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Bitcoin assumes that everybody sees the same ledger. However, what if your ISP is evil, and modifies your view of the Bitcoin network? Is it possible for such an evil ISP to make your own transactions not go to the real Bitcoin network, while returning results that make you believe that everything is fine? Your local blockchain could end up extremely badly out of sync with the global blockchain.

Is this scenario possible? If so, what happens when you finally sync back with the real blockchain? As far as I understand, Bitcoin always chooses the longest blockchain, but couldn't your evil ISP simulate a really busy Bitcoin network to you so that your fake blockchain is even longer?

Does this mean that applications like Satoshi Proof and Namecoin aren't really secure if networks can be maliciously partitioned? In Namecoin, for example, wouldn't it be possible for a bad ISP to simulate a blockchain that contains wrong domain information?

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Yes, the scenario is possible. The attacker has two possibilities: censoring data sent to the network (likely your transactions) and censoring what the nodes sees from the network.

In the first case the isolated node will attempt to resend transactions that belong to it until they get invalidated or committed into the blockchain.

In the second case the isolated node will not receive incoming transactions and eventually will not receive blocks (if these contain censored transactions). It is however not possible to fool the node into considering transactions as confirmed without the attacker also producing a valid proof-of-work.

The same argument is valid for Satoshi Proof and Namecoin, you can hide transactions, facts and domains, but you cannot inject wrong information.

Once reconnected the node will synchronize with the network (download blockchain & send its transactions) and eventually be up to date.

  • Why can't wrong information be injected? The censor can simulate a "micro-economy" of other nodes doing transactions, right? Censors aren't just limited to censoring traffic. – ithisa Apr 10 '16 at 17:42
  • They cannot confirm them, since simulating a confirmation would require the transactions to be included in a block that has a matching difficulty with the real network. This is difficult if the node was only recently isolated. – cdecker Apr 10 '16 at 18:05
  • The cost of launching an attack like this would be enormous (tens of thousands of dollars), so it would only be a risk for very high value targets. – David Schwartz Apr 13 '16 at 11:00

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