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[Applause]

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[Music]

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thanks for having me guys it's been an

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awesome conference so far I wish I could

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have been there in the flesh but lo and

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behold the government requires a fancy

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piece of paper to go across imaginary

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borders so unfortunately I couldn't be

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there so uh today I'm going to talk

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about a topic that I've been really

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interested in the last couple years I've

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been in Bitcoin and the crypto space for

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quite a while and

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um the most recent years just got a lot

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more interested in in threat models and

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how these systems can be attacked and

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pretty much how to attack them

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because best thing to do is to learn how

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to attack them before our

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adversaries can so we can find out how

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to mitigate and how to defend against

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any attacks So today we're going to talk

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about that and I hope to have a lot of

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discussion and kind of make it more of a

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Socratic style discussion with questions

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at the end to People for People to throw

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out ideas and get responses in regards

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to different threat models so this kind

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of be more of a general talk about proof

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of work in general rather than just

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Monero but we'll be talking about um

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specifics in

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Monero in regard

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to um certain aspects that Monero has

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that guards against 51% attack so let's

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get started so the one thing to remember

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in

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these scenarios is the state should

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always be considered the adversary I

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mean proof of work is economically

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rational incentivized enough to where a

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private actor is not incentivized to

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really take try and take down the

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network there you know if you're going

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to amass enough mining power to do 51%

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attack you might as well just join the

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network rather than try and go against

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it and so the state incentive is that

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they want to control the flow of money

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and they want to control econom activity

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and information and they have an

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economically rational incentive in

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regards to control where a free market

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participant doesn't have that incentive

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They Don't Really Care to

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control you know economic activity they

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just want to participate so the state

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should always be considered the

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adversary so just some Basics what is

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51% attack this is kind of the clearest

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definition I could come up with an

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adversary controlling 51% of the hash

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power with the intent to censor or

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double spend transactions and damage the

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utility of the network so a minor could

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have any you know minor could have 51%

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of the hash power it's very profitable

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to be majority minor but if they're not

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censoring or double spending then it's

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really not an attack it's you know the

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system works fine it's a risk because

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it's a centralization of hash power but

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if they're not directly attacking it

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it's not a big deal so that intent to

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damage a network is really what talking

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about

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here um what could 51% ATT accomplish

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again double spending which is sending

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the same amount of money twice I send

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you know 50 Monero to an exchange I sell

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it on the exchange and then I double

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spend using 51% of hash power to you

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know what you would call reorganize that

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block and then the transaction is no

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longer on the Chain I have the 50 minut

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Aro The Exchange doesn't but I have the

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whatever I sold or whatever product they

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bought censoring transactions so

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therefore be um certain transactions you

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don't want to

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be processed would not be processed so

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this is more likely in a Bitcoin proof

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of work scenario where the uh blockchain

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is transparent so let's say a state

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actor has 51% of the power they say all

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right you know these transactions from

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North Korea are going to get censored if

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you produce a block that has this utxo

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in it it's not going to get built on

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we're going to reject that block and

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ignore

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it then the third thing is sensoring

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miners so if a state actor has 51% of

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the hashing power and a minor a minority

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minor produces a valid

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block the majority miners can ignore

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that block and therefore the minority

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miners lose that block subsidy and the

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fee reward for that block so if I'm

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mining blocks that the state doesn't

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like and they have 51% of the power they

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could ignore my block and just build

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continue building on the heaviest chain

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that they create because they have the

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most hash power so essentially 51%

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attacker chooses who gets paid in that

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regard because you can censor uh blocks

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if the block contains things that you do

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not agree with that the you know

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attacker or sensor does not agree

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with identifying 51% attack um these are

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the few things I'm sure there's more but

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these are the ones I were most obvious

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to me number of Orphan blocks an orphan

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block is a block that's valid but is

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later disregarded as being part of the

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longest chain and so this can happen

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organically in the network with two

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blocks being found you know let say two

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different sides of the earth and then

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another block is found on top of it and

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so the first block that was

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found gets disregarded and the newer

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block with two blocks on it this the

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longer chain gets propagated on and then

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it could also happen 5 1% attack or

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again I was just saying you know a minor

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or state actor with

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% can ignore certain blocks that have

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certain transactions in them where they

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don't like and they can just ignore any

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block and then continue building because

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they have do 100% of the hash power

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they're producing the most work nodes

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follow the most work it's just how the

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system is

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designed again valid blocks not being

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mined on similar thing to or from blocks

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and then deep reorgs of the blockchain

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so that's like double spending so let's

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say your transaction has like five or

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six transactions and then suddenly it

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has

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zero that means the blockchain has been

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reorg

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by either an adversary or just a chain

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split okay so mitigating this is when it

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gets

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interesting significant energy usage so

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proof of work mining is really the

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energy put into it if you have you know

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one minor using one computer to secure

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blockchain it's it's weak you know it's

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not much energy behind it so significant

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energy usage is one of the most

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important things second most important

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is highly

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distributed High distribution of that

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minor energy and so in regards to

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bitcoin you know you have these giant

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Data Centers of Mega miners popping up

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in Us in Canada and Europe these are a

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huge security risk because they're

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easily identifiable they're usually

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registered with the state State usually

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you

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know could be licensed in the future

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they're already trying to tax them

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they're easily taxable and so having

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these huge data sending Center miners is

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not conducive to security of the

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network um accessible mining Hardware so

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as6 I mean I understand the argument for

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as6 and why they're good and I also

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understand this is why they're bad you

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know it's hard run as6 you need 240 volt

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you can't run onh house current you know

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it takes a lot of noise it incentivizes

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a more industrial scale mining so you

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know the normal person can't just easily

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buy an Asic and plug it in and run it

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whereas CPU mining you know you just old

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CPU hanging around just plug it in start

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mining you don't need any special

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electricity on any special you know

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ventilation any of that

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another part people don't think realize

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is plausible deniability so if I'm

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buying an Asic and importing it from

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China the shot 26 ASC they're going to

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know exactly what I'm using it for say

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why why are you buying this you know are

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you licensed with the government to use

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this to mine on this uh device and not

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process illegal

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transactions so they're going to know

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anyone who's buying a shot as6 there's

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the only one reason to buy that for uh

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Asic you know Monero if you're buying a

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bunch of CPUs there's 100 reasons why

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you're buying a bunch of

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CPUs they can't prove or even assume

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that you're going to be using it to M

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Monero so pulle deniability is a huge uh

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point when you're facing a state

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adversary in any relation not just in

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mining um a uniform utxo set so again

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Bitcoin is transparent utxos can be

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differentiated Monero on the other hand

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it's homogeneous all utxos you can't

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differentiate them and so the

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fungibility is there um we'll talk about

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more of this later when we get into the

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fee

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incentives and then the last thing with

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meating is disregarding laws and

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regulations um if you're minors and

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nodes are not willing to break the law

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they're useless because any moment the

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state could say you'll go to jail if you

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if you're caught mining Monero or if

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you're running a Monero node or if

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you're running a Bitcoin node and so the

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distinction here white mark and black

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market is a crucial one

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because um the dis between white market

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and black market is crucial because any

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white Market participant is by

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definition going to adhere to any state

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regulation or permitting Black Market by

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definition is not going to they're going

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to be willing to break the law and do as

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they will in a free market and so white

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Market is always going to be a security

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risk

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and I say this on Twitter a lot you know

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White Market hash is a security risk and

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the only secure hash is Black Market

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hash because the black market hash would

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be is willing to go against and

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disregard laws and regulations

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concerning their activity in the free

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market do you love coffee and Monera as

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much as we do consider making gratuitous

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org your daily cup pay with Monera for

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premium and fresh beans and if you like

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what you taste send a digital cash tip

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directly to the farmers that made it

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possible proceeds help us grow this

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channel gratuitous and

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[Music]

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Monero this a little meme I made about

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it and I think captures it quite

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well it just highlights the fact that

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white Market miners are a security risk

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and white mark

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miners more than often than not build

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these giant mining Farms that are easily

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identifiable easily um seizable easily

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exploited

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so so let's say a 51% Tech happens you

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know it's the state actor has gotten the

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percentage and we're Knee Deep and 51%

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attack the only solution in a proof of

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work system that doesn't require hard

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Fork is the V Market pressure of the

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network and so let's say State accur 51%

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of the network they're orphaning blocks

279
00:12:08,079 --> 00:12:13,279
that they don't

280
00:12:09,200 --> 00:12:16,800
like the only defense Pro of work NE has

281
00:12:13,279 --> 00:12:19,160
is enough transactions from enough fees

282
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from trans sensored transactions that

283
00:12:19,160 --> 00:12:24,959
incentivize Black Market miners to put

284
00:12:21,959 --> 00:12:26,760
new hash online to reap those fees and

285
00:12:24,959 --> 00:12:30,800
out has the

286
00:12:26,760 --> 00:12:33,320
attacker and so in Bitcoin it's a little

287
00:12:30,800 --> 00:12:36,800
more obvious because you have the utxo

288
00:12:33,320 --> 00:12:40,399
set that is transparent and so the state

289
00:12:36,800 --> 00:12:42,959
actor is censoring any transaction that

290
00:12:40,399 --> 00:12:45,240
they don't like and they're allowing

291
00:12:42,959 --> 00:12:46,839
certain transactions to go through and

292
00:12:45,240 --> 00:12:49,320
so the fee pressure from those sensored

293
00:12:46,839 --> 00:12:51,320
transactions needs to get to the point

294
00:12:49,320 --> 00:12:54,560
where black market miners or free market

295
00:12:51,320 --> 00:12:57,399
actors are economically incentivized to

296
00:12:54,560 --> 00:13:01,279
add more hash to the network and out has

297
00:12:57,399 --> 00:13:03,440
a 51% attacker and this is no guarantee

298
00:13:01,279 --> 00:13:04,720
but that's this is the only method other

299
00:13:03,440 --> 00:13:06,519
than a hard

300
00:13:04,720 --> 00:13:09,839
fork and it makes sense it's

301
00:13:06,519 --> 00:13:09,839
economically rational

302
00:13:10,240 --> 00:13:14,320
and And in regards proof of stake also

303
00:13:12,760 --> 00:13:18,680
this is not possible so in a proof of

304
00:13:14,320 --> 00:13:21,600
stake Network when 51% of you know the

305
00:13:18,680 --> 00:13:23,959
stake is obtained by a central actor

306
00:13:21,600 --> 00:13:25,199
there's no way to over out or out stake

307
00:13:23,959 --> 00:13:27,560
them because they're always going to be

308
00:13:25,199 --> 00:13:29,160
getting more stake than everyone else

309
00:13:27,560 --> 00:13:30,760
the reason proof of work works is

310
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because it's an external validation

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00:13:30,760 --> 00:13:34,440
method where you can actually add more

312
00:13:32,279 --> 00:13:37,079
physical energy to the network a proof

313
00:13:34,440 --> 00:13:38,760
of stake method the consensus is

314
00:13:37,079 --> 00:13:40,199
ingrained within the network the token

315
00:13:38,760 --> 00:13:41,920
is the consensus and the consensus

316
00:13:40,199 --> 00:13:44,199
relies on the token and so proof of

317
00:13:41,920 --> 00:13:46,360
stake is really a non-starter in my

318
00:13:44,199 --> 00:13:49,880
opinion in regards to 51% attacks there

319
00:13:46,360 --> 00:13:52,360
is no way to overcome an attacker

320
00:13:49,880 --> 00:13:53,639
without hard forking on 51% on a proof

321
00:13:52,360 --> 00:13:55,880
of stake

322
00:13:53,639 --> 00:13:58,800
Network proof of work allows you to add

323
00:13:55,880 --> 00:14:00,680
energy out has the attacker and reap the

324
00:13:58,800 --> 00:14:03,240
reward by the sensored

325
00:14:00,680 --> 00:14:05,160
transactions um the hard Fork methods

326
00:14:03,240 --> 00:14:07,160
change the hashing algorithm that

327
00:14:05,160 --> 00:14:11,519
punishes every minor not just the

328
00:14:07,160 --> 00:14:14,120
attacker so you kind of you know npal

329
00:14:11,519 --> 00:14:15,920
you know the whole entire network and

330
00:14:14,120 --> 00:14:18,279
every minor gets destroyed it's not

331
00:14:15,920 --> 00:14:20,279
really a great solution it's kind of a

332
00:14:18,279 --> 00:14:22,680
lastage effort change consensus

333
00:14:20,279 --> 00:14:24,720
mechanism same thing it punishes all

334
00:14:22,680 --> 00:14:27,680
legitimate miners R and black market

335
00:14:24,720 --> 00:14:30,199
miners not just the um adversarial

336
00:14:27,680 --> 00:14:32,360
Miners and then

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00:14:30,199 --> 00:14:33,759
breaking the heaviest chain in Bitcoin I

338
00:14:32,360 --> 00:14:36,360
don't think this is possible in Monero

339
00:14:33,759 --> 00:14:38,279
but in Bitcoin there's a RPC command

340
00:14:36,360 --> 00:14:41,040
where you could uh called invalidate

341
00:14:38,279 --> 00:14:43,360
block and you can manually go in and

342
00:14:41,040 --> 00:14:46,720
invalidate a certain block even if it's

343
00:14:43,360 --> 00:14:48,959
valid and your node will now follow um

344
00:14:46,720 --> 00:14:51,399
will not follow that chain it'll assume

345
00:14:48,959 --> 00:14:54,360
that block is invalid even if that chain

346
00:14:51,399 --> 00:14:57,800
has the heaviest most work done to it

347
00:14:54,360 --> 00:14:59,680
it'll manually go in and Fork off from

348
00:14:57,800 --> 00:15:01,399
that block which is essentially breaks

349
00:14:59,680 --> 00:15:04,440
the heaviest chain rule in proof of work

350
00:15:01,399 --> 00:15:07,920
which is the fundamental consensus and

351
00:15:04,440 --> 00:15:10,399
coordination method of the system and so

352
00:15:07,920 --> 00:15:12,000
these three methods aren't great and

353
00:15:10,399 --> 00:15:14,519
again Monero I don't I looked I don't

354
00:15:12,000 --> 00:15:16,240
think Monero has a invalidate block type

355
00:15:14,519 --> 00:15:18,720
command

356
00:15:16,240 --> 00:15:21,519
so again hard forking is not the best

357
00:15:18,720 --> 00:15:23,320
method but it's a kind of a lasage

358
00:15:21,519 --> 00:15:26,240
effort you really want to have the

359
00:15:23,320 --> 00:15:26,240
economically rational

360
00:15:26,519 --> 00:15:32,759
method um here's kind of a really simple

361
00:15:29,240 --> 00:15:36,440
graphic that I was inspired by um Eric

362
00:15:32,759 --> 00:15:38,399
Vos who's a great thinker in this um in

363
00:15:36,440 --> 00:15:42,759
this space in regards to adversarial

364
00:15:38,399 --> 00:15:45,519
thinking and um economic incentives and

365
00:15:42,759 --> 00:15:47,480
I'll uh Source one of his his books at

366
00:15:45,519 --> 00:15:49,759
the end but this was based on his

367
00:15:47,480 --> 00:15:51,600
something I saw he presented and this is

368
00:15:49,759 --> 00:15:54,199
the basis of the security model for

369
00:15:51,600 --> 00:15:56,519
proof of work when sooshi put together

370
00:15:54,199 --> 00:15:59,240
Bitcoin he essentially created a free

371
00:15:56,519 --> 00:16:01,680
market for Block space and what miners

372
00:15:59,240 --> 00:16:04,800
are doing is they're selling you

373
00:16:01,680 --> 00:16:07,560
confirmations via block space and users

374
00:16:04,800 --> 00:16:09,680
are purchasing that block space with

375
00:16:07,560 --> 00:16:11,600
transaction fees and this is the free

376
00:16:09,680 --> 00:16:14,040
market miners are selling block space

377
00:16:11,600 --> 00:16:17,160
users are buying block space it's very

378
00:16:14,040 --> 00:16:20,120
simple this is what the security model

379
00:16:17,160 --> 00:16:22,040
is based on if miners are selling block

380
00:16:20,120 --> 00:16:24,199
space and no one wants to buy it the

381
00:16:22,040 --> 00:16:28,040
Network's not secure no

382
00:16:24,199 --> 00:16:29,279
one is using it and vice versa if users

383
00:16:28,040 --> 00:16:31,480
are want to buying blocks space and

384
00:16:29,279 --> 00:16:34,199
there's no one offering it the security

385
00:16:31,480 --> 00:16:36,199
model breaks down as

386
00:16:34,199 --> 00:16:39,319
well these are a few

387
00:16:36,199 --> 00:16:42,279
caveats that I think are

388
00:16:39,319 --> 00:16:44,240
important um that some people might not

389
00:16:42,279 --> 00:16:47,519
agree with but uh the tailing Mission

390
00:16:44,240 --> 00:16:49,759
with Monero you know I don't fully agree

391
00:16:47,519 --> 00:16:52,560
that it's adds to security of the

392
00:16:49,759 --> 00:16:56,240
network especially under 51% attack and

393
00:16:52,560 --> 00:16:58,319
because under 51% attack the attacker is

394
00:16:56,240 --> 00:16:59,880
going to get paid the subsidy anyway

395
00:16:58,319 --> 00:17:01,639
there's no way to prevent the attacker

396
00:16:59,880 --> 00:17:03,279
from getting the subsidy so they're Deep

397
00:17:01,639 --> 00:17:05,360
by default getting paid to attack the

398
00:17:03,279 --> 00:17:06,360
network because there's a tail mission

399
00:17:05,360 --> 00:17:09,120
on a

400
00:17:06,360 --> 00:17:10,600
subsidy and also if you have 51% attack

401
00:17:09,120 --> 00:17:13,720
the attacker chooses who gets the

402
00:17:10,600 --> 00:17:16,839
subsidy so if a minor a minority minor

403
00:17:13,720 --> 00:17:18,959
mines a block and that 51% majority

404
00:17:16,839 --> 00:17:21,199
doesn't want them to have that subsidy

405
00:17:18,959 --> 00:17:23,319
they just ignore that block orphan it

406
00:17:21,199 --> 00:17:25,199
and build on their own chain so the

407
00:17:23,319 --> 00:17:28,559
attacker chooses who gets paid when they

408
00:17:25,199 --> 00:17:29,840
have 51% of the attacker and the

409
00:17:28,559 --> 00:17:32,760
attacker is always going to get paid the

410
00:17:29,840 --> 00:17:33,960
subsidy if they 51% because they choose

411
00:17:32,760 --> 00:17:38,679
who gets

412
00:17:33,960 --> 00:17:38,679
paid and U on bitcoin same

413
00:17:39,120 --> 00:17:45,880
thing and then this is kind of a kind of

414
00:17:42,880 --> 00:17:49,320
far out there but in regards to like the

415
00:17:45,880 --> 00:17:52,320
utxo set where um Bitcoin you can see

416
00:17:49,320 --> 00:17:56,600
what's happening utxo transparent you

417
00:17:52,320 --> 00:17:59,679
can't in some possible way the state

418
00:17:56,600 --> 00:18:01,679
could require you to offer your or

419
00:17:59,679 --> 00:18:04,039
provide your view Keys along with your

420
00:18:01,679 --> 00:18:06,640
transaction for them to process your

421
00:18:04,039 --> 00:18:08,679
transaction and put it in a block in the

422
00:18:06,640 --> 00:18:11,039
scenario where they have 51% of the hash

423
00:18:08,679 --> 00:18:14,159
power and so like using transaction

424
00:18:11,039 --> 00:18:15,520
extra field let's say oh we only process

425
00:18:14,159 --> 00:18:17,799
transactions if there's a vew key

426
00:18:15,520 --> 00:18:20,480
provided in the transaction extra field

427
00:18:17,799 --> 00:18:23,280
so that would feed back into the fee

428
00:18:20,480 --> 00:18:25,039
pressure mechanism where they're not

429
00:18:23,280 --> 00:18:27,400
processing transactions that have the

430
00:18:25,039 --> 00:18:30,200
vew keys or don't have the vew keys I

431
00:18:27,400 --> 00:18:31,919
should say so I don't think it's a a

432
00:18:30,200 --> 00:18:33,840
reality and again

433
00:18:31,919 --> 00:18:37,159
Monero based

434
00:18:33,840 --> 00:18:39,919
on um just having Asic resistance having

435
00:18:37,159 --> 00:18:43,120
more distributed mining not centralized

436
00:18:39,919 --> 00:18:45,679
Mining and having transparent UT or

437
00:18:43,120 --> 00:18:47,400
sorry uniform utxo set and being

438
00:18:45,679 --> 00:18:50,159
completely Anonymous really adds to the

439
00:18:47,400 --> 00:18:52,120
defense against 51%

440
00:18:50,159 --> 00:18:53,960
attack I went kind of quick I hope

441
00:18:52,120 --> 00:18:57,000
there's a lot of questions this is um

442
00:18:53,960 --> 00:18:59,159
you can contact me on Twitter this is

443
00:18:57,000 --> 00:19:00,880
the book I got a lot of this information

444
00:18:59,159 --> 00:19:02,840
was inspired and derived from crypto

445
00:19:00,880 --> 00:19:05,480
economics by Eric boscell who's probably

446
00:19:02,840 --> 00:19:07,559
the foremost thinker in these threat

447
00:19:05,480 --> 00:19:09,320
models and adversarial actors this book

448
00:19:07,559 --> 00:19:12,000
is a must if you're interested in this

449
00:19:09,320 --> 00:19:15,280
kind of thing so I recommend it you can

450
00:19:12,000 --> 00:19:19,280
find it for free on his GitHub and I

451
00:19:15,280 --> 00:19:21,120
think it's free on a as digital PDF as

452
00:19:19,280 --> 00:19:25,360
well

453
00:19:21,120 --> 00:19:25,360
so that's it

454
00:19:44,679 --> 00:19:49,240
there any questions or clarifications

455
00:19:46,280 --> 00:19:52,240
I'm happy to go over

456
00:19:49,240 --> 00:19:52,240
it

457
00:19:56,120 --> 00:20:03,240
yeah I have a question

458
00:19:59,200 --> 00:20:07,039
maybe one are you Satoshi

459
00:20:03,240 --> 00:20:11,000
Nakamoto there's no way for me to prove

460
00:20:07,039 --> 00:20:14,760
it even if I had the keys okay I could

461
00:20:11,000 --> 00:20:19,600
have stolen them yeah sure okay thanks

462
00:20:14,760 --> 00:20:19,600
for your talk man thank you yeah thanks

463
00:20:21,760 --> 00:20:31,509
[Music]

464
00:20:35,320 --> 00:20:41,980
[Music]