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From: Eric Lombrozo <elombrozo@gmail.com>
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Date: Sun, 21 Jun 2015 01:35:50 -0700
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To: Jeff Garzik <jgarzik@bitpay.com>
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Cc: Bitcoin Dev <bitcoin-development@lists.sourceforge.net>,
	Justus Ranvier <justusranvier@riseup.net>
Subject: Re: [Bitcoin-development] F2Pool has enabled full replace-by-fee
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> On Jun 21, 2015, at 12:42 AM, Eric Lombrozo <elombrozo@gmail.com> =
wrote:
>=20
>=20
>> On Jun 20, 2015, at 11:45 PM, Jeff Garzik <jgarzik@bitpay.com =
<mailto:jgarzik@bitpay.com>> wrote:
>>=20
>> On Sat, Jun 20, 2015 at 5:54 PM, Eric Lombrozo <elombrozo@gmail.com =
<mailto:elombrozo@gmail.com>> wrote:
>>  but we NEED to be applying some kind of pressure on the merchant end =
to upgrade their stuff to be more resilient
>>=20
>> Can you be specific?  What precise technical steps would you have =
BitPay and Coinbase do?  We upgrade our stuff to... what exactly?
>>=20
>> --
>> Jeff Garzik
>> Bitcoin core developer and open source evangelist
>> BitPay, Inc.      https://bitpay.com/ <https://bitpay.com/>
> Thanks for asking *the* question, Jeff. We often get caught up in =
these philosophical debates=E2=80=A6but at the end of the day we need =
something concrete.
>=20
> Even more important than the specific software you=E2=80=99re using is =
the security policy.
>=20
> If you must accept zero confirmation transactions, there are a few =
concrete things you can do to reduce your exposure:
>=20
> 1) limit the transaction amounts for zero confirmation transactions - =
do not accept them for very high priced goods=E2=80=A6especially if they =
require physical shipping.
> 2) limit the total amount of unconfirmed revenue you=E2=80=99ll =
tolerate at any given moment - if the amount is exceeded, require =
confirmations.
> 3) give merchants of subscription services (i.e. servers, hosting, =
etc=E2=80=A6) the ability to shut the user out if a double-spend is =
detected.
> 4) collect legal information on purchasers (or have the merchants =
collect this information) so you have someone to go after if they try to =
screw you
> 5) create a risk profile for users=E2=80=A6and flag suspicious =
behavior (i.e. someone trying to purchase a bunch of stuff that totally =
doesn=E2=80=99t fit into their purchasing habits).
> 6) get insurance (although right now reasonably-priced insurance is =
probably pretty hard to obtain since statistics are generally of little =
use=E2=80=A6we=E2=80=99re entering uncharted territory).
> 7) set up a warning system and a =E2=80=9Cpanic=E2=80=9D button so =
that if you start to see an attack you can immediately disable all zero =
confirmation transactions system-wide.
> 8) independently verify all inbound transactions and connect to =
multiple network nodes=E2=80=A6check them against one another.
>=20
>=20
> As for software tools to accomplish these things, we can talk about =
that offline :)
>=20
>=20
> - Eric Lombrozo
>=20
>=20
>=20
>=20

I should also point out that pretty much all of these suggestions =
(except for maybe 8) would apply to ANY payment system=E2=80=A6they are =
NOT specific to Bitcoin whatsoever. Any serious payment processor should =
have these sorts of policies engrained as part of company culture=E2=80=A6=
or else one day (probably not too long from now) you=E2=80=99ll be out =
of business. The mere suggestion that changing relay policy would pose =
significant threats to the bottom line of a payment processor is about =
the height of amateurishness, IMHO.


- Eric Lombrozo

--Apple-Mail=_E492F3A3-265A-4CAD-88B3-03BB53AA9A27
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<html><head><meta http-equiv=3D"Content-Type" content=3D"text/html =
charset=3Dutf-8"></head><body style=3D"word-wrap: break-word; =
-webkit-nbsp-mode: space; -webkit-line-break: after-white-space;" =
class=3D""><br class=3D""><div><blockquote type=3D"cite" class=3D""><div =
class=3D"">On Jun 21, 2015, at 12:42 AM, Eric Lombrozo &lt;<a =
href=3D"mailto:elombrozo@gmail.com" class=3D"">elombrozo@gmail.com</a>&gt;=
 wrote:</div><br class=3D"Apple-interchange-newline"><div class=3D""><meta=
 http-equiv=3D"Content-Type" content=3D"text/html charset=3Dutf-8" =
class=3D""><div style=3D"word-wrap: break-word; -webkit-nbsp-mode: =
space; -webkit-line-break: after-white-space;" class=3D""><br =
class=3D""><div class=3D""><blockquote type=3D"cite" class=3D""><div =
class=3D"">On Jun 20, 2015, at 11:45 PM, Jeff Garzik &lt;<a =
href=3D"mailto:jgarzik@bitpay.com" class=3D"">jgarzik@bitpay.com</a>&gt; =
wrote:</div><br class=3D"Apple-interchange-newline"><div class=3D""><div =
dir=3D"ltr" class=3D"">On Sat, Jun 20, 2015 at 5:54 PM, Eric Lombrozo =
<span dir=3D"ltr" class=3D"">&lt;<a href=3D"mailto:elombrozo@gmail.com" =
target=3D"_blank" class=3D"">elombrozo@gmail.com</a>&gt;</span> =
wrote:<br class=3D""><div class=3D"gmail_extra"><div =
class=3D"gmail_quote"><blockquote class=3D"gmail_quote" style=3D"margin:0 =
0 0 .8ex;border-left:1px #ccc solid;padding-left:1ex">&nbsp;but we NEED =
to be applying some kind of pressure on the merchant end to upgrade =
their stuff to be more resilient<br class=3D""></blockquote><div =
class=3D""><br class=3D""></div><div class=3D"">Can you be =
specific?&nbsp; What precise technical steps would you have BitPay and =
Coinbase do?&nbsp; We upgrade our stuff to... what =
exactly?</div></div><div class=3D""><br class=3D""></div>-- <br =
class=3D""><div class=3D"gmail_signature">Jeff Garzik<br =
class=3D"">Bitcoin core developer and open source evangelist<br =
class=3D"">BitPay, Inc. &nbsp; &nbsp; &nbsp;<a =
href=3D"https://bitpay.com/" target=3D"_blank" =
class=3D"">https://bitpay.com/</a></div>
</div></div>
</div></blockquote></div><br class=3D""><div class=3D"">Thanks for =
asking *the* question, Jeff. We often get caught up in these =
philosophical debates=E2=80=A6but at the end of the day we need =
something concrete.</div><div class=3D""><br class=3D""></div><div =
class=3D"">Even more important than the specific software you=E2=80=99re =
using is the security policy.</div><div class=3D""><br =
class=3D""></div><div class=3D"">If you must accept zero confirmation =
transactions, there are a few concrete things you can do to reduce your =
exposure:</div><div class=3D""><br class=3D""></div><div class=3D"">1) =
limit the transaction amounts for zero confirmation transactions - do =
not accept them for very high priced goods=E2=80=A6especially if they =
require physical shipping.</div><div class=3D"">2) limit the total =
amount of unconfirmed revenue you=E2=80=99ll tolerate at any given =
moment - if the amount is exceeded, require confirmations.</div><div =
class=3D"">3) give merchants of subscription services (i.e. servers, =
hosting, etc=E2=80=A6) the ability to shut the user out if a =
double-spend is detected.</div><div class=3D"">4) collect legal =
information on purchasers (or have the merchants collect this =
information) so you have someone to go after if they try to screw =
you</div><div class=3D"">5) create a risk profile for users=E2=80=A6and =
flag suspicious behavior (i.e. someone trying to purchase a bunch of =
stuff that totally doesn=E2=80=99t fit into their purchasing =
habits).</div><div class=3D"">6) get insurance (although right now =
reasonably-priced insurance is probably pretty hard to obtain since =
statistics are generally of little use=E2=80=A6we=E2=80=99re entering =
uncharted territory).</div><div class=3D"">7) set up a warning system =
and a =E2=80=9Cpanic=E2=80=9D button so that if you start to see an =
attack you can immediately disable all zero confirmation transactions =
system-wide.</div><div class=3D"">8) independently verify all inbound =
transactions and connect to multiple network nodes=E2=80=A6check them =
against one another.</div><div class=3D""><br class=3D""></div><div =
class=3D""><br class=3D""></div><div class=3D"">As for software tools to =
accomplish these things, we can talk about that offline :)</div><div =
class=3D""><br class=3D""></div><div class=3D""><br class=3D""></div><div =
class=3D"">- Eric Lombrozo</div><div class=3D""><br class=3D""></div><div =
class=3D""><br class=3D""></div><div class=3D""><br class=3D""></div><div =
class=3D""><br class=3D""></div></div></div></blockquote></div><br =
class=3D""><div class=3D"">I should also point out that pretty much all =
of these suggestions (except for maybe 8) would apply to ANY payment =
system=E2=80=A6they are NOT specific to Bitcoin whatsoever. Any serious =
payment processor should have these sorts of policies engrained as part =
of company culture=E2=80=A6or else one day (probably not too long from =
now) you=E2=80=99ll be out of business. The mere suggestion that =
changing relay policy would pose significant threats to the bottom line =
of a payment processor is about the height of amateurishness, =
IMHO.</div><div class=3D""><br class=3D""></div><div class=3D""><br =
class=3D""></div><div class=3D"">- Eric Lombrozo</div></body></html>=

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