasure of destruction. If I could wipe
out $BTC for a million bucks, I would do that in a heartbeat. A million
bucks to end the CO2 emissions would be cheap, cheap, cheap. I am sure
there are many more people with considerably more resources who would do
the same.

You might not even need to spend the money. Just hack into the nexus
coordinating some of the mining pools and you could probably get the
desired result. Of course their operations are absolutely impregnable,
nobody has ever hacked a pseudocurrency exchange have they?
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