“We have proposed a system for electronic transactions without relying on trust. We started with the usual framework of coins made from digital signatures, which provides strong control of ownership, but is incomplete without a way to prevent double-spending. To solve this, we proposed a peer-to-peer network using proof-of-work to record a public history of transactions that quickly becomes computationally impractical for an attacker to change if honest nodes control a majority of CPU power. The network is robust in its unstructured simplicity. Nodes work all at once with little coordination. They do not need to be identified, since messages are not routed to any particular place and only need to be delivered on a best effort basis. Nodes can leave and rejoin the network at will, accepting the proof-of-work chain as proof of what happened while they were gone. They vote with their CPU power, expressing their acceptance of valid blocks by working on extending them and rejecting invalid blocks by refusing to work on them. Any needed rules and incentives can be enforced with this consensus mechanism.” - Source
To me, this is the biggest hole in cryptocurrency as-is. I assume the NSA, FBI, and other three-letter agencies have much more computing power than any private organization or group. If anyone within those organizations wanted to control cryptocurrency, hell, it’s built-in to the system that they can rewrite history!
I think the solution to this is actually relying on trust, even trust in pseudonyms. David Chaum had the right idea here, but unfortunately, DigiCash never took off. We need trust and reputation on the internet, for reasons that are worth a blog post of their own (and I’ll be writing that blog post soon ), but in short, it would allow for a system that’s resilient against a 51% attack.
I really like your analysis, talking about the loophole in crypto explained. But don’t you think privacy coins like MONERO, PIVX, have gone a long way to fill this vacuum? Especially the revamped privacy coins like VEIL. I will be looking forward to see the blog post mentioned in your poat, thanks.
Privacy coins actually did justice to hiding transactions, coins like monero, pivx and veil can enable one do transactions without been traced, a win for crypto-niche if you ask me.