Re: [Bitcoin-development] Proposal: Encrypt bitcoin messages

[Peter Todd <pete@petertodd.org>]

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On 19 August 2014 19:40:39 GMT-04:00, Jeff Garzik <jgarzik@bitpay.com> wrote:
>Encryption is of little value if you may deduce the same information
>by observing packet sizes and timings.

That is simply incorrect. The resources required to do that kind of monitoring are very high; even the NSA can't pull it off consistently for non-targetted operations due to limitations on upstream bandwidth and other resources. (remember that many of their taps are non-cooperative ones, obtained by breaking into routers at ISP's) This I've confirmed with direct conversation with Jacob Applebaum and other Tor devs. Every additional bit of encrypted information flowing over the internet increases the work they need to so to deanonymize you. This is not unlike how CoinJoin, while not providing guaranteed anonymity, makes the job of attackers significantly more difficult by creating large amounts of statistical noise. In addition the Bitcoin P2P protocol has natural anti-traffic analysis properties due to its asynchronous nature.

Re: MITM attacks, again, the resources required to conduct them on a large scale instead of passive attacks just don't exist. For instance the NSA has to be relatively selective in using them for fear of being detected; being able to detect attacks is a huge improvement over the status quo anyway.

Having said that using Tor by default in Bitcoin Core is an even easier way of enabling encryption and authentication, and would help protect all Tor users from surveillance. The easiest way to do this would be to make the Debian/Ubuntu packages depend on Tor, and include a install-time script to setup the hidden service. I've verified with the Tor devs that they would welcome the additional load on the Tor network that Bitcoin would add.
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