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Date: Thu, 24 Apr 2014 11:03:37 -0400
From: Peter Todd <pete@petertodd.org>
To: Christophe Biocca <christophe.biocca@gmail.com>
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Cc: Bitcoin Dev <bitcoin-development@lists.sourceforge.net>
Subject: Re: [Bitcoin-development] Coinbase reallocation to discourage
 Finney attacks
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On Thu, Apr 24, 2014 at 10:47:35AM -0400, Christophe Biocca wrote:
> Actually Peter, coinbase confiscations are a much worse mechanism for
> enforcement of widespread censorship rules than simple orphaning. They
> lose their power when the transaction miners are punished for can
> build up over time without losing their usefulness:
<snip>
> Of course, in such a dystopian future, orphaning would be the
> enforcement mechanism. It would be stupid to rely on coinbase
> reallocation/burning to do this task when the existing tools work so
> much better.

I don't disagree with you at an end stage, but the thing with coinbase
blacklists/confiscation is because it's a voting mechanism the initial
stages of enforcing widespread censorship rules with it are much easier.
For instance, if a 10% pool that has been forced/wants to blacklist
certain transactions can do so, and then vote to blacklist blocks that
do not abide by that blacklist. Casting that vote does them no harm.
Every time another pool joins the blacklist, there's no harm to them to
doing so.  At some point they will reach a majority, which causes the
blacklist to actually apply. The whole process happens smoothly, letting
the blacklist be applied safely and easily.  With orphaning/reorging on
the other hand you just can't be sure that the other miners will
actually adopt it, making adoption risky.

Of course, that's above and beyond the fact that you can't prove a
Finney attack happened to a third-party, making it easy to attack
smaller miners with Sybil attacks, get them creating blocks with
double-spends in them, and using that as an excuse to punish them.

> What's interesting is that this mechanism is especially tailored to
> blocking time sensitive transactions (that need to be confirmed
> now/soon, or are worthless), such that their total out-of-band fees
> can't build up over time. Double spending is one such category. I'm at
> a loss to come up with something else, but maybe someone has a good
> example?

Decentralized markets are a great example: the bids and orders they
depend on are time-senstive and become much less valuable if they get
delayed greatly.

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