A part of my reason for sending this email was a quick discussion I had
with Gavin at the BitCoin conference. I was under the strong impression
that double spend notification was something he approved of and was
considering implementing himself.
In the case of a double spend, If the receiving end gets a timely
notification (few seconds) it isn't that important that any one of the
two (or more) transactions is chosen over another. The receiving side
can treat a double spend as a failed transaction as it should be proof
that the buyer is acting maliciously or has had their private keys
compromised.
I am aware Peter Todd has implemented replace by fee and is operating a
node on testnet doing this. I think he is rightly pointing out that the
current behaviour of dropping all second spends is based largely on the
good will of nodes and can absolutly contradict the perceived self
interest of those running miners. Accordingly relying on this behaviour
can be precarious. It was from reading his emails to this list or
bitcointalk that I recognized how essential it was to not transmit the
second transaction if double spend notification had any hope of being
worth much.
This is controversial because reliable 0-conf transactions are desirable
but as you said there really is no way to ensure significant integrity
in a decentralized way. Replace by fee would make what transactions get
into blocks more predictable and eliminate any expectation of reliable 0
conf transactions. The question is if this consistency is a better
choice than a double spend notification that is far from perfect but
today its still useful and in practice can probably be trusted as much
as credit cards.
A more strict version of replace by fee could be implemented that only
replaces transactions with ones that don't reduce any output quantity
and accordingly require introducing a new input. This would allow
increasing transaction fees on a transaction without hurting someone who
trusted a 0 conf transaction. This seems like feature bloat to me but
it wouldn't reduce 0 conf integrity.
Unfortunately, I don't see a way to make everyone happy on this issue.
Though, I expect everyone would either prefer double spend notification
or always replace by higher fee over what we have now.
- Quinn
On 05/20/2013 07:24 PM, Robert Backhaus wrote:
Personally, I agree, but a different decision has been made by the
main devs.
The issue is this: consider two transactions in the unconfirmed pool.
One transaction has 2BTC input, 1.5BTC to one address (the payment),
.4995 to another address (change) and .0005 standard fee. Another
transaction appears - Same input, 1BTC to one address, .999 to
another, and .001 fee. Which one would a miner include? On pure self
interest, the second one, because it has twice the fee. Anyway, the
miner has no real way of knowing which transaction was real, and which
the fraudulent double-spend. The network does not keep accurate
timestamps, so it has no way of really knowing which is first. A bit
of artificial DDOS-type overload on the recipient's system, and the
real transaction could easily appear last.
So the decision has been made to make 0-conf double spends trivial, so
no one will ever trust 0-confs. If a later transaction appears with a
larger fee, it will be considered to be the valid one, and the first
one dropped, as long as the first one has not been confirmed. This
makes undoing a mistaken transaction possible.
So anyone needing 0-conf-like speed will have to make other
arangements, such as contracting with enough mining pool power to
never drop their transactions unless confirmed multiple times. Secure
0-confs is an impossible target with blockchain cyrpto-currencies as
the stand. Any ideas on how to make them work are welcome, of course -
as long as we haven't heard them too many times before.
On 21 May 2013 10:45, Quinn Harris <btc...@quinnharris.me
<mailto:btc...@quinnharris.me>> wrote:
The current BitCoin implementation is subject to relatively easy
double
spend attack for 0 confirmation payments. Yet 0 confirmation payments
are needed for typical in person transactions like most purchases at a
local business.
Notably, it is easy to transmit two transactions from the same
output at
the same time to different sets of nodes on the network by using two
instances of bitcoind with same wallet file and a spend on each daemon
initiated by RPC by some easy to implement code. If the first attempt
to pay the merchant doesn't go through because they received the
"wrong"
transaction it could be quickly followed up with another initiated
spend
from a different output switching which daemon sends the
transaction the
merchant is expecting. This means an unsophisticated attacker can
reliably get away with this attack and it would be worth while for
small
transactions. Given this, I would be reluctant to trust 0
confirmation
transactions at all though I think many do in practice. Someone could
write and publish a special daemon to execute this attack further
reducing the cost.
Right now a node will drop any second spend of the same output in the
memory pool. After the first transaction has propagated through the
network issuing a second double spend transaction isn't likely to be
seen by a significant number of miners as most nodes especially non
miner nodes will drop this transaction. Today, it is necessary to
transmit both transactions on the network nearly simultaneously to
reliably get away with this simple attack. If in this case, the
receiving end is quickly notified of the double spend this attack
becomes more more difficult to get away with.
If the second transaction is relayed instead of being dropped to
notify
the receiving party of the double spend, most miners will receive both
transactions and it is possible that some or even many of the miners
would replace the first transaction with the second if it has a higher
fee as it would be in their short term interest. This can happen some
time after the first transaction has propagated through the network so
the receiving end wouldn't get a timely notification of the double
spend. Depending on the choices of the miners, this approach to
double
spend notification could exacerbate the very problem it was attempting
to fix compared to the current implementation. While miners might
continue to drop the second spends, the easy availability of the
second
spends would increase the short term reward for changing this policy.
This problem can be fixed if instead of sending the second
transaction a
new double spend message is sent with proof of the double spend
but not
the complete transactions. This would allow the receiving end to be
quickly notified of a double spend while in no way increase the chance
over the current implementation that a double spend would be
successful.
The proof of the double spend would include the scriptSig (input) from
the original transactions and the hashes from the "simplified"
transaction used by OP_CHECKSIG of the scriptPubKey (output) but
not the
entire transaction. This is the hash computed by the SignatureHash
function in script.cpp. The double spend notification message should
contain proofs of both signed transaction spending the same output
ordered by hash to produce a canonical proof for a specific two
transactions. To reduce DOS potential, the proof should not be
relayed
unless one of the original transactions has been received to ensure
there is some commitment to the block chain and different double spend
proofs of the same output should not be relayed. The forwarding of
transactions should remain exactly the same as it is now where the
second transaction is dropped but a double spend message is
transmitted
if appropriate.
The existing block chain needs to be checked to make sure the proof of
double spend couldn't have been derived from the block chain and a
single spend in the memory pool. This could happen if there was
already
an identical transaction in the block chain. This would typically
only
happen if someone was paying someone else the same amount they had
before and neither side changed addresses. In this case double spend
detection wouldn't be reliable as it could be generated by anyone, but
both the sending and receiving client could detect this situation and
warn the user.
It would still be possible for an attacker to send the second
transaction directly to powerful miners but this is a distinctly less
viable attack than the current double spend attack.
I would expect this double spend notification implementation to make
double spends more costly than they are worth for most cases today
that
0 confirmation acceptance is needed. That said over time this
provision
might become less effective. As the reward for each block mined
decreases, transactions fees will become a more significant part
of the
mining reward accordingly increasing the incentive to replace
transactions with higher fees. Today most BitCoin participants have a
high expectation of significant future appreciation of BitCoins and
recognize anything that brings into question the integrity of the
system
is likely to reduce that future value so they have a long term self
interest to keep up the impression of integrity. As BitCoin becomes
more establish this incentive will decrease.
On the other hand, non mining nodes have no incentive to replace by
fee. The continued increased capital costs of mining would likely
increase the proportion of non mining nodes typically run by those
with
an incentive to assure integrity of the network such as merchants.
But
increasing transaction volume is likely to increase node costs which
would push out non mining nodes with lower incentive more than mining
nodes. Accordingly increasing block size would have a tendency to
reduce the effectiveness of double spend notification. The primary
point is there are multiple counteracting forces that make predicting
the future effectiveness of double spend notification uncertain.
I don't believe this necessary warrants conceding that we can not
provide any protection from non trusted 0 confirmations
transaction as a
replace by fee implementation would do. But it would still be
important
to work towards more robust solutions notably various forms of 3rd
party
trust. This could be tamper resistant devices trusted to not
duplicate
spends, 3rd party certificates with proof the transaction was spent by
the holder of the certificate or multi signature transactions on the
block chain that must be signed by a trusted 3rd party to spend. I
would expect it would take significantly longer for the companies and
technologies to be built to implement this on a wide scale than adding
double spend proof messages to the current implementation. In
addition,
there will likely always be some use cases where a 3rd party
(centralization) is not viable.
Should a BIP and pull request implementing a double spend notification
as described be accepted?
- Quinn
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