Bitcoin mining and security models

Matt Corallo


Yes, something like that. As mentioned, I've been contributing to Bitcoin Core since 2011 and I've worked on various parts of bitcoin, such as the early payment channel work, some wallet stuff, and now I work for Chaincode Lab one of the sponsors-- we're a bitcoin research lab. We all kind of hang out and work on various bitcoin projects we find interesting. I want to talk about reflections on trusting trust.

For those of you who are too young to have read it, it's a great paper, it's about trusting compilers and it's from the 80s. First I want to talk a bit about what is bitcoin. Not technically. We have had a bunch of presentations covering the details of the blockchain and what most people are aware of a chain of blocks and transactions. But what is bitcoin socially? I don't want to talk about private blockchains because they are just cryptographic audit logs, they are a different class of thing.

It's useful to put bitcoin into context. Bitcoin is the first ecash scheme that didn't have a centralized trusted third party. This turned out to be critical. There were schemes that were centralized in some way... chaumian ecash and great features for privacy, but they had some trusted centralized third party and they all failed in one way or another, like paypal which failed at their original goal. They were an ecash scheme with lots of privacy and then the government told them they can't do that and they changed their system. Or what about Digicash? The system was good but the business was unable to make money. Bitcoin endeavored to fix this by removing trust and all trust requirements.

David gave a great talk earlier about full nodes, every full node validates everything; you just trust the software you are runnig, with the caveat of double spend protection... which is the job of miners. Keep in mind that the hashing has a cost. Bitcoin endeavors to be a trustless system, but maybe doesn't always succeed. If you want to assign a cost to undoing your transaction, bitcoin succeeds there. The cost to reorg a month or 6 months of bitcoin blockchain which has actual investment and hashrate-- all the sudden you can make reasonable arguments about the security.

Waiting a week or month for a payment to confirm, that's uncompetitive in the payments industry. When people use bitcoin for payments, yeah they relax this trustlessness requirement. Ultimately I think it should be roughly clear to people that pretty much every use case of bitcoin extends from trustlessness in some way. Some people see bitcoin as an interesting hedge against the US dollar or fiat. Maybe you don't trust the Venzeluen bolivar, which is currently worth effectively zero. But maybe you're OK with trusting miners? Maybe you only care about the 21 million bitcoin limit, and as long as you're running a bitcoin full node, you can make sure that stays true.

Payment processors act as trust anchors in payments. Merchants trust the bank. They don't have to trust each customer that walks into their shop. Banks have to trust their customers, and this actually leads to censorship issues where banks don't have to actually give you service. Also the government can cause banks to not take you as customer.

Some people talk about bitcoin as a global currency. They are still interested in the trustlessness. If you are sitting in the US, maybe you don't want to trust a US bank.

... you do have to trust the bitcoin community at large. When you take your bitcoin and put them in your full node or your bitcoin bank or whatever, ultimately you're trusting that the people pushing for the bitcoin brand are pushing for the bitcoin that you own or that you want. If the entire rest of the bitcoin community decides to hard-fork and increase the 21 million coin limit, all of the sudden the trustlessness property goes out the window. Ultimately what you're really trusting in for many bitcoin use cases, or the most trustless bitcoin use cases, it's a trust that the community will stay together and enforce the requirement that changes must have consensus and that the bitcoin system will continue to be the bitcoin system you care about. This is where David's talk about everyone should run a full node and clearly defining and not trusting everyone to be on the bitcoin system that you care about... but if you lose control of the brand, perhaps that system is no longer worth as much to you.

For the future of bitcoin technology, and for what people use bitcoin and how they use bitcoin, is that people should be able to relax these trust requirements. Almost all the use cases of people using bitcoin isn't taking a transaction and waiting 6 months so that they aren't trusting anyone, well they are trusting Coinbase or Bitpay and using only 1 confirmation. Trust relationships aren't inherently bad, they just add cost when you are forced into them or when they can be exploited.

When we talk about lightning network or tumblebit, it's trusting miners a bit, you can accept 1-6 confirmation transactions and in lightning it's trusting that you will be able to get a transaction into the blockchain within 1-6 days or whatever. These are also relaxations of trust, but they are relaxations of trust that people are okay with in the current bitcoin environment. Taking advantage of these trusts makes the system more usable. You get lightning, tumblebit, sidechains. Or SGX if you want to trust Intel. They make bitcoin the currency more usable even if people aren't actually using the bitcoin protocol.

The only way that bitcoin succeeds, because of this property where the only way for bitcoin to succeed is where the community enforces the consensus property; therefore the community must only change bitcoin with consensus. It's where we have freedom to innovate on top, using bitcoin and lightning and whatever, but that they are able to use these systems interoperably without using the chain unless they really do not trust any of the miners and want to wait 6 months for their payment. They should be able to do that. But the only way that this works is if people who have trust relationships can take advantage of those on a regular basis for most of their payments.

That's most of what I wanted to talk about in terms of trying to make points. If anyone has questions, now would be a great time. We're an hour ahead of schedule so we do in fact have time for questions.

Q: The one thing that I take from your presentation... the really attracted to.. bad people wanting to do bad things using bitcoin to facilitate that.. are there any... if things got really out of hand, like a lot of bad people doing bad things, ... is there..?

A: Bitcoin is a trustless system. In order to provide this property, it must be able to take advantage of it and do bad things with it. I would characterize it differently though. Because it's ultimately the ways that bitcoin is useful is using systems on bitcoin, like utilizing bitcoin as an asset to transact safely, you can bake anything you want into those systems, like zero-knowledge proofs that you are paying your taxes, or the same way we enforce money transmission laws today. If you fly a suitcase of cash to Iran, you're going to prison, not because the transaction is blocked, but rather because you go to prison. I gave a talk in Berlin a few weeks ago, digging into that. Essentially I made an argument that-- as a society, we have to have a lot of discussions about how far censorship can and should be allowed to go. I drew parallels with the Snowden disclosures with government monitoring of your phone and internet usage and it's even worse in the UK now, with a lot of the financial censorship in the US. It's somewhat common practice under the Obama administration for DOJ to show up at banks and insist that the bank not do business with someone simply because the DOJ was asking.