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README.md Another incorrect use of the term SPV removed. May 27, 2018

README.md

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Bitcoin Threat Model

A security review of the Bitcoin cryptocurrency


Motivation

The Bitcoin threat model is intended to help developers, investors and users better understand the security of Bitcoin. Threats are assumed to be any activity designed to prevent Bitcoin from accomplishing its mission to become cash (including a unit of account).

Conclusion

Currently there are no threats that have been identified that could prevent or significantly slow adoption of Bitcoin as cash. However, new threats could be discovered or existing threats may prove to be more impactful. Given the impact Bitcoin is likely to have, and the frequency and intensity of past attacks, this remains a real possibility.



Introduction

Under each threat is a description of the threat, the safety features designed to protect against the threat, and any past examples of attacks executing the threat.

Bitcoin can be attacked directly by making the software behave in a way that is ineffective as cash or by attacking the humans that are needed to support the software.

Threats are categorized as one of the following:

  • Prevent Adoption - These threats have a reasonable chance of preventing Bitcoin from being adopted as cash.
  • Significantly Slow Adoption - These threats have a reasonable chance of significantly slowing the adoption of Bitcoin as cash.
  • No Impact on Adoption - These threats do not have a reasonable chance of significantly slowing the adoption of Bitcoin as cash.

Software Threats

Software threats are threats that take advantage of security flaws within the software to prevent Bitcoin from becoming cash.

Creating a transaction

Owners of Bitcoin can send their Bitcoin to another user by creating a digitally signed transaction and broadcasting it to the Bitcoin network. The piece of software that creates transactions is called a "wallet." For a transaction to be accepted by the network it must be digitally signed using the owners private key. Keeping the private keys secret is also handled by the Bitcoin wallet software.

An attacker could steal a users private keys to steal their bitcoin.

If an attacker can gain access to a users private key he can send the associated bitcoin to himself.

Safety Features

  • Because each Bitcoin user maintains his own private keys an attacker can only steal from one person at a time. This greatly reduces the incentive for a attacker because in most centralized systems such as banks, credit reporting agencies and brokerages a successful attack could result in access to the funds of thousands of users.

  • As long as thefts of private keys is not systemic it will not prevent the adoption of Bitcoin as cash. This is especially true as long as theft of private keys remains more difficult than the theft government money.

  • Hardware wallets are gaining in popularity and they make theft of private keys nearly impossible without physical access to the device and password or pin number. This is a level of security that is far higher than is common in banking.

Past Attacks

No Impact on Adoption

  • Although users need to be careful to keep their private keys safe, Bitcoin remains the most secure digital asset.

An attacker could use a quantum computer to guess everyone's private keys.

If an attacker could gain access to everyone's private keys he could steal every bitcoin.

Safety Features

  • The private key is so large that it would take more energy than is produced by the sun in its entire lifetime to power a computer capable of guessing it.

Past Attacks

  • There have been no known attempts to perform this attack.

No Impact on Adoption

  • This attack is probably impossible. It is very unlikely that quantum computing or any other field of scientific research will result in such a drastic rewriting of our understanding of the basic laws of physics that guessing private keys would become possible.

Broadcasting a transaction to the network

After a transaction is created it is relayed over the Bitcoin network.

An attacker could broadcast a fake transaction to the network in order to steal bitcoins.

If an attacker could convince the network that a transaction was legitimate he could transfer bitcoins from a victims balance to his own account.

Safety Features

  • The Bitcoin network will reject any transactions that are not digitally signed by the private keys of the owner of the bitcoins.
  • If a flaw in the digital signature mechanism is discovered the Bitcoin network could consider any transactions after the flaw was discovered to be invalid. This would be far from ideal as some legitimate transactions could be ignored, but this possibility reduces the incentives for attackers to attempt this attack.
  • Digital signatures are a fundamental building block of computer security and have proven to be effective and secure in many applications including Bitcoin.

Past Attacks

  • There have been no known attempts to perform this attack.

No Impact on Adoption

  • It is unlikely that a flaw will be discovered that allows an attacker to forge a digital signature.

An attacker could broadcast a large number of transactions that pay himself in order to clog the network.

Because anyone can broadcast a transaction on the Bitcoin network it is possible for an attacker to broadcast a large number of transactions that transfer bitcoins to themselves. The Bitcoin network has no way to distinguish between legitimate transactions and transactions created with the intention of clogging the network. If the network is unable to process legitimate transactions Bitcoin would not be suitable as cash.

Safety Features

  • Bitcoin transactions are processed in order of the fees associated with the transaction. This makes congesting the network with frivolous transactions costly.
  • Layer two and side chain networks allow Bitcoin transactions to be consolidated. This decreases demand for space for transactions making more room for both legitimate and frivolous transactions.
  • Layer two and side chains technologies allow Bitcoin transactions to be consolidated. This increases the amount of fees that can be paid for legitimate transactions since each single transaction actually represents a batch of transactions. This will make this attack more expensive as frivolous transactions would have even more difficulty outbidding legitimate transactions.
  • Bitcoin limits the number of transactions that can be processed using a "block size" limit. This ensures that clogging the network would require competing for space through fees.

Past Attacks

No Impact no Adoption

  • Although this attack has been performed regularly in recent months its only effect has been occasional transaction delays and higher fees. It has not significantly slowed adoption. This is partially due to the fact that Bitcoin is so early in its evolution to become money that it is still in the "store of value" stage and partially because investors are aware that new features are on the way that will make this attack impractical.

An attacker could identify the participants in transactions through network traffic analysis

Bitcoin transactions are broadcast across the Internet by the sender. If an attacker can view network traffic and discover the source and destination of transactions this would make Bitcoin less suitable for cash.

Safety Features

  • Bitcoin destination addresses are randomly generated for each transaction and not tied to an individuals identity.
  • Bitcoin is an open source project with growing participation and regular contributions from the top cryptographers and software security experts. It is likely that additional safety features will be added to address this issue soon.
  • Bitcoin transactions can be sent from anonymous networks such as free wifi hotspots at coffee shops. However this is still a major inconvenience and it can still reveal the senders general location.

Past Attacks

  • The NSA collects and stores all Internet traffic. It is reasonable to assume all Bitcoin transactions are archived and analyzed so that they are easily readable and tied to individuals., https://www.theguardian.com/world/interactive/2013/jul/31/nsa-xkeyscore-program-full-presentation Access to this data may currently be limited to the thousands of employees and contractors that work for governments friendly to the US, but it is likely that this data will be more broadly distributed through a leak or hack if it hasn't been already., https://en.wikipedia.org/wiki/XKeyscore

  • BlockCypher has developed a graph network analysis system which link's activity on the bitcoin blockchain, and attempts to resolve activity back to individuals. They also run machine learning models against each bitcoin transaction to "score" it's association with gambling/drugs/etc. This system is partially detailed in the following talk given at a big data conference., https://www.youtube.com/watch?v=8ELUDY1-ee0

No Impact on Adoption

  • Bitcoin transactions can be tied to the senders by analyzing network traffic, however unless Bitcoin transactions become less secure than government money transactions this is unlikely to prevent Bitcoin from becoming cash. It is also likely that additional safety features will be added before this flaw has a significant impact on adoption.

An attacker could identify the participants in a transaction through public transaction data.

Bitcoin transactions are published on the public ledger and they contain the source, destination, approximate time and amount of each transaction. If it is possible for an attacker to discover the people involved in a transaction this would make Bitcoin less attractive as cash.

Safety Features

  • Bitcoin destination addresses are randomly generated for each transaction and not tied to an individuals identity.
  • Even with this fault, Bitcoin remains more secure than government money transactions.
  • Bitcoin is an open source project with growing participation and regular contributions from the top cryptographers and software security experts. It is likely that additional safety features will be added to address this issue soon.

Past Attacks

Medium Risk

  • Bitcoin transactions can be tied to the senders by analyzing the public ledger, however unless Bitcoin transactions become less secure than government money transactions this is unlikely to prevent Bitcoin from becoming cash. It is also likely that additional safety features will be added before this flaw has a significant impact on adoption.

Confirming Bitcoin transactions

Bitcoin transactions are confirmed through a process called mining. To prevent double spending of transactions they are grouped together and a difficult math problem is solved using this set of transactions, and the previous set of transactions, as inputs. Sets of transactions are called "blocks." The math problem is so difficult that a significant amount of money, must be spent on electricity in order to solve the problem. The person that solves the math problem is rewarded with bitcoin, in the form of transaction fees included by the senders of transactions, and a "block reward" where additional bitcoins are created. Solving this math problem is called "finding a block." Everyone running mining software is competing to be the first to find the next block.

An attacker could run mining software in order to prevent transactions from being confirmed.

Because anyone is able to download and run the software that confirms transactions on the Bitcoin network it is possible for an attacker to mine blocks without including transactions.

Safety Features

  • Transactions include transaction fees. If an attacker ignores these transactions, he will not be able to collect the associated transaction fees.
  • If an attacker ignores a transaction in a block, it is likely that he will not be the miner that solves the next block so he will have only succeeded in delaying the transaction for a short period of time.
  • In order to delay a transaction for a longer period of time an attacker would need to dedicate more computing power to the network. This would be expensive because he would have to spend a lot of money on electricity and computer hardware and his only reward would be in bitcoins that would be less valuable as a result of his actions.
  • The value of Bitcoin has been increasing rapidly since it was created. Many individuals with the funding and knowledge to execute this attack would gain more from investing in Bitcoin than from attacking it.
  • Unlike other proof of work systems the Bitcoin proof of work doesn't generate anything desirable to the marketplace beyond securing the network. This prevents attacks like these from being partially subsidized through the sale of the other proof of work outputs.
  • Bitcoin mining uses cutting edge chip design to produce computer power as efficiently as humanly possible. This means that an attacker could not easily develop more effective hardware in order to make this attack more cost effective.
  • This attack would increase fees. Increased fees would incentivize others to mine blocks with the transactions and this would increase the cost of the attack.

Past Attacks

No Impact on Adoption

  • The only effect of this attack would be to increase fees and fees are unlikely to go high enough to significantly slow adoption as investors anticipate that this attack will be less effective in the future.

An attacker could run mining software in order to double spend bitcoins.

Because anyone is able to download and run the software that confirms transactions on the Bitcoin network it is possible for a bad actor to mine blocks without including transactions.

If the attacker sends bitcoin he could delay that transaction until a new transaction, using the same funds, is confirmed by the network. This would make the initial transaction invalid after it was relayed across the network.

Safety Features

  • The cost of executing this attack increases exponentially as the transaction moves further back into the block history because the Bitcoin network considers the longest (valid) history to be correct.
  • Many Bitcoin wallets don't display a transaction completely finalized until it is at least 6 blocks old.
  • Layer 2 technologies such as the lightning network reduce this threat because transactions are confirmed instantly.
  • Unlike other proof of work systems the Bitcoin proof of work doesn't generate anything desirable to the marketplace beyond securing the network. This prevents attacks like these from being partially subsidized through the sale of other proof of work outputs.

No Impact on Adoption This attack is not cost effective.

An attacker could exploit a flaw in the proof of work algorithm to fake the performance of work.

If an attacker is able to find a flaw in the proof of work algorithm he could obtain the benefits of transaction fees and block rewards without doing the work required to secure the Bitcoin network.

Safety Features

  • The proof or work algorithm is based on the SHA-256 hash algorithm. This algorithm has been in use for over a decade and is critical to most digital security applications and it is believed to be secure.
  • The Bitcoin proof of work has been in use on the Bitcoin network for over 8 years and the only flaw uncovered to date only allowed the attacker to fake ~20% of his work.

Past attacks

No Impact on Adoption

  • Although past attacks have been successful they were a result of a known design flaw (transaction malleability) that has been fixed.

An attacker could steal all of the hardware used to confirm Bitcoin transactions.

If an attacker could gain control of all of the hardware used to confirm Bitcoin transactions he could prevent some or all Bitcoin transactions.

Safety Features

  • Bitcoin mining is decentralized. Mining computers are located in many geographic areas that are under the control of various criminal organizations that are hostile to one another. Even if all mining hardware could be found, coordination between hostile groups, that may see Bitcoin as a lesser threat to their interests than to their rivals, seems unlikely.
  • The Bitcoin protocol was designed to keep incentives for mining in a single location as small as possible. For example the delay between a miner finding a block and the rest of the miners knowing about this discovery is short.
  • Miners are, to some degree, aware of this threat. This encourages miners to remain anonymous and keep their locations secret. If this attack is attempted this awareness will be greatly increased.

An attacker could claim to be Satoshi and remove a safety feature from the next version of Bitcoin.

Satoshi Nakamoto is the name of the author of the original Bitcoin white paper and software. Because he is so well respected in the Bitcoin community he, or someone pretending to be him, could attempt to remove a security feature in the next version of Bitcoin.

Safety Features

  • Satoshi Nakamoto disappeared from the Bitcoin community years ago. Since that time many well respected developers and security researchers have become experts in Bitcoin and the design and implementation decisions that keep it secure. Convincing the best security researchers in the world to remove a safety feature in Bitcoin would not be easy, even by someone with the reputation of Satoshi.
  • Impersonating Satoshi is difficult because he retains ownership of bitcoin balances. Anyone claiming to be Satoshi should be able to provide proof of his identity by sending those bitcoins.
  • In some debates people have attempted to use Satoshi's vision, or intention as support for their position. In these cases an appeal to the authority of Satoshi has generally undermined the argument because it distracts from the technical advantages and disadvantages of a given design or implementation decision.

Past Attacks

An attacker could remove a safety feature from the next version of Bitcoin to enable a new capability.

In all software projects there is a tension between adding new features or capabilities and maintaining safety features. This is often exacerbated by the fact that safety features often prevent software from being used certain desirable ways. As an example cars have speed limiters to prevent a car from driving as fast as the engine will allow but it does prevent users from racing at top speed.

Even in the most effective software projects the security vs features trade off decisions become heated and political. If an attacker is able to convince the community that a new feature is more important than an existing safety feature, the safety feature would be removed.

Safety Features

  • The Bitcoin technical community has the best software security experts working diligently to keep Bitcoin secure.
  • Because the Bitcoin software is currently securing over 60 Billion USD in value the technical community is slaw to make changes that could introduce security vulnerabilities.
  • Side chains allow new features to be developed and deployed using bitcoin as the asset, without changing the Bitcoin network or protocol. It is likely that any significant change in the future will be deployed onto a side chain before those features are included into Bitcoin itself.

Past Attacks

No Impact to Adoption

  • This attack is unlikely to be successful.

An attacker could create a copy of Bitcoin (aka fork) that is missing a safety feature and trick people into using it.

Because Bitcoin is an open source project anyone can copy the code and build their own version of Bitcoin. If they can convince someone that their version of Bitcoin is the real Bitcoin they will have successfully removed that safety for those users.

Safety Features

  • If investors are deceived into using a version of Bitcoin that lacks the safety features of Bitcoin that does not reduce the security of Bitcoin.
  • While siphoning off investors from Bitcoin would delay Bitcoin from becoming money in the near term, it would accelerate the education of investors regarding the safety features of the real Bitcoin and this would accelerate Bitcoin becoming cash.
  • Side chains allow new versions of Bitcoin to be created while still using Bitcoin as an asset. New versions of Bitcoin will likely be tested as a side chain before those features are implemented into the original Bitcoin. This would give people more time to understand any changes being proposed.
  • It would be very difficult to promote a version of Bitcoin without the Bitcoin community exposing the attempt as an attack.
  • While it is still possible some investors would be deceived they would almost certainly understand there is a significant controversy and if they made the wrong choice they would be more immune to this attack in the future.
  • By it very nature this attack involves creating a new digital asset that doesn't work as well as Bitcoin as cash. This fact will eventually become clear to all investors making this attack ineffective over time.

Past Attacks

No Impact to Adoption

  • This threat is unlikely to impact adoption. The Bitcoin Cash fork attack was well funded and benefited from a major design flaw in Bitcoin (transaction malleability) that has now been fixed and a method for deploying controversial changes (miner signaling) that is unlikely to be used in the future and it still had negligible effect on the adoption of Bitcoin.

An attacker could create a variety of implementations of Bitcoin in order to add a security flaw.

If an attacker is able to create a new implementation of the Bitcoin software that is not thoroughly reviewed by Bitcoin security experts he could introduce a subtle security flaw that is not discovered before it is deployed.

Currently the vast majority of expertise is focused on a single repository and this makes it very difficult for a flaw to go undiscovered.

If an attacker could create one or more Bitcoin implementations of Bitcoin it would at minimum spread out the efforts of security experts and at most prevent some implementations from being reviewed before deployment.

Safety Features

  • The Bitcoin development community is aware of this attack and has been very vocal about the need to prevent it.
  • Bitcoin development is very difficult and it would be difficult to recruit competent developers to participate in this attack.
  • The Bitcoin development community does review other implementations and has offered security fixes both to protect Bitcoin and to expose the poor quality of some implementations before they are adopted by the unwitting.

Past Attacks

An attacker could create an insecure second layer network on top of Bitcoin.

If an attacker is able to create an insecure second layer network on top of Bitcoin he could steal all bitcoin moved into the second layer network.

Historically large thefts of bitcoin,even when unrelated to security flawsin the bitcoin network itself,have resulted in signifiant decreases to the bitcoin price.

This would allow an attacker to profitin at least two ways.First, he would gain the bitcoin storedin the insecure layer two network, and second, he could "short" bitcoinand thereby profit from the decreased market value of bitcoin.

Safety Features An insecure layer two network must contain a security flaw. This allows honest participants to make it clear that they intend to take advantage of the design to drain the funds.

By being public about their intention, and their progress towards obtaining the funds, the honest actors will likely aquire more support, for example hash power,than the attackers.

This will have a few helpful effects. First, the attackers will lose significant motivation to develop the insecure layer two solution because it is unlikely that they will be able to drain the funds before the honest actors.

Second, knowledge of the ongoing project to drain the funds from the layer two network would discourage users from moving their funds into the insecure layer two network.

Third, if the attackers are aware of this they will be further demotivated to implement an insecure layer two solution because the amount of funds that will be available to steal will not be significant.

Past Attacks

Observing confirmed transactions

In order for a transaction to be completed the receiver must be confident the transaction has been irreversibly confirmed by the Bitcoin network. this is performed by Bitcoin "node" software. This software maintains a copy of the longest set of transactions presented to it that are valid. The node software considers a transaction valid if it is structured correctly, digitally signed by the bitcoin owner, and does not attempt to transfer more bitcoin than is available to the sender.

An attacker could create a less secure digital asset and trick people into buying it.

If an attacker can trick investors into using his digital asset as cash it could prevent Bitcoin from becoming cash (unit of account).

Safety Features

  • If a digital asset is less secure than Bitcoin it is also less suitable as cash. Eventually this reality will be understood by investors and they will abandon the less secure coin.
  • Many members of the Bitcoin community are technically literate and obsessed by the technology and the incentive structure that makes Bitcoin secure.
  • No criminal organizations in the world have been successful at keeping security flaws secret.
  • Digital assets contain the greatest rewards for identifying security flaws. Security researchers and hackers are highly incentivized to find every security flaw.
  • Effort spent on promoting flawed digital assets is most effective when targeting people that are new to the technology because existing members of the community are more difficult to deceive. The net effect of this attack is to educate people of the value of Bitcoin.

Past Attacks

No Impact on Adoption

  • Although the market cap falsely indicates otherwise, Bitcoin adoption has not been slowed by past attacks and likely has been accelerated.

An attacker could create a more secure digital asset so that investors will abandon Bitcoin.

If an attacker could create a more secure digital asset investors would abandon Bitcoin and adopt this new asset as cash.

Safety Features

  • The vast majority of cryptography experts are working on Bitcoin.
  • As an open source project Bitcoin is able to incorporate any advances discovered in other projects.
  • Digital assets benefit from "network effects" for adoption. A new Digital asset would be starting at a great disadvantage in this regard.
  • Crypto-currencies require proof of work to secure the network. Bitcoin has the greatest amount of work by several orders of magnitude.
  • If a new digital asset is more secure and honors past Bitcoin transactions it would, be an upgrade to Bitcoin, not a competitor of Bitcoin.

Past Attacks

  • This attack would result in improved Bitcoin security. It is not really an attack when properly understood.

No Impact on Adoption

  • This attack would result in improved Bitcoin security. It is not really an attack when properly understood.

An attacker could mine invalid Bitcoin blocks to remove a safety feature from Bitcoin

If an attacker could make the network accept blocks that don't include a safety feature he would have effectively removed that safety feature.

Safety Feature

  • The Bitcoin network enforces the rules that include safety features on every Bitcoin node, miner and wallet. As a result blocks mined without the safety feature will simply be ignored by the Bitcoin network.

Past Attacks

No Impact on Adoption

  • This attack is not effective, but it could be used to support a misinformation campaign, a fork to remove a safety feature, or a new digital asset that is missing a safety feature.

An attacker could deceive a Bitcoin node into thinking a transaction did or did not get confirmed.

Because Bitcoin nodes accept information from any other computer running the Bitcoin node software it is possible to provide a node or a group of nodes false information about the current state of a transaction.

Safety Features

  • Bitcoin nodes form a peer-to-peer network and obtain copies of transactions from multiple nodes. An attacker would need to prevent a node from communicating with all innocent nodes in order for this attack to be successful.
  • In order to provide a set of false transactions that appear valid the attacker would need to perform the proof of work required by the current network difficulty making this attack expensive.
  • As soon as a node discovers that a longer block chain exists with valid transactions it immediately accepts this new set of transactions as correct and discards its previous set of transactions.
  • Satellite connections allow nodes to download a copy of the block chain even if they are using an Internet connection that keeps them ignorant of a longer valid chain of transactions.
  • If a node owner is concerned that he may be the victim of a network split attack he could wait until he receives physical media containing the longest block from another physical location.
  • Absolute censorship is difficult for a short period of time and nearly impossible, for a longer period of time, as evidenced by the Chinese governments serious, yet ineffective, efforts to censor the Internet.
  • In many ways this is not an attack on Bitcoin directly, but an attack on the Internet itself. Building a secure Internet is becoming more and more important and there are several efforts underway to accomplish this goal. As Bitcoin and other digital assets become more important the motivation to create a secure Internet will grow.
  • In order to make this attack more cost effective more nodes would need to be deceived at the same time. However, the more nodes are deceived into trusting an invalid chain of transactions the more likely it becomes that the victims become aware of the attack and stop trusting their node software.

An attacker could deceive a bitcoin wallet into thinking a transaction did or did not get confirmed by the Bitcoin network.

In some cases, such as operating on a mobile phone, the Bitcoin client software doesn't perform the full validation of the Bitcoin transaction history. To the degree that the client doesn't perform complete validation safety features are discarded.

  • Bitcoin client software that doesn't perform complete validation of the Bitcoin transaction history often connects to another computer that it trusts to perform this full validation on its behalf. While this is not ideal, because an attacker could pretend to be this trusted computer, it does provide greater security than outright skipping validation.
  • The Bitcoin community encourages users to run a full node, especially when acting as a merchant, or accepting large amounts of Bitcoin from untrusted parties.
  • In order for this vulnerability to effective Bitcoin as a whole attacks would need to become systemic and this would likely result in the awareness required to encourage full nodes.

An attacker could introduce security flaws into Bitcoin mining hardware in order to break the security of Bitcoin.

If an attacker included a "back door" in mining hardware before it was shipped to the buyer he could gain control of the majority of the Bitcoin computing power.

Safety Features

  • The Bitcoin network is not effected by the specific owners of mining hardware. The attacker would be as legitimate a Bitcoin miner as the previous owners before control of the hardware was stolen.
  • As the new "owner" of Bitcoin hardware he would be equally as incentivized to use these resources to secure the Bitcoin network as the rightful owners.
  • Once the physical owners of hardware discovered the hardware was not behaving according to their wishes they would remove the security flaw.

Past Attacks

No Impact to Adoption

  • Even if successful this attack would probably have no effect on the Bitcoin network.

Human Threats

Bitcoin can be attacked by attacking the humans that support the Bitcoin software as network operators, investors, merchants, developers or hardware manufacturers.

Network Operators

People that run the software needed to support Bitcoin can be attacked.

An attacker could threaten to harm an individual or group mining bitcoin.

Bitcoin mining is a critical part of the Bitcoin network. Without functioning mining software no new Bitcoin transactions could be trusted.

Safety Features

  • Bitcoin mining can be done anonymously. In the most extreme case a Bitcoin miner could obtain new transactions and distribute discovered blocks via sneaker net. Before this extreme however Bitcoin miners could use anonymizing technology such as VPNs or Tor.
  • Bitcoin mining is decentralized. No single person controls all of the Bitcoin mining computer power and Bitcoin mining equipment is distributed across the globe.
  • Even if a large miner was intimidated into action there is little damage he could do to the Bitcoin network. Double spending is not cost effective. Delaying specific transactions would have limited effect. He could not create invalid bitcoins or steal bitcoins.
  • An attacker that intimidates a miner has effectively stolen the mining equipment and would be best served by mining bitcoins for profit and securing the network.

No Impact to Adoption

  • Although the attack is possible it is unlikely that it would succeed in disrupting the Bitcoin network for any significant period of time.

An attacker could threaten to harm node individual or group running a Bitcoin node

Bitcoin nodes are critical to the Bitcoin network. Without a network of functioning nodes new transactions could not be relayed.

Safety Features

  • Nodes simply validate and relay transactions. Even if a node operator was intimidated into action he could at most slightly delay the relay of traffic and deceive any partial nodes that trusted him to validate transactions (not a best practice for significant transactions).
  • Nodes can be operated anonymously. In the most extreme example node operators could run software on computers not owned by them.
  • Nodes could download all new transactions using Satellite connections and transmit new transactions hidden inside pictures and using burner phones.
  • Nodes could use anonymizing technology such as VPNs or Tor to hide their physical location.
  • Peer to peer networks such, as BitTorrent and Bitcoin, have proven extremely difficult, if not impossible, to shut down. This is in spite of the fact that well funded industries and governments have attempted to shut them down in the past.

No Impact to Adoption

  • Although the attack is possible it is unlikely that it would succeed in disrupting the Bitcoin network for any significant period of time.

Investors

Without Investors Bitcoin would have no market value and be unsuitable as cash.

An attacker could extort the private keys from an investor.

An attacker could threaten to harm a Bitcoin investor unless he handed over the private keys to his bitcoin holdings.

Safety Features

  • Many Bitcoin investors are anonymous making extortion difficult.
  • Bitcoin investors have unknown balances making extorting all of the bitcoin held by an investor difficult.
  • Even if this became a common problem for Bitcoin investors it would not be a threat to Bitcoin becoming money unless it was easier to extort a Bitcoin investor than an investor in government money.
  • Many Bitcoin wallets make it easy to create false bitcoin balances making it appear that they have been emptied by an attacker when bitcoin holdings remain.
  • Public advocates of Bitcoin are often careful to own only a small amount of bitcoin because they are security experts and very aware of this threat.
  • Bitcoin allows multi signature addresses that would require an attacker to extort multiple people, simultaneously, in order to steal bitcoin
  • Criminal organizations are comprised of acting individuals. Senior decision makers would gain greater personal benefits by becoming investors in Bitcoin than attempting to prop up its organization's competing cash.

No Impact to Adoption

  • While the threat to an individual investor may be high Bitcoin offers more investor security than the assets it competes with so it is unlikely that extorted private keys will prevent Bitcoin from becoming money.

An attacker could deceive investors regarding the utility of Bitcoin.

If investors were tricked into believing Bitcoin is less useful as money than another asset they would sell. If this could be achieved at sufficient scale Bitcoin would not become cash.

Safety Features

  • To the extent that this attack is only partially successful it would inoculate investors to future deception.
  • This attack would be impossible to maintain for a long period of time.
  • Access to information has been increasing at a rapid rate for the last 50 years and it seems unlikely that this trend will reverse.

Past Attacks

No Impact to Adoption

  • In spite of the fact that these attacks have been constant and well funded, Bitcoin adoption has been rapid and has arguably been faster than the technical advancements, needed for Bitcoin to become cash.

An attacker could threaten to harm Bitcoin investors if they don't sell or hand over their bitcoin.

This is a duplicate of the threat: An attacker could extort the private keys from an investor. Using the threat of violence to force someone to hand over their private keys is essentially the same attack. The only difference is that this attack may be more likely to be attempted by larger criminal organization that have violent control over a population within a specific geography, whereas the other attack may be more likely to be attempted by individual criminals or smaller criminal organizations, but the safety features and the technical nature of the attack is identical.

An attacker could threaten to harm anyone that attempts to buy or sell bitcoin.

If an attacker can make it impossible to buy or sell bitcoin he wouldn't have to force existing investors to sell or hand over bitcoin because an asset that can't be sold can't become money.

Safety Features

  • As more of the world savings moves into digital assets this becomes a more difficult attack because digital assets can more easily be exchanged for one another anonymously.
  • It is possible to buy and sell bitcoin anonymously through decentralized exchanges. In these exchanges the buyer can send cash through the mail and the seller can send bitcoin after the payment is received. The buyer relies on the reputation of the seller, including the number of previously successful sales, to avoid being ripped off. Millions of dollars in these type of Bitcoin transactions are executed daily at the time of this writing.
  • As the threat of violence in commerce becomes a greater issue the utility of Bitcoin becomes more obvious. This could backfire on the attacker and accelerate the move from assets, such as physical cash, bank account balances, centrally controlled stocks and bonds, and precious metals into bitcoin because it is more difficult to steal.
  • As the number of people that own bitcoin increases the more a given population would resist this attack.
  • Some assets are more valuable specifically because they represent rebellion or resistance to the threat of violence. This could increase interest in Bitcoin in areas where it is prohibited by a corrupt government or other criminal organization.

No Impact to Adoption

  • Even the announcement that China, previously thought to be one of the most important regions for Bitcoin, will ban all Bitcoin transactions merely caused transactions to move to decentralized exchanges.

Past Attacks

Bitcoin Merchants

In order for Bitcoin to become electronic cash (including a unit of account) merchants, that sell goods or services, must accept bitcoin for payment. If an attacker can prevent merchants from accepting bitcoin he would prevent Bitcoin from becoming cash.

An attacker could threaten to harm anyone accepting bitcoin as payment.

An attacker could threaten merchants with direct violence or they could tell merchants that they must perform free labor or pay money, if they accept bitcoin in order to prevent Bitcoin from becoming cash (including the unit of account).

Safety Features

  • Bitcoin transactions, like paper cash transactions, are difficult for governments to tax. This provides significant financial incentive for merchants to accept bitcoins secretly and to provide a "regular price" and a "bitcoin or cash price." In the USA this "cash price" is often 20% - 30% lower because sales tax, income tax, and payroll taxes to the business owner can easily exceed 60%. This means that the merchant is paid an additional 30% as compensation for the risk involved in making a "secret transaction."
  • Attackers are aware that as they increase the cost of "in the open" transactions they increase the benefits of secret transactions. This makes these type of attacks risky as they could result in the loss of existing avenues of extortion.

Medium Risk

  • Although it is unlikely this attack could prevent Bitcoin from becoming cash it could possibly slow adoption.

Past Attacks

Bitcoin Developers

Bitcoin developers are critical for the continued improvement of Bitcoin software. Without Bitcoin developers the Bitcoin code would not be improved and could become unusable if vulnerabilities discovered in the future are not repaired.

An attacker could threaten to harm anyone contributing to Bitcoin software.

If an attacker could convince developers that contributing to Bitcoin is likely to result in their death or kidnapping it is possible that Bitcoin would fail to become cash.

Safety Features

  • Bitcoin development can be done anonymously. In fact the original white paper author and first Bitcoin developer, known as Satoshi Nakamoto, has an identity that remains unknown.
  • Bitcoin is the result of over 30 years of research and development by the cypher punk community. This community has included the very best software security researchers and cryptographers that have invested the most basic building block of Internet and computer security (Public Key Cryptography). If any group could operate anonymously, and effectively, it would be this community.
  • If a security researcher that is part of a criminal organization discovered a way to significantly improve Bitcoin the best way to profit from this knowledge would be to purchase a large amount of Bitcoin on margin and then anonymously publish the code. The market price of Bitcoin would increase and he would make a large amount of money. In this way, even well funded organizations that wish to destroy Bitcoin development would likely end up funding improvements through "reverse-corruption."
  • There are a large and growing number of Bitcoin developers.

Past Attacks

No Impact to Adoption

  • Given the roots of the Bitcoin development community it is unlikely that this attack would be successful.

An attacker could bribe or extort a Bitcoin developer into introducing a security flaw into Bitcoin.

If an attacker could get flawed code into the next version of Bitcoin he could destroy the features of Bitcoin that make it useful as money.

Safety Features

  • Bitcoin code reviewed by hundreds of software security experts before any change is introduced. It would be very hard to construct a change that contained a security flaw that wouldn't be noticed by the Bitcoin community at large.
  • The Bitcoin community is very risk averse. It is aware that the success of Bitcoin would result in the destruction, or at least a drastic reduction in funding, of many monopolies and other criminal organizations. As a result it is hyper vigilant regarding code changes.
  • Side chains will allow new features to be tested with millions or billions of dollars worth of bitcoin before exposing all of Bitcoin to the risk associated with any new feature or change. As more money is available for an attacker, without being a threat to the core Bitcoin network, the more unlikely it is that a flaw will remain undiscovered until it is implemented in Bitcoin.
  • A Bitcoin developer will only have one chance to introduce a flaw if he is caught as his credibility will be destroyed.

Past Attacks

No Impact to Adoption

  • Although it appears this attack has been attempted more than once in recent years no security flaws have been introduced to Bitcoin.

Bitcoin Hardware Manufacturers

Bitcoin hardware manufactures produce hardware for mining. This mining hardware is critical for confirming Bitcoin transactions.

An attacker could threaten to harm Bitcoin mining hardware manufacturers if they sell to the public.

If cutting edge Bitcoin mining hardware was no longer available it would make confirming transactions less secure. This could reduce the security of Bitcoin enough to prevent it from becoming cash.

Safety Features

  • Mining hardware makes confirming transactions more efficient, but this action may motivate the Bitcoin community enough to overcompensate for the loss of efficiency using less efficient hardware.
  • There are currently more than one mining hardware manufacturer based in more than one geographic region. And it seems likely that more competition in the mining hardware space will result in more manufacturers over time. This would make this attack more difficult over time.
  • As the amount of computing power decreases on the network the rewards for operating mining hardware increases. If this attack was executed it would make Bitcoin mining more profitable and this would attract additional manufacturers and mining operators.

Past Attacks

  • No past attacks have been disclosed.

No Impact on Adoption

  • It is unlikely this attack would significantly slow adoption.