> The set of legal transactions on the blockchain is determined entirely by what the majority of miners will accept.
That is incorrect.
The majority of miners only decide on the order of valid transactions, not whether the transactions themselves are valid or not. Every Bitcoin client itself checks the validity of the transaction.
If 51% of miners use the "Bitcoin-Bailout" client and the rest of the network does not, the network is forked and the remaining 49% continue with the classic Bitcoin client and protocol.
An attacker that controls more than 50% of the network's computing power can, for the time that he is in control, exclude and modify the ordering of transactions. This allows him 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
The attacker can't:
- Reverse other people's transactions
- Prevent transactions from being sent at all (they'll show as 0/unconfirmed)
Good observation; I was trying to figure out how to state my proposal as concisely as possible, and glossed over that detail. See my other comment: https://news.ycombinator.com/item?id=7310959
Still, I think it is a reasonable proposal. Not something that can be done quickly, but reputable companies could bail out Gox, then try to convince everyone to accept the new version of the client which would allow Gox coins recovery.
There is a real moral hazard here. People have been told to stay away from MtGox for months, but still chose not to listen and kept large sums on the exchange.
If the community chose to bail out MtGox users, that raises questions whether somebody knew that a bailout is going to happen and has profited from staying on MtGox, whether the Bitcoin balances stored in the MtGox database are accurate, and so on. Many customers there bought Bitcoin for 20% of the price on the regular exchange -- they knew that they were gambling.
What if the next exchange has problems, and people won't leave because they expect to be bailed out again?
It's a can of worms, and I'd rather that it stay closed.
The best thing for Bitcoin is if people learn from MtGox, lower their trust for exchanges, and start demanding proof of funds.
Yes, this is a reasonable concern, I agree. One could argue that a buyer actually planned the bailout to capitalize on Gox users, who, obviously, are going to pay some percentage of their balances for the whole operation. However, Gox customers don't really have any other choice, so they'd take the deal.
One can suggest that this kind of tactic will never be again used in the future, since all exchanges would be audited and customers would be more cautious.
I can almost guarantee you that if such a bailout happens that it will likely encourage such behavior in the future. Rewarding a behavior encourages that behavior, whether it is good or bad.
In the future all exchanges could be audited and customers more cautious, but if something catastrophic happened then there would be those demanding another bailout because a precedent had already been set. Even those protections mentioned would likely stagnate over time.
This does interest me about Bitcoin - who controls the default client? If you can persuade the majority to adopt a new version, you can change the rules by which the currency operates. If it is more widely used, this would become a real issue, because individually users do not have much power over the direction of it.
Everybody can start using their own fork of the currency, but it's in your interest to use the same version as everybody else. You basically have to convince both miners and major stakeholders that a change to the code is good, otherwise you risk a network split, the valuation crashes and your investment is gone
That is incorrect.
The majority of miners only decide on the order of valid transactions, not whether the transactions themselves are valid or not. Every Bitcoin client itself checks the validity of the transaction.
If 51% of miners use the "Bitcoin-Bailout" client and the rest of the network does not, the network is forked and the remaining 49% continue with the classic Bitcoin client and protocol.
More info: https://en.bitcoin.it/wiki/Weaknesses#Attacker_has_a_lot_of_...
An attacker that controls more than 50% of the network's computing power can, for the time that he is in control, exclude and modify the ordering of transactions. This allows him 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
The attacker can't:
- Reverse other people's transactions
- Prevent transactions from being sent at all (they'll show as 0/unconfirmed)
- Change the number of coins generated per block
- Create coins out of thin air
- Send coins that never belonged to him