Q: What is Byzantine Fault Tolerance [Free #22]
Bitcoin SV is suffering through a 51% attack this week. What is this attack vector, and what does it have to do with Byzantine Generals?
Well, Hello There!
Welcome back to another issue of the newsletter. It’s been an absolutely bonkers week, as is so often the case in cryptocurrency. While I was putting together this week’s newsletter,
… one of the largest hacks in the history of crypto (certainly the largest this year) took place (and as I was getting ready to hit send this morning, they’re in the process of sending the stolen funds back!).
… the US Congress was passing one of the most technologically regressive laws with regard to cryptocurrency on the planet…
… and an ongoing 51% attack was being perpetrated on the second largest fork of Bitcoin Core (that is: Bitcoin SV).
Any single one of these events would be a fitting subject for a 2,500 word edition of this newsletter, but this week we have all three.
We’ll touch on all these stories and more, but we’re going to focus on foundational knowledge, as is our wont around here, and talk mostly about the 51% attack and Byzantine Fault Tolerance, a very important topic to cypherpunks.
That said, I strongly urge you to get involved to the extent that it’s still effective to do so around the Infrastructure Bill, and the crypto amendments. Please ask your congressfolks and senators to not inhibit innovation and take a pro-technology and pro-business stance in removing the crypto provisions. It’s important for the future of our industry.
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Blockchain Bulletin
New crypto tax amendment in US infrastructure bill sparks concern in the industry. A controversial amendment added to the US infrastructure bill related to tax reporting guidelines has been a concern in the industry this past week, reported CoinDesk.
BSV suffered a 51% attack. The Bitcoin SV blockchain suffered a 51% attack, reported CoinDesk, according to analyst firm Coin Metrics, according to CoinDesk, which crossed several days and wiped out hundreds of thousands of transactions.
Ethereum ‘London’ hard fork completed. Much-awaited Ethereum ‘London’ hard fork has been completed, which is a milestone on the step towards Ethereum 2.0, reported CoinTelegraph.
Blockchain Behind the Scenes
Demand for blockchain art and games drives $1.2B in NFT sales in July. The nonfungible token market may have seen a slump earlier this year but it appears to be turning around when sales hit $1.2 billion in July.
Gamers pledge $203M to ‘Ember Sword’ for virtual land. The unreleased MMORPG game ‘Ember Sword’ recently announced that its upcoming virtual land sale received $203 million in pledges from gamers looking to get into the future economy.
Blockchain Deep Dive: What is Byzantine Fault Tolerance?
Byzantine Fault Tolerance, the generalized term for the solution to the old computer science Byzantine Generals Problem is foundational to blockchain technology.
It’s a very fancy title for solving the problem of what to do when complex things break.
The original white paper for the Byzantine Generals Problem was written by Robert Shostak in the early 1980s.
The requirements for “Byzantine Fault Tolerance are the following:
All loyal generals decide upon the same plan of action.
A small number of traitors cannot cause the loyal generals to adopt a bad plan.
Every loyal general must obtain the same information v (1) .... , v (n).
If the (i)th general is loyal, then the value that he sends must be used by every loyal general as the value of v (i).
In plain English: the challenge is to create a system for the Generals to interact with each other in which they can successfully conduct their war. They must all act in concert for the campaign to be successful, but they can’t be sure if everyone is loyal to the empire, or if their lieutenants are relaying commands accurately.
It’s a problem that has broad applications, including rocket science, computer science, electronic system design and aeronautics.
51% attacks, therefore, are attacks on a Byzantine Fault Tolerant blockchain that require accruing more than half the hash power of the network to alter the ledger in a way that’s financially incentivized by the attackers.
Highly capitalized blockchains are inherently less succeptible to this attack vector than smaller chains.
Technical Analysis: Alt Season is back.
From VirtualBaconDAO’s Dennis Liu
Ethereum is finally back and it's starting to outperform Bitcoin.
Specifically, I was looking for ETH/BTC to flip the 0.068 previous high, which indicates a healthy uptrend as we've made a higher low above the previous high.
I have also entered Dogecoin today.
Bitcoin dominance is dropping, which means money is flowing from Bitcoin into altcoins.