Using Discreet Log Contracts To Attack Bitcoin Forks

Currently, there are many blockchains with miniscule amounts of hash power compared with Bitcoin’s, and yet, they rarely see attacks. I believe that this is because of external factors that prevent miners from taking advantage of this potential revenue stream. Discreet Log Contracts (DLCs) are a method to mitigate these external factors so that miners have the ability to attack minority blockchains.

The Problem

If one wanted to attack a minority blockchain (e.g., BSV), the current best way would be to steal bitcoin from an exchange. This could be done by depositing some BSV into an exchange, selling it for bitcoin, withdrawing said bitcoin, and then executing a 51% attack such that the original BSV deposit never happened. At the end of this, the attacker has received Bitcoin without having to spend any BSV.

There are a few problems with this attack scenario that make it difficult to execute. One is that most exchanges require know-your customer (KYC) procedures for trading and withdrawals. This means that if such an attack were perpetrated on a blockchain like BSV, the exchange could see exactly who was doing it. Another problem is that the attacker would clearly be stealing from the exchange, which is immoral, and it could destroy a miner/mining pool’s reputation if they were to execute such an attack.

Collectively, these factors mitigate and arguably remove the incentives that large-scale miners would need to find such attacks to disrupt minority blockchains worthwhile.


DLCs provide a way to establish contracts on Bitcoin that are contingent on a set of oracles’ attestations. If one wanted to attack minority blockchains, it would be useful to be able to bet that they will experience 51% attacks, or to better quantify such attacks, one could bet that a blockchain reorganization (reorg) greater than or equal to 100 blocks will occur. Once a miner has made such a bet, they have an economic incentive to attack the minority blockchain, as it would allow them to receive the payout without having to steal from an exchange. Such a miner could then attack the blockchain themselves to force a 100-block reorg to occur, after which the oracles would attest that the event occurred, and the miner could then claim their reward by executing the DLC. Thus, the miner could attack the minority blockchain and get paid for it while not having to steal from anyone.

The only thing missing is that the miners need someone to fund the other side of this contract by betting that the minority blockchain will not experience a large reorg. Anyone could take this bet, whether holders of the actual coin or simply gamblers. The non-malicious miners of the target blockchain would have a large incentive to take this side of the bet, as they are the defense system that prevents these large reorgs from happening. In the event that the attacker fails, or no attack ever comes, the bet would provide free extra income for the minority blockchain’s miners.

If a market developed around this, it could create a signalling mechanism that would show when a block reorg attack is about to occur. If a miner were about to execute a large reorg on a blockchain, they would likely purchase any available contracts betting that the reorg will occur. This mass buying of the contracts could signal to the market that a reorg is coming, and entities like exchanges could temporarily halt deposits and withdrawals to mitigate risk.

In summary, today Bitcoin miners do not have a way to profit from attacking minority blockchains without stealing from a regulated entity. DLCs provide an alternative that could function as a marketplace for pricing the cost to attack minority blockchains.

This is a guest post by Ben Carman. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine


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Interview: Bitcoin Smart Contracts With Ben Carman

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In this episode of the “Bitcoin Magazine Podcast,” host Christian Keroles sat down with rising Bitcoin developer Ben Carman to discuss his cutting-edge work in the Bitcoin smart contracting space, as well as controversy and disputes that Carman finds himself in as he trolls Bitcoin Twitter.

Carman and Keroles first met far before Carman’s rise to prominence in the Bitcoin community at the BitBlockBoom conference in 2019. Since then, Carman has joined SuredBits as a leader in discreet log contract (DLC) technology. DLCs show promise as the smart contracting and oracle layer for the Bitcoin financial stack. Carman has since built Krystal Bull, which is a wallet for hosting an oracle. Carm threw in his two cents on the Taproot activation discussion and educated Keroles about all of the benefits and features that Taproot enables.

Lastly, they dove into a recent confrontation between Eric July and Carman. July is a prominent libertarian pendent who does not really recommend or educate his following on Bitcoin. Carman and other Bitcoin plebs joined July’s podcast to call out the fact that he and other libertarians that do not take action are LARPS and he discussed the fallout from that confrontation.

Topics discussed include:

  • DLCs
  • The Bitcoiner and libertarian showdown
  • Suredbits
  • Krystal Bull
  • Why run an oracle?
  • Taproot
  • Lot=true versus =false
  • The future and nature of Bitcoin finance
  • Why are libertarians who deny bitcoin LARPs?
  • Eric July’s podcast


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Human Rights Foundation Announces $70,000 In Bitcoin Development Grants

Today, the Human Rights Foundation (HRF) has announced four new grants as part of its Bitcoin Development Fund, a program launched last year to financially support Bitcoin developers who are working to make the network more private, decentralized and resilient.

The non-profit focused on preserving human rights around the world will be donating $25,000 in BTC to Jesse Posner, who is working on adapter signatures and discreet log contracts (DLCs); $25,000 in BTC to the team behind Munn Wallet; $10,000 in BTC to Janine Roem, who manages a Bitcoin privacy newsletter; and $10,000 in BTC to the team behind open-source cryptography non-profit Blockchain Commons.

“This wave of donations will support Bitcoin development, a new open-source wallet, a privacy newsletter and internships for college students to work on Bitcoin software and new user education,” per an HRF announcement shared with Bitcoin Magazine.

The announcement also offered details on how each recipient and project could advance Bitcoin as a sovereignty tool.

Posner was previously working on key management for the cryptocurrency exchange Coinbase, before shifting to open-source technology development. HRF expects its grant to help him research and implement key management for Bitcoin following the activation of Taproot, highlighting the potential of flexible round-optimized Schnorr threshold signatures (FROST) to help users easily and privately control funds.

The Lightning-compatible Munn Wallet is available for Android and iPhone and seeks to make it easier for users to self-custody their bitcoin. The project is based in Argentina and led by Dario Sneidermanis.

Roem’s “This Month In Bitcoin Privacy” newsletter collects and redistributes the latest news and how-tos in Bitcoin privacy to help readers better protect themselves from bad actors and prying eyes while utilizing the technology.

Blockchain Commons, an organization working to create decentralized blockchain infrastructure, is expected to put its grant toward the launch of a series of Bitcoin-focused internships for university students. The internships will give participants the opportunity to contribute to Bitcoin software development and to help HRF network activists onboard to Bitcoin.

“They will allow, for example, journalists and dissidents under authoritarian regimes to have personalized assistance on how to, for example, set up a bitcoin payment processor on their website to allow them to receive donations from anywhere in the world, configure a wallet that they securely control and sell bitcoin into fiat safely when necessary to pay for program expenses,” per the announcement.

The HRF Bitcoin Development Fund has supported numerous individuals and projects since its inception, including Chris Belcher for CoinSwap, Gloria Zhao for Package Memepool Accept, the Global Mesh Labs team for the Lot49 protocol, Ben Kaufman for Specter Wallet, Openoms for JoinInbox, Evan Kaloudis for Zeus and Fontaine for Fully Noded.


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