The Bitcoin War is Coming

Seven months ago, I assessed the prospects for Bitcoin and Ethereum. In terms of economics, I predicted that, regardless of the final outcome, three things would definitely happen: a hard fork would result in two competing Bitcoin blockchains; the total price of the two Bitcoins would drop sharply and fluctuate wildly as the two blockchains gained dominance in transactions; and the hard fork phase would be a full-blown cyberwar in the vein of the biggest war in the history of the Internet. That war is finally here, and this post is an attempt to examine the possible attacks that could occur in the coming months.

The split started with the ViaBTC mining pool, whose owners finally admitted that miners only care about profits. We should all be grateful to the pool and its miners for ViaBTC’s rise to prominence when Gavin Andresen was unwilling to continue to be the leader. Regardless of the outcome, there is now enough hashrate that the future of Bitcoin will be resolved and cryptocurrencies will rise again. Importantly, businesses will be able to make plans for the future. Regardless of whether the big fork is accepted and widely adopted, businesses like us will continue to focus our limited resources on X11 and Ethereum.

(Author: Steve Sokolowski)

Not only is there more support now than before (for big blocks), but things have intensified since Monday. The Segregated Witness soft fork was opposed as soon as it was proposed. Even if the remaining miners supported it, Segregated Witness could not be activated because it only had 87% hashrate support, and 95% was required to activate it. This means that Segregated Witness would have to be a hard fork in order to be activated. The hard fork was proposed by the people who wanted to implement it, and it would lead to a battle between two Bitcoins: one with Segregated Witness and a 1MB block size, and the other that rejected Segregated Witness and had no block size limit.

If the cryptocurrency becomes widely used, Bitcoin Unlimited will be simpler because it has more block space. If it turns out that 10MB blocks are needed, and enough people support Bitcoin Classic adopting Segwit to store 1.2MB of data, then 88% of transactions will happen on the Unlimited chain, even if people prefer to use the Core chain. The Core chain simply cannot keep up with demand. The reason I keep imploring someone to join and lead is because people have no choice. If there is enough demand for Bitcoin, all we need to do is provide a fork with unlimited blocksize, allowing demand to overflow and surpass Core.

That being said, there has been evidence that some former Core supporters will take unethical or illegal actions to prevent the block size from expanding. The following are the actions that have been verified.

Method 1: Continuous DDoS Attack

Industries supporting Bitcoin Unlimited could be subject to sustained distributed denial of service attacks. Given the risks involved, these attacks could cause the most network traffic in the history of the Internet, up to 266Gbps of traffic, which would paralyze the operations of some companies. These attacks would cause significant collateral damage and harm many businesses that have nothing to do with Bitcoin. They are larger than any attacks we have seen before, and the funds supporting the attacks are unprecedented.

We have already seen man-made attacks on Bitcoin Classic, XT, and Unlimited nodes. In one well-publicized case, an ISP saw an entire town compromised, with criminals able to prevent the community from calling 911. If anyone were to tragically die due to a lack of connectivity caused by these attacks, then we can expect more negative publicity about Bitcoin being a breeding ground for criminals.

These attacks will also affect other cryptocurrencies due to collateral damage. This is because the cloud servers that host Bitcoin often also host other cryptocurrencies nodes, such as Ethereum. So if an attack on Bitcoin is launched, the Ethereum network will be less secure. I expect that once these attacks begin, the number of nodes for all altcoins will decrease across the board. Some cryptocurrencies will be unable to provide verification services due to too few nodes, and the coins will be locked in exchanges.

Note that these attacks are expensive—2 Gbps of sustained upload traffic, which is what Comcast now offers to residential customers in the Northeast, cost $400 per month last year. Business-grade Internet service, which has more uptime and higher-priority packet delivery than residential service and is used by web hosting companies, costs two to ten times the cost of residential service for the same bandwidth. As a result, most businesses that fall victim to these attacks will not be able to remain profitable and will go out of business.

DDoS attacks should scare ViaBTC and Bitcoin.com. They represent asymmetric warfare that costs too much to defend against for very little profit.

Method 2: “Low Luck Miner”

Six months later, Chris noticed that our mining pool was having lower luck than expected. We thought it was due to a mining pool malfunction that prevented some blocks from being broadcasted, or due to errors in our profit analysis reports. We tried to correlate luck to many variables, such as time, coin, whether merge mining occurred, hashrate, etc. It wasn't until March of this year that Chris wanted to check if luck was related to mining rigs, and he found that some large miners were producing slightly less than expected.

When these miners were banned, the luck values ​​returned completely to normal. However, new users continued to have these same issues. We were not able to pinpoint exactly why these users had such low luck values, as it seemed like it was human error and users were losing money due to this issue. We concluded that the only possible causes were: whether these miners had a defective firmware, whether the hashing was incorrect, or whether the shared difficulty was assessed incorrectly. Some internet research indicated that cloud mining providers like NiceHash were tainted by these poorly configured miners, but we were unable to associate the miners with any specific cloud mining server or IP address.

After 300 hours of research, we were finally able to figure out how to detect these miners and the "balance confiscation" issue. Luck immediately returned to 100%. Similar miners eventually disappeared, and the detection system did not cause any losses in the past few months.

Recently I discovered that if miners like SHA-256 exist, or if the firmware causing the problem can be intentionally dumped, hackers could intentionally purchase miners and instruct them to go to a pool like Roger Ver's. Then the Bitcoin.com pool's lucky value would decrease, causing Bitcoin Unlimited's network share to drop. Additionally, miners would go to the Core pool due to reduced income. If executed intentionally, this is similar to the "block withholding attack" described in the literature.

As far as we know, no other mining pool has found a way to eliminate this attack, and if they did, such a discovery would be a competitive advantage and they are unlikely to publish it. There are no papers in scientific journals that discuss the solution. If this is true, then the Unlimited mining pool may suffer a loss of revenue, which will reduce the success of Bitcoin Unlimited. After the ViaBTC mining pool announced support, their luck immediately dropped, and the bad luck has been going on for some time, which may be due to statistics, but it may also be the first manifestation of more errors.

Method 3: Bitcoin Media Bias

Now, everyone in the forums knows about reddit's /r/bitcoin and bitcointalk.org, which censor dissenting opinions and only present Core's views on the block capacity issue. However, the tendency of large bitcoin news sites is not so obvious, such as coindesk.com and cryptocoinsnews.com. Now that the block capacity issue has reached a turning point, these sites are publishing more publicly.

The reason these sites are so one-sided is because they are owned by the same companies that are hindering progress. A great diagram explaining the many interconnections between these sites can be found at ( https://forum.bitcoin.com/download/file ... &mode=view ). This spaghetti-like diagram shows how wealthy individuals who can gain or lose enormous wealth have locked up entire sectors of the Bitcoin economy. Almost every major company has received investment from Blockstream or from companies that have invested in Blockstream. Most reputable media outlets have also received money from these people. The entire industry is extremely corrupt and influenced by big money at the expense of the average user who wants a functioning network.

Affected sites, such as Coindesk, appear to publish articles around two categories of topics. One category of articles focuses on Core development without interviewing or considering the opinions of those who disagree with Core. These articles contain adjectives used by unscrupulous journalists, such as constantly referring to Ethereum as a "hijacked" or "mutable" blockchain instead of simply distinguishing between Ethereum and Ethereum Classic.

Another type of article is a three to five paragraph article speculating on the price of Bitcoin. They often contain unsubstantiated claims like “SegWit Released, Bitcoin Price Increases”, or simpler but meaningless headlines like “Is Bitcoin the Next Bubble?” There are quite a few people who are not very interested in the actual deployment or use of Bitcoin, but are simply interested in price bubbles so they can make money.

Untrue comments like those by Michael Casey ( https://www.sec.gov/comments/sr-batsbzx … 1630-4.pdf ) also exacerbate the issue of journalistic fairness. Documents filed with the SEC are meant to come from experts and have a certain authority to them. In this example, Mr. Casey notes that the claim that Craig Wright is Satoshi “has not received any attention” “in the community.” While Wright has not publicly proven that he is Satoshi, there are many who believe he is an unethical, boastful, scumbag — such as Andresen and Matonis, among others. Even if one person may have thought so, it is necessarily false and unacknowledged. Such misleading claims in official communications or in newspapers lead people to make incorrect decisions. Worse, regulators may take such claims as fact and generate regulations without investigating the truth.

Yet mainstream media knows reddit is not a trustworthy source, and many tech sites regularly reprint or reference sites like Coindesk and Cryptocoinsnews, treating what they publish as fact because they are news papers. As the war intensifies, journalists will seek out Bitcoin news, and biased articles from these sites will affect coverage for non-technical audiences. Those who support Core may also seek out negative official documents to strengthen their narrative. Those who support Bitcoin Unlimited should consider funding a site that does not accept paid articles or opinions, and aims to achieve a high page rank that makes sites like Coindesk lose money and influence.

in conclusion

If a hard fork could be avoided before, it is impossible now because the Segwit soft fork has been blocked. Unfortunately for those who want to implement a soft fork and delay the implementation of unlimited blocksize, the best case scenario is a cyberwar against those who support Bitcoin Unlimited. If the hashrate of Bitcoin Unlimited remains stable and continues to block Segwit, a hard fork is almost inevitable as both sides are tired of the stalemate.

A side effect of the Core and Unlimited split is that transactions spent by users on the Core chain with Segwit enabled can be replayed on the Unlimited chain. The Segwit change will make these transactions spendable by anyone on the other chain. Segwit is therefore likely to be a complete failure, as people who want to use the Core chain will avoid it anyway, as the lower transaction fees are not enough to incentivize replay attacks on the Unlimited chain. Both chains will still exist, but activating Segwit will make Bitcoin Core a playground for thieves, just as Ethereum Classic has become a platform for people who use old addresses to send and receive funds. I will discuss this consequence more in a future post.

Over the next few months I expect the community to be torn apart as people like Theymos, Gregory Maxwell, and Peter Todd go all out to disparage those who don't support Core. Mining pools will be under pressure to get lucky if they can get the dumb miners to do what they want. Criminals will likely start funding DDoS attacks on one (or even two) sides. It will get ugly fast, and people are advised to take precautions as soon as possible.

Translator’s note: This is the most pessimistic post I have read recently about the split in the Bitcoin community. I cannot verify the original views myself, so I translated it for your reference so that we can work together to find a consensus-based but non-divisive path to upgrade the Bitcoin protocol.