The NSA now owns Bitcoin


#1

The NSA now owns Bitcoin

Bitcoin has a flaw. It’s always been there.

Satochi Nakamoto (the nom de guerre of the mind behind Bitcoin) designed this flaw into the software because of one false assumption. What was that assumption? He believed that it was possible to build an open and free economic system built purely on simple self-interest (selfishness). Lots of people make this mistake (famously, Greenspan believed that selfish decision making would prevent the banking crisis of 2008).

It’s not, obviously. Eventually, selfishness will lead one group to rig, cheat, control, etc. the system so they can get better returns. That’s exactly what happened. Here’s the flaw they exploited.

When a single entity (“a single miner” or “a mining pool”) controls over 50% of the transaction processing it can control the entire system. This means they can “see” every transaction, spend the same coins more than once, and deny transactions they don’t approve of.

That’s finally happened. According to analysis from Cornell researchers, a mining pool called GHash has now reached 51% for large stretches of time (effective “ownership” is likely much less).

Here’s the new boss:

Who is Ghash? No clue. Obviously, this is bad thing for an “open and decentralized” currency.

However, the ability of anyone to pull this off does make the next step inevitable. If Ghash isn’t already an NSA , it most likely will be the NSA. From the NSA’s perspective, Bitcoin is a wet dream. How so?

A threat that can be “pwned” by throwing lots of computer hardware at it? That is what the NSA specializes in.

The NSA is a place where a $1 billion program to thwart “terrorist” financing can be justified in an instant. Simply, they can outspend everyone else and buy the best talent to design the mining hardware they use.

The hack pays for itself as it grows (it earns bitcoins from mining). One competitive advantage an NSA mining pool has? It can afford to give nearly all of the money it earns for other miners in its pool back to them.

PS: Any economic system that doesn’t use enlightened self-interest is doomed to failure.

PPS: The Bitcoin boiler rooms trying to pump up the coin to make a buck, hate this post.

From the comments section:

Nonoutsourceable Scratch-Off Puzzles to Discourage Bitcoin Mining Coalitions

edit**

Here’s another article on this subject from Monday June 16, 2014

How A Mining Monopoly Can Attack Bitcoin

GHash, a mining pool operated by the anonymous, purportedly Russian-owned CEX.io, achieved 55% of the total network mining power for about a 24 hour span. There is much panic, confusion and even denial around what a majority miner can do, may want to do, and will do.

Monopolist
Just as we predicted, some people are trying to shift the narrative to “OK, GHash may have a 51% majority, but they’d be crazy to launch a 51% attack, it would be counter to their interests.” This argument is dead, killed by empirical data – anyone who tries to recycle this argument in a post-51%-GHash world is at best misled. There are lots of attack types that are available to a 51%er, many of them quite subtle, and the participants do not conform to simplistic models.

The Bitcoin community seems to have a limited understanding of the attacks that a 51%er can launch. This is evident from Gavin’s official response, which claims that there are “only two” attacks: (1) double-spends, and (2) wholesale denial-of-service. Gavin, who is both a friend and an impeccable engineer, may be trying to downplay the danger to soothe the community’s fears [*], but discussions in community forums also show that most people don’t understand what a monopoly miner can do. In particular, they seem oblivious of the more subtle attacks that a monopolist can launch.

In this post, we’ll go over the possible strategies that miners can adopt as a function of their size. Our central thesis is that 50% is absolutely unacceptable for Bitcoin even when there are no attacks being launched. We propose putting technical measures in place to deter mining pools over 25%. Until such measures are in place, we advocate the poor-man’s-alternative-to-protocol-fixes-and-regulation, namely, we advocate putting social pressure on miners to not exceed 25%. A final goal of this post is to caution the community against a toxic mining strategy called transaction differentiation.


#2

An interesting take on Cryptocurrency from this post:

I just read the NSA document http://groups.csail.mit.edu/mac/classes/6.805/articles/money/nsamint/nsamint.htm#Introduction – Of 1996.

I can confirm for newer users that it accurately describes the current Cryptocurrency protocol from a 1996 perspective.

This is enough evidence for me to confirm (my own opinion):

That Crypto is an NSA funded design, but people from the NSA or Google (there would be a large crossover of employees) “acted alone” and built and released the design, which was all in all a collaboration.

Then after the fact, the key financial institutions that have primary political control over the Government. (Probably about 8 months from release) noticed the entity and then, associated agencies including the NSA, but more importantly the FBI, CIA and SS, were “assigned” to the “case” of Crpytocurrency.

which then easily accurately explains the rest of the crypto history up until this point.

The take away point and moral of the story?

The NSA public image problem.

The NSA would have been functioning and meeting its primary objectives in 1996 (as the document proves), it actually kind of amuses me after a point to see some of the the mindless NSA bashing occurring but lets do something simple and analyze the name :

National Security Agency -

That is to say to look after the security of the nation.

Well in 1996 when the “National Security Agency” funded that document, they get 100% points for doing the job as the document clearly describes a decentralized payment system, one that frees the Nation from the occupation of Banks issuing currency as debt, so here is a time to be proud of that institution if you are a Citizen of the Nation that it was helping to Secure.

however, obviously there has been extensive overreach and crossover of political power in many institutions since that time, a lot of water has flowed under the bridge of human history since 1996.

So its fair to say that partly the NSA now has an image imbalance because it now has its “bad side” exposed , but has to keep its good side secret. ( of course).

another point towards the inevitable open intelligence system that will prevail in the future.

but open intelligence can not occur until the “human energy token” issuing power is decentralized under general neutral control principals.

Summary

if you are a citizen of that Nation hop in your time machine and go back to 1996 and shake the hand of anyone you can meet in the NSA for doing their job and helping secure your nation.

but don’t expect to ever hear that natural and warranted credit on Television, and what can you derive from that?


#3

If a million or so bitcoiners joined the safe network and set up a deal where instead of buying/selling processing power -they donated it only to be used in the event a single entity were approaching 50%. If this is even possible could it produce enough hashing power to fend off such an attack


#4

I’ve been writing for awhile that it would become obvious soon enough that the blockchain-public ledger-challenged BTC/suck-off-the-tit-thereof-copykat-altcoins, etc. would be co-opted (rather than fought) by the NSA-wielding authoritarians w/ the help of the Googlish & Applish & microsoft-cocked companies of the world. Having firmly established their stake in the matter w/ soon-to-be-subsumed Ghash.io, their coup is now almost baked (that didn’t take them long, did it) as they now turn to leave net neutrality in the dust by peeling off the biggest, fatest fiber lanes for their corporautocratic and spying purposes. The NSA couldn’t be doing what it’s doing w/o a lot of help from a lot of soul-less hacks which isn’t news.

What IS news is that we who actually get it that MaidSafe and the SAFE Network are solutions to this brave new world, better get off our asses, out of the forums and into action. We are better off getting together quickly now, re-thinking our own casual approaches to the matter, see the urgency to acting in concert with the deployment of the SAFE Network by deploying applications to attract the masses quickly. This is my strategy and I invite other like-minded people to join w/ me in getting some order to our work going. The SAFE Network is only half-technology. The other half is human; it’s us now, the pioneers and earliest adopters who write on this forum. Do we fully embrace this already? Is there any evidence in our lives that this is so? Is there any impetus in anyone who reads this to join with others in a team (outside the Pods)? We need to be real w/ ourselves and each other and MaidSafe. There is no guarantee that we will pull off our coup against the brutes & thugs. If we don’t adopt a non-violent but nevertheless serious war-footed revolt against what we see happening, I’m afraid we may not get to see the light of day before the brutes & thugs have figured out a way to use their propaganda and spy machine to thwart SAFE Network adoption (surely the NSA is aware of MaidSafe). Yes, @dirvine has said we have our thought-to-be-unstoppable jeanie that soon will be out of the bottle. Is what we have really that? I sure as hell hope so but it certainly isn’t enough even if he’s right. The unstoppability of the societal reboot is dependent in some measure upon how fast the SAFE Network is adopted. I for one, don’t see that we have the luxury for a slow uptake. We have to think about it now and get MVPs up as soon as possible with OSS teams hacking quickly. Calling all OSS hacks…three great projects to sink your teeth into here: BuildItHub, SAFEx and Network99. Contact me if you’re interested; contact me if you want to appear on the SAFE cafe and talk about your take on where we are and what we need to be doing right now: dl99pr@gmail.com

P.S. Being afraid to come out of the shadows isn’t very helpful. @dirvine and others put themselves out there for the world to see. Anyone else can too even if it means putting away reluctance to become an equally brave soul. This is directed to each and everyone of us, including me!


#5

@chrisfostertv I fully agree with you about the foolishness or trying to build an economic system based purely on self-interest. Ever since the industrial revolution and the development of modern economic theory, in fact, there has been a widely accepted myth the human beings can be modeled as 100% rational, ultimately selfish actors. It’s not hard to understand why theorists would make that assumption, because it greatly simplifies the task of creating socioeconomic theories.

However, as a great man once said: “For every problem, there is a solution that is simple, elegant, and wrong.”

I think we (or at least those of us who are paying attention) can see just how wrong those theories are. Actually, it should be obvious from the perspective of evolution: Is Man a solitary hunter? Quite the contrary. Humans are actually very well equipped, psychologically speaking, to live in a small community or tribe where altruism, mutual unconditional assistance, and group solidarity are held in utmost regard. But of course this only applies to humans who are in a condition of social AND economic liberty. In my view, the hugely asymmetric globalization of labor and the subsequent undoing of the local economy have created hardship and uncertainty in some places which tends to force humans closer to the idea of “selfish functionalism”, if we can call it that. Thus the economic models of the 19th century have become a self-fulfilling prophecy.

But I think that the Internet (or any system that allows people to bypass institutions) can forge solidarity among humans worldwide. That’s why I’m so excited about maidsafe. I really hope it, or something like it, pans out. If it does I imagine that we’ll eventually see political and economic inequality begin to crumble on a global scale.

EDIT: And let me add that I think the concept of “scale” is crucial here… State communism, for instance, fails because the scale on which it is carried out it so large that violent force in necessary to force people into the collective.

Thoughts?


#6

@chrisfostertv please can you edit the OP to place the content in a quote section. ATM it looks like you are writing this. I wouldn’t have realised if I hadn’t scrolled back and followed the link. Same with the second post - it looks like you wrote stuff that you’re cutting and pasting, which is helpful if it is made clear. Right now it is very misleading to me. Thanks.

Very interesting and useful finds! :slight_smile:

Can someone read the measures adopted in the link at the end of the OP and see if they are applicable to SAFE - to discourage centralisation of farming & computation?


#7

The consequences of globalization will fade into history as time plays out. It was an inevitable consequence of a shrinking world. It will pass and the good news is, we willl get to keep the good bits while spitting the bad bits out.

We should never attempt to hold back technical progress, but rapid changes can cause disruption to societies in a interim. People should be sympathetic to the situation though.


#8

Some explanation on the paper Nonoutsourceable Scratch-Off Puzzles to Discourage Bitcoin Mining Coalitions


#9

The problem with Bitcoin is mining. Proof of work is insecure because it centralizes around ASIC manufacturers. It’s an unwinnable game for every player except the ASIC manufactures.

So it’s not fair to say the NSA owns Bitcoin. Are all the ASIC manufacturers American companies? It is fair to say it’s centralized and a small group of people can easily collude in secret to own Bitcoin.


#10

@chrisfostertv thanks for reformatting the posts. Much clearer.


#11

Some minor issues with the OP:

  1. Of all the tech multinationals, Google is the least friendly internally to the NSA/CIA/Homeland Security. That is the case in all of internal culture, senior management buy in, and from the business side e.g. lack of contracts with the military-industrial complex. If anyone were to be helping the NSA make Bitcoin, it would not be Google.

  2. The primary interest of the FBI, CIA and SS in cryptocurrencies is that they don’t have anyone to go after when chasing terrorist money laundering. The established banks at least have someone you can go lean on, even send in a wet work team to foreign countries when necessary. Cryptocurrencies makes that much harder, and that makes them nervous because they’re used to having someone they can nail blame to.

  3. The NSA absolutely could become the majority Bitcoin miner, they have the compute for sure. But then they’d be insanely wealthy, and I think you’d find the temptation to do off book spending would be enormous. After all, the CIA found it very hard to not use the money they made from importing cocaine into the US and selling crack into black neighbourhoods during the 1980s for all sorts of fun things, all of which eventually came to light and a whole ton of people had to get Presidential pardons.

  4. All of Bitcoin is only worth a total of 8 billion or so. That is quite frankly pocket change when compared to an annual US non-military security spend of $100 bn or so. Useful pocket change for sure, especially as it’s all off books, but it’s still a small percentage of the annual income.

Niall


#12

Bitcoin wouldn’t be anonymous enough to be off books but I think some of the other cryptocurrencies like Zerocash might be.

Intelligence agencies will make use of cryptocurrencies for certain but it will not be something they’d admit doing.


#13

So my question is how do we close this hole? And how do we keep safecoin from becoming the next target?


#14

Even if the NSA takes all the capacity it have to be a part of the SAFE Network and farm safecoins, the network will still make copies of the files on 3 other continents, so it wouldn’t affect the network as much at bit coin could be affected. I think?


#15

to discourage centralisation of farming & computation

So true. That has been one of my fears with joining in on any crypto currency. The nsa et al has so much money they can “contribute” and farm each currency into total ownership for them yet again. We have to de-fund the overlords and maybe even decentralize geo-farming so that farming a coin has to come from geographically diverse locations as well as cpu processes. MaidSafe can then tout that no one entity can control or own. The farming has to come from geo diverse nodes across the entire mesh, maybe even add in a requirement of different cpu types, arm vs intel vs amd, etc. Sorry just thinkin out loud again hmmmf :×


#16

I don’t know about Bitcoin, but i can see maidsafe being attacked/owned by NSA. They have a near endless supply of ip adresses. An endless supply of servers and storage space.

I see no way to protect maidsafe in such a way that most data would not end up on such a NSA farm.

What if the new mega datacenter they built is going to run maidsafe for storing all the data they snoop?


#17

I agree, we should just give up now…it’s hopeless.

What’s on TV tonight?


#18

“What if the new mega datacenter they built is going to run maidsafe for storing all the data they snoop?”

Go for it! Then my drive will fill up too :smiley: I can finally get paid for the use of my information…lol