I was reading this interesting discussion in the comments section on ZH where this guy was talking about how a single entity (think corrupt government and banksters) can throw money and processing power at will at the network to successfully manage a 51% attack or just cause havoc in the system by sending incorrect network messages, such as denying valid transactions or allowing invalid transactions.
The initial part of the discussion quoted here
Assume I'm a completely unscrupulous and ammoral person, for example, and I want to shut down bitcoin. Here are the ways I would attempt to do it.
- Write a virus to mine bit coins and spread it across the internet.
- Write a virus to steal bit coins, and spread it across the internet.
- Write a virus to act as part of the bitcoin network, and deny transactions that are valid
- Write a virus to act as part of the bitcoin network to approve transactions that are invalid.
- Dump the bit coins I mined as part of step #1 and #2 on the market
- Create a mania in bitcoins by dumping billions into buying bitcoins after doing step #5
- Associate it with terrorism
- Associate it with drugs
- Claim that people like me are manipulating it
And that's just off the top of my head.
I gots unlimited money. I am working in a market that is unregulated. I run the government or own it. Try to stop me.
Here is a link to that discussion. http://www.zerohedge.com/news/2013-03-25/bitcoin-mania-accelerates?page=2#comment-3373165
Can someone please comment on whether this is possible and if not, how does the bitcoin algorithm/ecosystem counter such an attack