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From: Andy Parkins <andyparkins@gmail.com>
To: Mike Hearn <mike@plan99.net>
Date: Wed, 23 Apr 2014 12:39:18 +0100
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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 Wednesday 23 Apr 2014 12:07:25 Mike Hearn wrote:
> > Just pedantry: 100% of credit card transactions _can_ be fradulantly
> > charged
> > back but arent.
> 
> If you do a chargeback the bank double checks this, investigates it and
> people who repeatedly try and do fraudulent chargebacks get their
> accounts terminated. It's not like your bank offers you a "reverse this
> payment" button in the UI that always works, right?

True; the effort of a chargeback is non-zero on credit cards; but that's my 
point: it's non-zero for bitcoin too.

> > If N was 5%, then only 5% of bitcoin transactions _could_ be
> > fraudulantly "charged back"; so then why wouldn't only 2% of those
> > bitcoin transactions be fraudulant too, just as in the CC case?
> 
> If you attempt fraud against a bank, they know who you are and will come
> after you in one way or another. But it's safe to assume that users of a
> double spend service would be anonymous and the kind of merchants they go
> after are not hassling their customers with strong ID checks, so there
> would be no consequences for them. It's a game they can only win.

You're still being unfair to bitcoin.  Not everyone who uses bitcoins will 
be dishonest.  The dishonest 5% hashing power is not going to be used in 
100% of any given merchants transactions.  That's all I'm saying.  You're 
original statement that we could end up in a position that bitcoin has a 
higher failure rate than credit cards seems unfair to me.

> if N was only, say, 5%, and there was a large enough population of users 
who were systematically trying to defraud merchants, we'd already be having 
worse security than magstripe credit cards.

"[If] there was a large enough population" -- why are bitcoin users more 
dishonest than credit card users?  Most people are honest, so it seems 
unlikely that that 5% attack surface would be used at 100%; or even 40% 
necessary to equal the 2% chargeback rate with CC.  

I really didn't want to get into an argument over this: all I'm saying is 
that things aren't as bad as you painted them.


Andy

-- 
Dr Andy Parkins
andyparkins@gmail.com