It takes a 51% attack to cause a double-spend.

ch01.asciidoc

@@ -57,8 +57,11 @@ Satoshi Nakamoto's invention is also a practical solution to a previously unsolv
 
 Bitcoin is a technology, but it expresses money which is fundamentally a language for exchanging value between people. Let's look at the people who are using bitcoin and some of the most common uses of the currency and protocol through their stories. We will re-use these stories throughout the book to illustrate the real-life uses of digital money and how they are made possible by the various technologies that are part of bitcoin. 
 
-North American Retail::
+North American Low Value Retail::
-Alice lives in Northern California's Bay Area. She has heard about bitcoin from her techie friends and wants to start using it. We will follow her story as she learns about bitcoin, acquires some and then spends some of her bitcoin to buy a cup of coffee at Bob's Cafe in Palo Alto. This story will introduce us to the software and basic transactions from the perspective of a retail consumer.
+Alice lives in Northern California's Bay Area. She has heard about bitcoin from her techie friends and wants to start using it. We will follow her story as she learns about bitcoin, acquires some and then spends some of her bitcoin to buy a cup of coffee at Bob's Cafe in Palo Alto. This story will introduce us to the software, the exchanges and basic transactions from the perspective of a retail consumer.
+
+North American High Value Retail::
+Carol is an art gallery owner in San Francisco. She sells expensive paintings for bitcoin. This story will introduce the risks of a "51%" consensus attack for retailers of high-value items. 
 
 Offshore Contract Services::
 Bob, the cafe owner in Palo Alto is building a new website. He has contracted with an Indian web developer, Gopesh, who lives in Bangalore, India. Gopesh has agreed to be paid in bitcoin. This story will examine the use of bitcoin for outsourcing, contract services and international wire transfers. 
@@ -66,18 +69,12 @@ Bob, the cafe owner in Palo Alto is building a new website. He has contracted wi
 Charitable Donations::
 Eugenia is the director of a children's charity in the Philippines. Recently she has discovered bitcoin and wants to use it to reach a whole new group of foreign and domestic donors to fundraise for her charity. She's also investigating ways to use bitcoin to distribute funds quickly to areas of need. This story will show the use of bitcoin for global fundraising across currencies and borders and the use of an open ledger for transparency in charitable organizations.
 
-Remittances and Reverse Remittances::
-Gopesh, the Indian web developer, is supporting his daughter Radhika who is a student in Essex, England. Gopesh is now considering sending Radhika bitcoin, eliminating the fees he used to pay for remittances. This story will demonstrate the use of local exchange and peer-to-peer exchanges for international remittances with bitcoin.
-
 Import/Export::
 Mohammed is an electronics importer in Dubai. He's trying to use bitcoin to buy electronics from the USA and China for import into the U.A.E. to accelerate the process of payments for imports. This story will show how bitcoin can be used for large business-to-business international payments tied to physical goods.
 
 Mining for Bitcoin::
 Jing is a computer engineering student in Shanghai. He has built a "mining" rig to mine for bitcoins, using his engineering skills to supplement his income. This story will examine the "industrial" base of bitcoin, the specialized equipment used to secure the bitcoin network and issue new currency.
 
-Peer Lending::
-Zenab is a shopkeeper in Kisumu, Kenya and needs a loan to buy new inventory for her shop. With the assistance of a micro-lending organization, she is financing a micro-loan in bitcoin from individual lenders all across the world. This story will demonstrate the potential for bitcoin to offer peer-to-peer micro-lending by aggregating small investments, matching them with borrowers in developing nations. 
-
 Each of the stories above is based on real people and real industries that are currently using bitcoin to create new markets, new industries and innovative solutions to global economic issues. 
 
 === Getting Started

ch08.asciidoc

@@ -796,6 +796,12 @@ It is important to note that consensus attacks can only affect future consensus,
 
 One attack scenario against the consensus mechanism is called the "51% attack". In this scenario a group of miners, controlling a majority (51%) of the total network's hashing power, collude to attack bitcoin. With the ability to mine the majority of the blocks, the attacking miners can cause deliberate "forks" in the blockchain and double-spend transactions or execute denial-of-service attacks against specific transactions or addresses. A fork/double-spend attack is one where the attacker causes previously confirmed blocks to be invalidated by forking below them and re-converging on an alternate chain. With sufficient power, an attacker can invalidate six or more blocks in a row, causing transactions that were considered immutable (6 confirmations) to be invalidated. Note that a double-spend can only be done on the attacker's own transactions, for which the attacker can produce a valid signature. Double-spending one's own transactions is profitable if by invalidating a transaction the attacker can get a non-reversible exchange payment or product without paying for it. 
 
+Let's examine a practical example of a 51% attack. In the first chapter we looked at a transaction between Alice and Bob for a cup of coffee. Bob, the cafe owner, is willing to accept payment for cups of coffee without waiting for confirmation (mining in a block), because the risk of a double-spend on a cup of coffee is low in comparison to the convenience of rapid customer service. This is similar to the practice of coffee shops that accept credit card payments without a signature for amounts below $25, as the risk of a credit-card chargeback is low while the cost of delaying the transaction to obtain a signature is comparatively larger. In contrast, selling a more expensive item for bitcoin runs the risk of a double-spend attack, where the buyer broadcasts a competing transaction that spends the same inputs (UTXO) and cancels the payment to the merchant. A double-spend attack can happen in two ways: either before a transaction is confirmed, or if the attacker takes advantage of a blockchain fork to undo several blocks. A 51% attack allows an attacker to double-spend their own transactions in the new chain, thus undoing the corresponding transaction in the old chain. 
+
+In our example, malicious attacker Mallory goes to Carol's gallery and purchases a beautiful triptych painting depicting Satoshi Nakamoto as Prometheus. Carol sells "The Great Fire" paintings for $250,000 in bitcoin, to Mallory. Instead of waiting for six or more confirmations on the transaction, Carol wraps and hands the paintings to Mallory after only one confirmation. Mallory works with an accomplice, Paul, who operates a large mining pool and the accomplice launches a 51% attack as soon as Mallory's transaction is included in a block. Paul directs the mining pool to re-mine the same block height as the block containing Mallory's transaction replacing Mallory's payment to Carol with a transaction that double-spends the same input as Mallory's payment. The double-spend transaction consumes the same UTXO and pays it back to Mallory's wallet, instead of paying it to Carol, essentially allowing Mallory to keep the bitcoin. Paul then directs the mining pool to mine an additional block, so as to make the chain containing the double-spend transaction longer than the original chain (causing a fork below the block containing Mallory's transaction). When the blockchain fork resolves in favor of the new (longer) chain, the double-spent transaction replaces the original payment to Carol. Carol is now missing the three paintings and also has no bitcoin payment. Throughout all this activity, Paul's mining pool participants may remain blissfully unaware of the double-spend attempt, as they mine with automated miners and cannot monitor every transaction or block.
+
+To protect against this kind of attack, a merchant selling large-value items must wait at least six confirmations before giving the product to the buyer. Alternatively, the merchant should use an escrow multi-signature account, again waiting for several confirmations after the escrow account is funded. The more confirmations elapse, the harder it becomes to invalidate a transaction with a 51% attack. For large-value items, payment by bitcoin will still be convenient and efficient even if the buyer has to wait 24 hrs for delivery, which would ensure 144 confirmations. 
+
 In addition to a double-spend attack, the other scenario for a consensus attack is to deny service to specific bitcoin participants (specific bitcoin addresses). An attacker with a majority of the mining power can simply ignore specific transactions. If they are included in a block mined by another miner the attacker can deliberately fork and re-mine that block, again excluding the specific transactions. This type of attack can result in a sustained denial of service against a specific address or set of addresses for as long as the attacker controls the majority of the mining power. 
 
 Despite its name, the 51% attack scenario doesn't actually require 51% of the hashing power. In fact, such an attack can be attempted with a smaller percentage of the hashing power. The 51% threshold is simply the level at which such an attack is almost guaranteed to succeed. A consensus attack is essentially a tug-of-war for the next block and the "stronger" group is more likely to win. With less hashing power, the probability of success is reduced, as other miners control the generation of some blocks with their "honest" mining power. One way to look at it is that the more hashing power an attacker has, the longer the fork they can deliberately create, the more blocks in the recent past they can invalidate, or the more blocks in the future they can control. Security research groups have used statistical modeling to claim that various types of consensus attacks are possible with as little as 30% of the hashing power.