War is upon us

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Steve Sokolowski
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War is upon us

Postby Steve Sokolowski » Thu Oct 13, 2016 7:22 am

Seven months ago, I evaluated the possible futures for Bitcoin and Ethereum. In that economics-focused post, I predicted that no matter the eventual outcome, there were three events that were certain to occur: a hard fork would cause two Bitcoin chains to begin competing with each other, the total price of the two bitcoins would fall dramatically and with high volatility as the two chains traded for dominance, and the period near the fork would be outright cyber warfare, seeing the largest attacks in the history of the Internet. That war is finally upon us, and the purpose of this post is to examine the attack vectors that are likely to occur over the next few months.

The split was started by mining pool ViaBTC, the owner of which finally acknowledged that miners care about nothing other than profit. Where Gavin Andresen was unwilling to step up and be a leader, ViaBTC did, and we all owe the pool and its miners a debt of gratitude. Whatever the outcome, there is now sufficient hashrate that Bitcoin's future will finally be decided once and for all, allowing cryptocurrency to thrive again. The important part here is that businesses will be able to make future plans. Either the large blocksize fork will be accepted and widespread adoption will be possible, or it will not, in which case businesses like ours will continue to focus their limited resources on X11 and Ethereum.

What will press the issue now is not only that there are more people in support than before, but also that as of Monday, the Segregated Witness soft fork is dead on arrival. Even if every other remaining miner supported it, only 87% of the 95% activation threshold will be met, rejecting its deployment. That means that Segregated Witness must then become a hard fork initiated by people who want to implement it, setting up an upcoming battle between two Bitcoins: one that has 1MB blocks with Segregated Witness, and one that rejects Segregated Witness but has no blocksize limit.

If cryptocurrency becomes widely used, the unlimited Bitcoin will win simply because it has more space. If it turns out that there is demand for 10MB blocks, and enough people on Bitcoin Classic adopt Segregated Witness to make blocks able to represent 1.2MB of data, 88% of the transactions will take place on the unlimited chain, even if people prefer to use the Core chain. Core simply wouldn't be able to service the demand. The reason why I've repeatedly implored someone to step up and lead is because people have had no alternative. If Bitcoin has enough demand, all that needs to be done is to provide an unlimited blocksize fork and allow the demand to spill over and overtake the Core naturally.

That said, some supporters of the Core have demonstrated in the past that they are willing to take unethical or illegal actions to prevent blocksize expansion, some of which are examined below.

Method 1: Sustained DDoS attacks

Sectors of the Bitcoin industry that support Bitcoin Unlimited are likely to come under sustained distributed denial of service attacks. Given the stakes involved, these attacks are likely to involve the most traffic in the history of the Internet, making the 266Gbps attacks against some corporations pale in comparison. The attacks will create significant collateral damage and damage many businesses unrelated to Bitcoin. They will be bigger than what has ever been seen before because the world has never seen a computer network with more money at stake before.

We've already seen how people hosting Bitcoin Classic, XT, and Unlimited nodes have come under attacks that have disrupted other services. In one widely publicized case, one ISP saw an entire town knocked out, with the criminals able to block 911 calls from the community. If someone tragically dies due to a lack of connectivity as a result of these attacks, expect more negative publicity about Bitcoin being a hotbed for criminals.

The attacks will also affect other coins as collateral damage. Many of the nodes that host Bitcoin also host Ethereum on the same virtual machines, so the Ethereum network will become less secure as a result. I expect that once these attacks begin, there will be an across-the-board drop of node count for all altcoins. Some coin networks may end up with too few nodes to survive and have their wallets locked on exchanges.

Note that these attacks are expensive - 2gbps of sustained upload traffic, which Comcast now offers to residential users in the Northeast, cost $400 per month last year. Business-class Internet services, which have much greater uptime and higher priority packet delivery than residential services, and which are used by web hosting firms, cost two to ten times what residential services cost for the same bandwidth. Therefore, most businesses that suffer these attacks will be unable to remain profitable and will shut down.

DDoS attacks should terrify ViaBTC and Bitcoin.com. They represent asymmetric warfare that costs too much to defend against in the extremely thin margin mining environment.

Method 2: "Low luck miners"

For six months, Chris noticed that our pool had been experiencing lower luck than expected. We had assumed that the cause was due to a pool bug that was causing some blocks to not be submitted, or an error in our profit reports. We tried to correlate luck across many variables, like time, coin, whether merge mining was occurring, hashrate, and so on. It wasn't until this March that Chris thought to examine whether luck was correlated by mining rig, and he determined that some large miners made slightly less than would be expected.

When these miners were banned, luck completely returned to normal. However, new users continued to exhibit these same issues. We never were able to determine exactly why these users had such low luck, since it seemed that it would have to be human error and the person loses money due to the issue. We concluded that the only possible cause was if the firmware on these miners was defective and hashing incorrectly or evaluating share difficulty incorrectly. Some Internet research suggested that some cloud mining providers like NiceHash were polluted with these misconfigured miners, but we were not able to correlate the miners with any specific cloud mining service or IP address.

After 300 hours of research, we were finally able to determine how to detect these miners and issue "balance forfeitures." Luck immediately returned to 100%. The miners eventually disappeared and the detection system hasn't caused any forfeitures for several months.

It occurred to me recently that if SHA-256 miners like this exist, or if the firmware that causes the problem can be dumped intentionally, hackers could purposely buy the miners up and direct them towards a pool like Roger Ver's. The Bitcoin.com pool would then suffer from reduced luck, causing the Bitcoin Unlimited share of the network to decline, and additionally causing miners to go to Core pools due to the reduced earnings. If executed purposely, this would be similar to what is described in the literature as a "block withholding attack."

To our knowledge, no other pool has yet discovered how to eliminate such attacks, and if they have, the discovery is such a competitive advantage that they are unlikely to publish it. There are certainly no papers in the scientific journals describing the solution. If that is true, then the Unlimited mining pools could suffer from reduced earnings and that would reduce the odds of success of Bitcoin Unlimited. The luck of the ViaBTC pool fell immediately after their announcement of support and poor luck has persisted for some time, which may be due to statistics but could also be the first indicator of something more being wrong.

Method 3: Biased Bitcoin media

By now, everyone is aware that reddit's /r/bitcoin and bitcointalk.org, among other forums, are censored and present the Core's view of the blocksize issue. To most, however, the bias of the largest bitcoin news sites, like coindesk.com and cryptocoinsnews.com wasn't as obvious. Now that the blocksize issue is reaching a turning point, these sites are becoming more blatant in their publishing.

The reason that these sites are so one-sided is that they are owned by the same corporations that are blocking progress. A good diagram explaining the many interconnected relationships between these sites is available at (https://forum.bitcoin.com/download/file ... &mode=view). This spaghetti-like diagram shows how rich people who stand to gain or lose immense amounts of wealth have locked themselves into all sectors of the Bitcoin economy. Nearly every major company has taken investments from Blockstream or companies that have invested in Blockstream. Most of the well-known media outlets have also received money from these same people. The entire sector is rotten to the core and influenced by big money that stands to gain profit at the expense of normal users who want a functioning network.

Influenced sites like Coindesk seem to publish articles with two main themes. Some articles focus on Core developments, and fail to interview or consider what people who disagree with the Core have to say. These articles include adjectives that no respectable journalist who presents the facts would use, such as continually referring to Ethereum as the "hijacked" or "mutable" blockchain instead of simply differentiating between it and Ethereum Classic.

The other class of articles are three or five paragraph pages that speculate on the Bitcoin price. These commonly include unsubstantiated statements like "Bitcoin price rises on news of Segregated Witness" or more simple but meaningless headlines like "is Bitcoin overdue for the next bubble?" There are a significant number of people who care little about the actual deployment or usage of Bitcoin and are solely interested in pumping its price so they can make money.

Dishonest comments like this one by Michael Casey (https://www.sec.gov/comments/sr-batsbzx ... 1630-4.pdf) also contribute to the problem of journalistic fairness. Documents submitted to the SEC have a certain gravitas to them that implies they are coming from an expert. In this example, Mr. Casey states that the claim that Craig Wright was Satoshi Nakamoto was "not taken seriously by anyone of note" in the community. While Wright failed to prove publicly that he was Nakamoto, there are many who believe that he is an immoral scumbag who nevertheless is who he said he was - such as Andresen and Matonis, among others. It is blatantly false to fail to acknowledge that even a single person may have thought that way. Misleading claims like this in official correspondence or in newspapers cause people to make improper decisions. Worse, regulators may take statements like that as fact and create regulations without investigating the truth.

While mainstream media is aware that reddit is not a trustworthy source, many tech sites regularly reprint or reference sites like Coindesk and Cryptocoinsnews, treating what they publish as factual because they appear to be journalistic newspapers. As the war intensifies, journalists will search for Bitcoin news, and biased articles from these sites will influence coverage for the non-technical audience. People supporting the Core may also look to poison official documents to push their narrative. Those supporting Bitcoin Unlimited should consider funding a site that does not accept paid articles or opinions, and aim to achieve a high PageRank so that sites like Coindesk lose money and influence.

Conclusion

If a hard fork were avoidable before, it is impossible to avoid now that Segregated Witness has been blocked as a soft fork. Unfortunately, the best hope for those who want to implement it as a soft fork, and delay the implementation of an unlimited blocksize, is to conduct cyber warfare against people who support Bitcoin Unlimited. If hashrate in support of Bitcoin Unlimited remains steady and continues to block Segregated Witness, then a hard fork is all but inevitable as the two sides grow tired of the stalemate.

A side effect of a split between the Core and Unlimited is that Core users who spend money using Segregated Witness can expect their transactions to be replayed on the Unlimited chain. The change from those transactions will be spendable by anyone, costing them value on the other chain. Thus, Segregated Witness is likely to be a complete bust because people who want to use the Core chain will avoid it anyway, as the lower transaction fees are not enough of an incentive to risk replay attacks on the Unlimited chain. Both chains would still survive, but the activation of Segregated Witness would make Bitcoin Core a playground for thieves like Ethereum Classic has become to people who use old addresses to send and receive funds. I will talk about this outcome more in a future post.

In the coming months, I expect the community to be torn apart as people like theymos, Gregory Maxwell, and Peter Todd go all out to disparage people who break with the Core. If they can implement buggy miners, pools will feel the pressure of reduced luck. Criminals are likely to start financing DDoS attacks against one (or even both) sides. It's going to get ugly soon, and people would be advised to take preventative measures as soon as possible.
Last edited by Steve Sokolowski on Thu Oct 13, 2016 9:27 am, edited 2 times in total.
el33th4x0r
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Re: War is upon us

Postby el33th4x0r » Thu Oct 13, 2016 9:20 am

The attack you are describing on mining pools was analyzed in depth by Ittay Eyal. It's called the Miners Dilemma, and it's a seemingly paradoxical way for pools to make more money by infiltrating other pools and withholding blocks. I suggest reading Eyal's paper, as it examines the attack in great detail.
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Steve Sokolowski
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Re: War is upon us

Postby Steve Sokolowski » Thu Oct 13, 2016 9:26 am

el33th4x0r wrote:The attack you are describing on mining pools was analyzed in depth by Ittay Eyal. It's called the Miners Dilemma, and it's a seemingly paradoxical way for pools to make more money by infiltrating other pools and withholding blocks. I suggest reading Eyal's paper, as it examines the attack in great detail.


Thanks for the tip. I had actually read this paper previously. I think that I might have confused people when I said that there are no papers describing the "method," which could be taken to mean that nobody has described that attack, if it was one. What I meant to say is that there are no papers describing the solution to the attack. I will edit the article to be more clear.

But until you said it, I wasn't aware that the paper was widely known, and therefore had no idea that this was a widespread problem. If this paper has been read by a lot of people, it's possible that every pool has lots of these miners connected to them right now, meaning that if nobody has discovered the solution, it's essentially a zero-sum game. The troublemakers could still tip the scales by directing more of the bad hashrate towards pools they hate most, though.
sickpig
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Re: War is upon us

Postby sickpig » Thu Oct 13, 2016 9:48 am

wouldn't be effective to release your technique to determine evil miner such that every pool could deploy it?
ittayeyal
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Re: War is upon us

Postby ittayeyal » Thu Oct 13, 2016 9:51 am

Hi Steve. Ittay here, author of the aforementioned paper.

Steve Sokolowski wrote:... that attack, if it was one.


Important question: Do you figure this was an attack or a benign misconfiguration? Can you share some details?
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Steve Sokolowski
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Re: War is upon us

Postby Steve Sokolowski » Thu Oct 13, 2016 10:03 am

ittayeyal wrote:Hi Steve. Ittay here, author of the aforementioned paper.

Steve Sokolowski wrote:... that attack, if it was one.


Important question: Do you figure this was an attack or a benign misconfiguration? Can you share some details?


There isn't any way to prove it was an attack. Since the customer is always right, we treated these incidents as misconfigurations and that's how our documentation refers to the issue.

It was strange, however, how some of the affected customers were penalized hundreds of dollars each day for several days and then never called or sent an E-Mail. They just disappeared, despite burning enormous amounts of electricity and earning nothing. I'm not sure how much can be inferred from that, though, given how many scams there are in this industry. They either knew they were wrong, or perhaps they had no idea their miners were messed up, assumed we were a scam, and went to another pool that didn't penalize them.

The problem with saying the incidents were "attacks" is that it's not clear who is doing the attacking. There could be many targets. We could be the target, but the miner could be buying hashrate from a cloud mining service and be a victim. The cloud mining service could actually be the target and everyone else is collateral damage. Someone could be distributing fake firmware on the Internet and advertising it as increasing hashrate, not caring about what the firmware does because the intention is for the installer to search for and steal bitcoins. Or, the manufacturers could be purposely making bad miners to cut costs. There are so many potential attackers and victims that one can't automatically assume that a specific person is at fault, even if it is intentional.
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Re: War is upon us

Postby jrmoreau » Thu Oct 13, 2016 2:04 pm

You mentioned preventative measures. What are the ones you'd recommend? Thank you for sharing your insight.
gustavo198718
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Re: War is upon us

Postby gustavo198718 » Thu Oct 13, 2016 3:17 pm

Hi Steve,

Have you ever read the book "Meditations" by Marcus Aurelius?

Its a really good book.

Made me think about your comments and frustration with bitcoin core and the idea that the media attempts to appeal to the majority that have most at stake.

I think the goal in all of this is to find truth, and Marcus uses "nature" as the tool to find truth in this life. Nature is pretty simple and it is indifferent. It does "bad" things to good people, and it does "good" things to bad people, but it is pure and true.

I own a mix of crypto currencies, but the majority is in BTC.

If BTC fails because of not increasing the blocksize, do you think it would inherently be "bad" if that it supposed to be the truth? Why not let it continue as it is?
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CritterDog
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Re: War is upon us

Postby CritterDog » Thu Oct 13, 2016 6:05 pm

People will get fed up with this switch over to litecoin. This is why litecoin is now being worked with again.. New IOS wallet new Jaxx wallet accepts it.. New A4 script Miners out And I think coinbase will accept it at any time..
Last edited by CritterDog on Mon Oct 17, 2016 1:59 pm, edited 1 time in total.
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Re: War is upon us

Postby Steve Sokolowski » Thu Oct 13, 2016 6:25 pm

jrmoreau wrote:You mentioned preventative measures. What are the ones you'd recommend? Thank you for sharing your insight.


I wish that there were an easy way to defend against this, but there really isn't. DDoS attacks are something that simply can't be dealt with, for example, which is why I'm worried that ViaBTC won't survive.

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