From memory, the top two or three Peercoin wallets have a million or so PPC each. I presume these are exchange wallets
My question: what if one of these wallets was compromised and one million PPC stolen? What would we do and, more importantly, can we do anything to prevent it?
That was a common misconception. It is not true – at most, anything over 50% of the minting coins are needed to attack. Even at under 50%, a double-spend attack can be successful, but it is not guaranteed.
My question is posed from a Peercoin “system” perspective, rather than an individual perspective
For example, ten thousand Peercoiners could each have 100 PPC on an exchange (1 million PPC in total). From an individual perspective, that is not particularly reckless as this is only $100, at current prices. If the exchange does down, each person loses their 100 PPC. Not good, but not too much of a personal disaster, either
But from a Peercoin perspective, might not the theft of one million PPC be a calamity? 5% of all Peercoins will have been stolen. Would we accept the loss, as bitcoiners did with Mt Gox? But what if the stolen coins were used for minting, therefore raising the risk of a 51% attack? Would Sunny deploy the checkpointing system?
These questions are hypothetical, of course. The real issue is how to prevent such a theft. Is it worth the Peercoin community reaching out to exchanges who, we suspect, are the wallet owners, and offering to help them prevent such hacking attacks?
[quote=“Sunny King, post:13, topic:2074”]I have never claimed that you need both 51% PoW and 51% all coins to attack peercoin. That’s a misunderstanding of peercoin’s security. Peercoin’s security is 100% proof-of-stake, so in terms of security it’s not really a hybrid system. So you don’t need 51% PoW. You need and only need to attack proof-of-stake.
Also, you don’t need 50% of all coins, you only need a significant portion of active minting coins for a ‘51% attack’ (in bitcoin’s terms), which includes the ability to DoS the blockchain. However this does not mean peercoin’s security is then weaker than bitcoin’s. After 6~7 years, bitcoin’s inflation rate would be close to 1% annual. Let’s assume that the mining capital has a lifecycle of 3 years, then you would only need 3% of bitcoin total coin stock value to permanently 51% bitcoin blockchain. Of course, bitcoin’s inflation would drop further after another 4 years, and so on. So we are kinda of looking at bitcoin’s security at most a couple percent of total coin stock value.
Currently my rough estimate of peercoin’s 51% security is at about 1M~2M peercoins. That already puts us ahead of bitcoin’s future. Unlike bitcoin, peercoin’s security is not a function of inflation rate. Over time it would only strengthen as coins are more distributed. With the features that reduces minters’ risk while improving incentive are introduced, we are looking at a good leap of security level further.[/quote]
I think if so many ppc are stolen from an exchange or a person, we shouldn’t rollback the blockchain or use the checkpoint system (?). That would make crypto more or less useless as a secure decentralized payment system. If people know you can undo transactions and that option is used then they will loose trust in the whole system.
Because exchanges wants to earn money i guess they use the coins for minting what makes storing them less secure, so i think cold storage minting would be a big step in preventing things like that.
Peerchemist mentioned here about adding functionality to Peerbox that would allow it to create secure printable paper wallets. If he does do that, maybe we should promote the use of cold storage using Peerbox, rather than storing your coins on an exchange.
Not knowing the detail of the theft I guess multisig wallet could have made the theft much more difficult.
But what if the stolen coins were used for minting, therefore raising the risk of a 51% attack? Would Sunny deploy the checkpointing system?
The thief would be able to 51% attack the network within weeks after the stolen coins are able to mint (in 30 days) because there are only 2 million Peercoins minting. The stolen coins would be able to find 30%-50% new blocks depending whether the coins are already minting now. The thief will be able to take over Peercoin network in the worst case after 30 days. The thief may not destroy the value of the stolen coins by destroy the network. He could blackmail the community just like the NXT theif did. But uncertainty of the network could cause enough damage.
Checkpoint will be needed to nuke the theft transaction.
Checkpoint should not be removed before any single entity owns more than 20% of network minting Peercoins or a single high value owner can disrupt the network, or multisig is used by most high value owners.
A theft of more than 20% of the minting coins by someone with evil ideas could also destroy the coin. Not an easy choice to make and therefore a high chance the community will be divided.
I suppose that we would have to either ask every major stakeholder to start minting for a while and/or deploy checkpointing when the thief can’t be traced.
With this kind of scenarios one wishes that every major stakeholder (including exchanges) would have implemented multisig. Hope v0.5 of the wallet with multisig won’t take too long. This scenario is apparently very real, although I don’t know how the theft was done.
Is it technically possibly for Sunny to place an upper limit on now many peercoins can be held in one wallet? Perhaps something be written into the code that would prevent one wallet destination/address receiving more than 100,000 PPC, as it would trigger some signal that it is “full up”?
This would not increase the security of wallets themselves, but it would better defend the network by making the theft of any one wallet less devastating.
I assume the larger exchanges, which we suspect of holding the big wallets, are used primarily by traders and speculators.
Consumers, savers and investors, who we need to expand Peercoin and secure it, do not need to use high volume exchanges, particularly. Such people are more likely to be interested in exchanges in their own country, or at least representing their own language group.
So, when listing exchanges on peercoin.net, why don’t we present them in such a way that tilts the emphasis away from the Russian and Bulgarian behemoths, and towards national exchanges elsewhere? That will help decentralisation.
[quote=“RobertLloyd, post:14, topic:2797”]Is it technically possibly for Sunny to place an upper limit on now many peercoins can be held in one wallet? Perhaps something be written into the code that would prevent one wallet destination/address receiving more than 100,000 PPC, as it would trigger some signal that it is “full up”?
This would not increase the security of wallets themselves, but it would better defend the network by making the theft of any one wallet less devastating.[/quote]
A perhaps better variant of this concept would be to make the PoS system ignore all wallets over a certain amount, like it ignores “coin-days” that surpass 90 (?) days. Or to define a “absolute maximum” of coin-days a wallet can have. So big holders that want to mint would have to split their coins into multiple wallets.
Now the question is: if a malicious user has many wallets which sum up to 51% of minting coins, would they present the same danger than one single wallet with all the 51%? If yes, then this approach is useless, unfortunately … except for the fact that it would be more difficult perhaps to hack more than one private key, but that depends on the security measures of exchanges and other big holders.
I am also a NXT follower and the long-term solution proposed there is to promote more decentralized exchange methods, like the NXT multigateway (http://multigateway.org) that already is working but has less liquidity than centralized exchanges like BTER. It uses Nxt’s colored coins / asset exchange feature. Would it be possible to implement such a exchange in Peercoin too? I’m not aware of the latest development discussions.
