How economics broke the Bitcoin monopoly & what are the consequences?


#1

Foreword:

I’m dedicating this latest blog entry to the moderator that deleted my post on bitcointalk.org, the post was an expression to give some simple advice to Patrick Byrne the CEO of the company “overstock”

The first part of this is the information I would have given him basically in private, but due to this creative censorship of myself I think it would be better shared publicly, as it is Crypto Currency common knowledge anyhow, it’s just that it is often wrapped up in a lot of technical jargon, fortunately I can break that down for anyone to read.


Andreas M. Antonopoulos educates Senate of Canada about Bitcoin


#2

Does this mean that you think Safecoin will be a better currency than Bitcoin? I have my doubts whether Safecoin will be safe enough in the sense of being unhackable. Bitcoin solves this by using proof of work. In the case of Safecoin there is no such mechanism if I have understood it correctly. This means that if an attacker can control a large enough number of nodes then the safecoins can be messed with.

Don’t get me wrong, I do believe a simple distributed hash table can be excellent for a virtual currency. The problem is that it seems very tricky to make such system trustless.


#3

I agree with a lot of the OP and believe Bitcoin has a number of issues. I differ with a lot of people on here who say Bitcoin is complimentary to Safecoin; it may be in the short term, but I think Safecoin/Safenet will subsume all Bitcoin related features.
@Anders - I believe your concern, though technically possible, would require an un-feasible amount of nodes to be attacked - this is explained fully in another thread and documented too. Don’t ask me where…lol…I’m sure someone will direct you soon.


#4

I think you misunderstand both systems, and personally I think Safecoin is less vulnerable to “hacking” as you call it than Bitcoin.

Reason:

  • bitcoin uses proof of work, but this can be forged if you control 50% of the nodes on the network. The rewards system of bitcoin actually encourages separate miners to come together in pools, which actually makes this likely - in fact it has already happened several times that a mining pool has gained control of >50% and the system has relied on the pools a) not abusing this position to forge transactions, and b) voluntarily scaling their activity back by members migrating to other pools. Note: a 50% bitcoin attack gains you control of the entire blockchain allowing you to steal any amount from any address.

  • Safecoin uses proof or resource, and according the the maths cannot be forged until you control >75% (or more quite possibly) of the nodes, in order to control a small part of the Safecoin (not everything) - I’m not sure if the limitation is to coin held by a single node, but it is along those lines, and means the risk is to a small, possibly miniscule, part of the network (need detail on this!). Also, there is no “pooling” incentive to the degree that there is in bitcoin, making this much less likely. This is because everyone can earn, because the system uses proof of resource rather than proof of work.

So Safecoin is safer than bitcoin because: a) 75% (or more) versus 50% attack needed, b) much less incentive to “pool” nodes - I can’t see any at the moment but let’s see what happens, and c) A 75% attack only affects some of the issued Safecoin, I believe a tiny fraction (but need confirmation of that), whereas a 50% bitcoin attack gives the ability to forge transactions for any address on the blockchain (this is a massive difference).