Subject: Re: [Bitcoin-development] F2Pool has enabled full replace-by-fee

From: Peter Todd <[email-masked]>
Date: Fri, 19 Jun 2015 11:11:27 -0400

On Fri, Jun 19, 2015 at 03:00:57PM +0000, [email-masked] wrote:
> On 2015-06-19 10:39, Peter Todd wrote:
> 
>      Yesterday F2Pool, currently the largest pool with 21% of the hashing
>      power, enabled full replace-by-fee (RBF) support after discussions 
> with
>      me. This means that transactions that F2Pool has will be replaced if 
> a
>      conflicting transaction pays a higher fee. There are no requirements 
> for
>      the replacement transaction to pay addresses that were paid by the
>      previous transaction.
> 
> 
> Intentional fraud is a bad thing to add to a financial protocol.
> 
> A user who creates conflicting transactions, one that pays someone else 
> and another which does not pay them, and broadcasts both of them, has 
> just self-incriminated themselves by producing prima facie evidence of 
> fraud.

Depends.

If you ask me to pay you 1BTC at address A and I create tx1 that pays
1BTC to A1 and 2BTC of chain to C, what's wrong with me creating tx2
that still pays 1BTC to A, but now only pays 1.999BTC to C? I'm not
defrauding you, I'm just reducing the value of my change address to pay
a higher fee. Similarly if I now need to pay Bob 0.5BTC, I can create
tx3 paying 1BTC to A, 0.5BTC to B, and 1.498BTC to C.

Yet from the point of view of an external observer they have no idea why
the transaction outputs reduced in size, nor any way of knowing if fraud
did or did not occur.

Equally, maybe you tell me "Actually, just give me 0.5BTC to cancel out
that debt", in which case I'm not breaking any contract at all by giving
you less money than I first promised - the contract has changed.

Again, none of this can or should be observable to anyone other than the
parties directly involved.

> It may be the case that since Bitcoin spans multiple legal jurisdictions 
> and can be use anonymously that the victims of such fraud can not rely 
> on legal recourse, and it may also be the case that proof of work is how 
> Bitcoin deals with the aforementioned factors, but regardless 
> un-prosecutable fraud is still fraud and anyone who encourages it should 
> be recognied as a bad actors.
> 
> Committing vandalism and encouraging fraud to prove a point may be 
> something the network can't stop on a technical level, but there's no 
> reason not to call it out for what it is.

What do you think of Bitcoin XT then? It relays double-spends, which
makes it much easier to get double-spends to miners than before. In
particular you see a lot of zero-fee transactions being replaced by
fee-paying transactions, relayed through Bitcoin XT nodes and then
mined. Is that encouraging fraud?

-- 
'peter'[:-1]@petertodd.org
000000000000000003932458055c68d4ee2b6d68441c4764efbdf6b0b1683717