Who would accept confirmations of invalid transactions in a 51% attack?

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You are guessing that even with 51% of the network hashrate, an attacker can still not benefit from invalid transactions. However, the usual idea of a 51% attack is not to create invalid transactions, but to remove valid transactions, as if they had never happened.

For example, if Sam makes a valid transaction in payment to company XYZ, and then receives the item or service they paid for, having 51% of the network hashrate may allow them to go back to the block before they made the payment and create blocks that are similar to the existing blocks but do not include that payment. If they continue producing valid blocks until their chain is the longest, then the rest of the network will use this chain and continue adding blocks to it. This would mean that everyone else in the world would see the blockchain without problems with the correct balances, apart from company XYZ who provided the item or service. That company would now find themselves without the payment, as it would...

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The bitcoin community has been critical for the past two days of the increasing hash rate of the biggest bitcoin mining pool Ghash which states that it is currently able to process 37.92 Ph/s leading to an estimation of 42% – 47% of the total network hashrate.

Ghash has not yet responded to requests for comments. However, in a press release issued in January 2014 to alleviate fears of 51% control of the total hashrate, Ghash, whose hashrate is stated to consist of approximately 45% BitFury ASIC based miners and 55% independent miners, publicly stated in clear terms that:

“GHash.IO does not have any intentions to execute a 51% attack… it could risk our investments in physical hardware and we see no benefit from having 51% stake in mining”.

Concerns however have been raised in response to suggestions that Ghash can be trusted even in the theoretical scenario that it gains 51%...

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Also known as >50% attack or a double spend attack. An attacker can make a payment, wait till the merchant accepts some number of confirmations and provides the service, then starts mining a parallel chain of blocks starting with a block before the transaction. This parallel blockchain then includes another transaction that spends the same outputs on some other address. When the parallel chain becomes more difficult, it is considered a main chain by all nodes and the original transaction becomes invalid. Having more than a half of total hashrate guarantees possibility to overtake chain of any length, hence the name of an attack (strictly speaking, it is "more than 50%", not 51%). Also, even 40% of hashrate allows making a double spend, but the chances are less than 100% and are diminishing exponentially with the number of confirmations that the merchant requires.

This attack is considered theoretical as owning more than 50% of hashrate might be much more expensive than any...

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You may have heard the term “51% attack”, but what does it actually mean ?

Bitcoin miners use powerful computers to verify that each person who wishes to spend Bitcoins actually has Bitcoins to spend and isn’t trying to fool the system. They do this by reviewing the Blockchain – a digital file that documents every Bitcoin transaction ever made. Miners usually groups together in mining pools so they can combine their mining power and become more efficient.

The power of the miners verification process comes from it’s decentralization. For example, let’s say there’s a transaction that is going through the block chain. Each miners will review this transaction and decide if the sender actually has the bitcoin he wants to send. If the majority of miners rules the transaction is valid it will go through.

But what if someone could get a hold of more than 50% of the network’s mining power and manipulate the system for his own needs. Theoretically speaking, if...

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DEFINITION of '51% Attack'

51% attack refers to an attack on a blockchain – usually bitcoin's, for which such an attack is still hypothetical – by a group of miners controlling more than 50% of the network's mining hashrate, or computing power. The attackers would be able to prevent new transactions from gaining confirmations, allowing them to halt payments between some or all users. They would also be able to reverse transactions that were completed while they were in control of the network, meaning they could double-spend coins.

They would almost certainly not be able to create a create new coins or alter old blocks, so a 51% attack would probably not destroy bitcoin or another blockchain-based currency outright, even if it proved highly damaging.

BREAKING DOWN '51% Attack'

Bitcoin and other cryptocurrencies are based on blockchains, otherwise referred to as distributed ledgers. These digital files record every transaction made on a cryptocurrency's...

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Learn about the difference between full vs simplified modes, and how a bitcoinj app can be attacked.

Introduction

bitcoinj supports two different modes for your application: full verification and simplified verification. The mode you choose controls the resource usage of your application and how much trust you need in other participants in the Bitcoin system. As a developer, it’s important you understand the differences and in which situations your app can or cannot be trusted.

Firstly, let’s recap how a regular full node works. The fundamental problem Bitcoin solves is achieving consensus on who owns what. Every node maintains a database of unspent outputs, and transactions that attempt to spend outputs that don’t exist or were already spent are ignored. Blocks are solved by miners and broadcast to ensure everyone agrees on the ordering of transactions, and so nodes that don’t see a broadcast transaction for some reason (eg, they were offline at the time) can...

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I received notification of a bank reversal filed by someone who had sent me money in payment of an Ebay purchase. The money was in my account but has been taken out again.

I contacted the buyer and he apologised and said that his account had gone to zero, but he had now rectified and the funds should come to my acount shortly.

As the seller, I need to respond by 28th December or the reversal will be completed. I have been given three ways to respond (provide proof of postage, provide proof that I refunded the payment, or accept liability for this transaction). The first two are not relevant, and what does it mean 'accept liability for this transaction'?

Why am I (the seller) the one that has to respond when it is a problem I can't solve from my end?

Does the buyer have to send the money again? or will it automatically when he gets the money in his...

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Can such attacks be detected? Yes.

What you would see is a chain reorganization that invalidates a large (greater than three) number of previously-accepted blocks. The standard client will actually log this -- you'll see a REORGANIZE in the client's debug.log file. The client doesn't currently log the number of blocks invalidated by the reorganization, but that's a simple enhancement.

Can honest users revert such attacks? Sort of.

If a transaction you care about is in the set of blocks that was invalidated, you can always resubmit that transaction. Unless the sender issued a conflicting transaction as part of a double-spend attack, the transaction will still be valid. (The network will actually do this for you automatically. Miners don't want to miss out on the chance to grab the transaction fees associated with the undone transactions.)

As a longer-term solution, there have been proposals discussed to reject reorganizations that invalidate suspiciously...

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One of the annoyances of the blockchain as a decentralized platform is the sheer length of delay before a transaction gets finalized. One confirmation in the Bitcoin network takes ten minutes on average, but in reality due to statistical effects when one sends a transaction one can only expect a confirmation within ten minutes 63.2% of the time; 36.8% of the time it will take longer than ten minutes, 13.5% of the time longer than twenty minutes and 0.25% of the time longer than an hour. Because of fine technical points involving Finney attacks and sub-50% double spends, for many use cases even one confirmation is not enough; gambling sites and exchanges often need to wait for three to six blocks to appear, often taking over an hour, before a deposit is confirmed. In the time before a transaction gets into a block, security is close to zero; although many miners refuse to forward along transactions that conflict with transactions that had already been sent earlier, there is no...

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Imagine a scientist reading about an experimental result and then repeating the experiment for herself. Doing so allows her to trust the result without having to trust the original scientists.

Bitcoin Core checks each block of transactions it receives to ensure that everything in that block is fully valid—allowing it to trust the block without trusting the miner who created it.

This prevents miners from tricking Bitcoin Core users into accepting blocks that violate the 21 million bitcoin limit or which break other important rules.

Users of other wallets don’t get this level of security, so miners can trick them into accepting fabricated transactions or hijacked block chains.

Why take that risk if you don’t have to? Bitcoin Core provides the best possible security against dishonest miners along with additional security against other easier attacks (see below for details).

How Validation Protects Your Bitcoins

and put your...

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Considering a bitcoin mining hardware purchase? Make a more informed decision with our Bitcoin Mining Dashboard.

Starting late in the day on June 8th, and then again on June 10th, Feathercoin succumbed to 51% attacks. While this does not directly affect bitcoin, there are several lessons that the bitcoin community can learn from this experience. There is a case to be made that alt-coins have a diversification advantage, as silver does to gold, but they also provide an interesting testing ground for both new technologies and human behavior.

Feathercoin is part of a group of crypto-currencies commonly called alt-coins. These currencies are largely based on the bitcoin protocol but with a few minor modifications. In Feathercoin’s case, there are two significant changes:

2.5 minute block time – This is 1/4 the length of bitcoin’s 10 minute block time. The intent of this is to reduce the wait time for confirmations of transactions. However, the net computing power...

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As Ghash.io’s total hashrate approaches the feared 51% mark, there has been no official word from the pool's operating exchange, CEX.IO.

Data from Blockchain.info indicates that Ghash.io’s hashrate has been fluctuating between 40% and 50% of the network's total over the course of the week.

Jeffrey Smith, CIO of CEX.IO tweeted on 11th June that the company was planning to release an official statement. He also reassured bitcoiners that he was aware of the situation at hand and did not intend to harm the community.

I want everyone to know - we are aware of the 51% on @ghash_io We would never harm the community. Our official statement is coming soon.

— Jeffrey Smith (@jeff_smith01) June 11, 2014

While Smith may understand the repercussions of his pool approaching the 51% mark, the exchange has not released a plan of action to mitigate the threat.

However in correspondence with CoinDesk, Smith said they were still working on a...

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“Fear always springs from ignorance." - Ralph Waldo Emerson

What is 51% attack?

The blockchain is the distributed financial ledger of transactions. The ledger is secured by consumed hash power in Proof-of-Work (PoW). When someone has >50% of the network hash power, he would be able to generate blocks to selectively confirm certain transactions or rewrite the recent transaction history. A typical attack looks like this:

1) Create a private blockchain starting from block number N and do not broadcast it to the network

2) on the public blockchain, exchange coins for goods or services (e.g. sell coins for BTC on an exchange)

3) wait for m blocks to be generated on the public blockchain to confirm the transaction

4) at block N+m, the provider of goods or services is happy about the m confirmations and delivers the product

5) by this time, the private blockchain has generated more than m blocks, therefore longer than the public...

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Every cryptocurrency, which is related to mining is subject to a 51% attack. In Bitcoin, miners control the network, If a pool operator had 51% of the network, he could always have the “longest blockchain” and decide where all new bitcoins belong. In effect, bitcoin will continue, but no one can transfer their bitcoins to other users. In order to maintain a perfectly working bitcoin currency, no one single entity should ever have control of 51%, or greater, of the total network hashing power

If a miner gains 51% or more power, he is capable to:

Reverse transactions that he sends while he’s in control. This has the potential to double-spend transactions that previously had already been seen in the block chain. Prevent some or all transactions from gaining any confirmations. Prevent some or all other miners from mining any valid blocks.

In his Bitcoin paper, Satoshi identified several issues, with the 51% attack being the greatest.

So what is the 51%...

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Transactions as Proof-of-Stake & The End of Mining
http://the-iland.net/static/downloads/TransactionsAsProofOfStake.pdfThe concept behind Proof-of-Stake is that a block chain should be secured by those with a financial interest in the chain. This paper will introduce a new approach to Proof-of-Stake that utilizes coin-days-destroyed by every transaction as a substitute for the vast majority of the security currently provided by Proof-of-Work. Unlike prior Proof-of-Stake systems in which only some nodes contribute to the proof-of-stake calculation, we present a new approach to Proof-of-Stake whereby all nodes generating transactions contribute to the security of the network. The result is that the network immune to known attacks against Bitcoin or Peercoin.
Every transaction on the network carries with it an implicit Proof-of-Stake in the network. The creator of the transaction wants the network to accept it and the receiver of the transaction is making decisions on...
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What is often considered a very large flaw in the design of Bitcoin is that hypothetically, if a single entity contributed the majority of the network’s **mining hashrate**, they would have full control of the network and would be able to manipulate the public ledger (blockchain) at will.

It is an interesting concept because it is theoretically possible; the network is free and open, so if someone were to have enough computational power (which would cost a huge amount by itself), there is no bitcoin authority to stop them from doing so. In the event that such an attack successfully takes place, it is likely confidence in the currency would be lost and it’s value as a currency would decline rapidly.

Wait, they’d have complete control of the network?

Not quite. There’s only a couple things someone with 51% of the network hashrate could do. They could prevent transactions of their choosing from gaining any confirmations, thus making them invalid, potentially preventing...

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The Bitcoin network is run entirely through mining. Mining is the process by which computers solve algorithms, and when they find a block they get the block reward of 25 Bitcoins (worth $15,500 currently). Usually miners pool together their resources and receive shares of the block reward proportional to their mining power, since when mining alone it's extremely rare to find a block even if you own hundreds of thousands of dollars of mining equipment. When a block is found all transactions included in that block are confirmed. After receiving Bitcoin you cannot send it anywhere until it is confirmed at least once, so mining is essential for the Bitcoin network to keep running. On average there is 1 block found every 10 minutes, so it takes on average 10 minutes for a transaction to become confirmed. Confirmation time can vary wildly though, from less than a minute to several hours.

When Bitcoin arrives in your wallet it proceeds to confirm and is non-reversible nearly 100%...

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(This article was republished on steemit.com on 2016-07-12)

When bitcoin launched, a lot of people thought they finally had decentralised digital cash. We saw people using bitcoins for ideological reasons, but also for the presumed anonymous properties. You didn’t need to provide any identity information to create a wallet or send a transaction. Anonymous magic internet money. Cool, right?

Over the years, it became more clear that bitcoin isn’t anonymous at all. All transactions can be traced on the blockchain. If you transact with a stranger at a bitcoin meetup, he could start guessing your total bitcoin balance in your wallet. When you interact with regulated bitcoin businesses, you are required to provide ID information. And you can be sure that this company will couple your customer data to your blockchain fingerprint. This data can be handed over to law enforcement upon request, and be used to analyse the blockchain and associate more activity with you,...

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