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Date: Wed, 10 Oct 2012 13:19:00 +0200
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From: Mike Hearn <mike@plan99.net>
To: Gregory Maxwell <gmaxwell@gmail.com>
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Cc: Bitcoin Development <bitcoin-development@lists.sourceforge.net>,
	electrum.desktop@gmail.com
Subject: Re: [Bitcoin-development] Electrum security model concerns
Precedence: list

+gary

> Electrum also has a daemon for merchants.

Well, I suggest taking it up with Thomas directly. A thread here won't do m=
uch.

> Considering the dislike of
> Java that exist reflexively in much of the non-java community and the
> greater ease of deployment and the integration of type-2 split key
> management

I'm hoping that MultiBit Merchant will provide something similar based
on bcj, ie, you don't have to actually be a Java developer to use it,
it can just talk to your app via POSTs and GETs.

WRT deterministic wallets, yes, right now that's indeed a competitive
advantage of Electrum. So much code to write, so little time.

> Generally for thin clients=E2=80=94 a lying server can make clients think
> they've received confirmed payments they haven't, and unless the
> client is constructed to be a bit less thin a lying server can lie
> about input values and cause thin clients to spend large values to
> fees.

Yes indeed. This also gives [hacked] server operators a way to steal
money from users without private keys, they can get clients to create
some very high fee transactions and then provide them directly to a
miner who promises to cut them in (or they can mine themselves, of
course).

> Beyond that the protocol between the clients and servers is
> unauthenticated cleartext JSON in TCP.

I thought it used SSL. Maybe I'm thinking of BCCAPI which is a similar appr=
oach.

> that the payment is unconfirmed. There is a "pro" mode, that shows
> 'processing' for unconfirmed transactions

I think communicating transaction confidence to users is something of
an open UI design problem right now. I agree that hiding it entirely
seems suboptimal, but in reality explaining what the risks are for a
given number confirmations is difficult. Given the lack of actually
reported double-spends against unconfirmed transactions, I can
understand this choice, even if I wouldn't recommend it.

> My only question is will they know this because we as a community and
> the authors of the thin clients provided clear explanations and
> appropriate caution

Well, I pushed for English-text explanations of clients on bitcoin.org
rather than a feature matrix, for this kind of reason :) Unfortunately
the current texts are too small to really give a detailed explanation
of the security models involved. It may be worth adding one-liners
that link to a page explaining different security models (full, SPV,
superlight).

One thing I'm really hoping we can find and get agreement on is
somebody clueful and trustworthy to work on the bitcoin.org website.
Bitcoin, the project, needs a stronger voice than it currently has,
partly to speak about such issues. For instance, an FAQ that isn't on
the wiki would be good. And a simple "Welcome to Bitcoin" flow on the
bitcoin.org website that guides people to appropriate clients, teaches
them the security basics, etc, would be excellent.