Rusty Russell's Coding Blog

As all software, it took longer than I expected, but today I tagged the first version of pettycoin.  Now, lots more polish and features, but at least there’s something more than the git repo for others to look at!

A “non-blocking” IPv6 connect() call was in fact, blocking.  Tracking that down made me realize the IPv6 address was mostly random garbage, which was caused by this function:

bool get_fd_addr(int fd, struct protocol_net_address *addr)
{
   union {
      struct sockaddr sa;
      struct sockaddr_in in;
      struct sockaddr_in6 in6;
   } u;
   socklen_t len = sizeof(len);

   if (getsockname(fd, &u.sa, &len) != 0)
      return false;
   ...
}

The bug: “sizeof(len)” should be “sizeof(u)”.  But when presented with a too-short length, getsockname() truncates, and otherwise “succeeds”; you have to check the resulting len value to see what you should have passed.

Obviously an error return would be better here, but the writable len arg is pretty useless: I don’t know of any callers who check the length return and do anything useful with it.  Provide getsocklen() for those who do care, and have getsockname() take a size_t as its third arg.

Oh, and the blocking?  That was because I was calling “fcntl(fd, F_SETFD, …)” instead of “F_SETFL”!

I decided to use github for pettycoin, and tested out their blogging integration (summary: it’s not very integrated, but once set up, Jekyll is nice).  I’m keeping a blow-by-blow development blog over there.

At linux.conf.au I spoke about my pre-alpha implementation of Pettycoin, but progress since then has been slow.  That’s partially due to yak shaving (like rewriting ccan/io library), partially reimplementation of parts I didn’t like, and partially due to the birth of my son, but mainly because I have a day job which involves working on Power 8 KVM issues for IBM.  So Alex convinced me to take 6 months off from the day job, and work 4 days a week on pettycoin.

I’m going to be blogging my progress, so expect several updates a week.  The first few alpha releases will be useless for doing any actual transactions, but by the first beta the major pieces should be in place…

Chris Fisher’s Jupiter Broadcasting pod/vodcasting started 8 years ago with the Linux Action Show: still their flagship show, and how I discovered them 3 years ago.  Shows like this give access to FOSS to those outside the LWN-reading crowd; community building can be a thankless task, and as a small shop Chris has had ups and downs along the way.  After listening to them for a few years, I feel a weird bond with this bunch of people I’ve never met.

I regularly listen to Techsnap for security news, Scibyte for science with my daughter, and Unfilter to get an insight into the NSA and what the US looks like from the inside.  I bugged Chris a while back to accept bitcoin donations, and when they did I subscribed to Unfilter for a year at 2 BTC.  To congratulate them on reaching the 100th Unfilter episode, I repeated that donation.

They’ve started doing new and ambitious things, like Linux HOWTO, so I know they’ll put the funds to good use!

I was thinking about peer-to-peer networking (in the context of Pettycoin, of course) and I wondered if sending ~1420 bytes of data is really any slower than sending 1 byte on real networks.  Similarly, is it worth going to extremes to avoid crossing over into two TCP packets?

So I wrote a simple Linux TCP ping pong client and server: the client connects to the server then loops: reads until it gets a ‘1’ byte, then it responds with a single byte ack.  The server sends data ending in a 1 byte, then reads the response byte, printing out how long it took.  First 1 byte of data, then 101 bytes, all the way to 9901 bytes.  It does this 20 times, then closes the socket.

Here are the results on various networks (or download the source and result files for your own analysis):

On Our Gigabit Lan

Interestingly, we do win for tiny packets, but there’s no real penalty once we’re over a packet (until we get to three packets worth):

On Our Wireless Lan

Here we do see a significant decline as we enter the second packet, though extra bytes in the first packet aren’t completely free:

Via ADSL2 Over The Internet (Same Country)

Ignoring the occasional congestion from other uses of my home net connection, we see a big jump after the first packet, then another as we go from 3 to 4 packets:

Via ADSL2 Over The Internet (Australia <-> USA)

Here, packet size is completely lost in the noise; the carrier pidgins don’t even notice the extra weight:

Via 3G Cellular Network (HSPA)

I initially did this with Wifi tethering, but the results were weird enough that Joel wrote a little Java wrapper so I could run the test natively on the phone.  It didn’t change the resulting pattern much, but I don’t know if this regularity of delay is a 3G or an Android thing.  Here every packet costs, but you don’t win a prize for having a short packet:

Via 2G Network (EDGE)

This one actually gives you a penalty for short packets!  800 bytes to 2100 bytes is the sweet-spot:

Summary

So if you’re going to send one byte, what’s the penalty for sending more?  Eyeballing the minimum times from the graphs above:

	Wired LAN	Wireless	ADSL	3G	2G
Penalty for filling packet	30%	 15%	 5%	 0%	 0%*
Penalty for second packet	30%	 40%	 15%	 20%	 0%
Penalty for fourth packet	60%	 80%	 25%	 40%	 25%

* Average for EDGE actually improves by about 35% if you fill packet

I tested out livingroomofsatoshi.com, which lets you pay any BPAY bill (see explanation from reddit).  Since I’d never heard of the developer, I wasn’t going to send anything large through it, but it worked flawlessly.  At least the exposure is limited to the time between sending the BTC and seeing the BPAY receipt.  Exchange rate was fair, and it was a simple process.

Now I need to convince my wife we should buy some BTC for paying bills…

As my previous post documented, I’ve experimented with localbitcoins.com.  Following the arrest of two Miami men for trading on localbitcoins, I decided to seek legal advice on the sitation in Australia.

Online research led me to Nick Karagiannis of Kelly and Co, who was already familiar with Bitcoin: I guess it’s a rare opportunity for excitement in financial regulatory circles!  This set me back several thousand dollars (in fiat, unfortunately), but the result was reassuring.

They’ve released an excellent summary of the situation, derived from their research.  I hope that helps other bitcoin users in Australia, and I’ll post more in future should the legal situation change.

I bought 10 BTC to play with back in 2011, and have been slowly spending them to support bitcoin adoption.  One thing which I couldn’t get reliable information on was how to buy and sell bitcoin within Australia, so over the last few months I decided to sell a few via different methods and report the results here (this also helps my budget, since I’m headed off on paternity leave imminently!).

All options listed here use two-factor authentication, otherwise I wouldn’t trust them with more than cents.  And obviously you shouldn’t leave your bitcoins in an exchange for any longer than necessary, since most exchanges over time have gone bankrupt.

Option 1: MtGox AUD

Yes, I transferred some BTC into MtGox and sold them.  This gave the best price, but after over two months of waiting the bank transfer to get my money hadn’t been completed.  So I gave up, bought back into bitcoins (fewer, since the price had jumped) and thus discovered that MtGox was issuing invalid BTC transactions so I couldn’t even get those out.  Then they halted transactions altogether blaming TX malleability.  Then they went bankrupt.  Then they leaked my personal data just for good measure.  The only way their failure could be more complete is if my MtGox Yubikey catches on fire and burns my home to the ground.

Volume: Great (5M AUD/month)
Price Premium: $25 – $50 / BTC
Charge: 0.65%
Hassle: Infinite
Summary: 0/10

Option 2: localbitcoins.com

According to bitcoincharts.com, localbitcoins is the largest volume method for AUD exchange.  It’s not an exchange, so much as a matching and escrow service, though there are a number of professional traders active on the site.  The bulk of AUD trades are online, though I sold face to face (and I’ll be blogging about the range of people I met doing that).

localbitcoins.com is a great place for online BTC buyers, since they have been around for quite a while and have an excellent reputation with no previous security issues, and they hold bitcoins in escrow as soon as you hit “buy”.  It’s a bit more work than an exchange, since you have to choose the counter-party yourself.

For online sellers, transfers from stolen bank accounts is a real issue.  Electronic Funds Transfer (aka “Pay Anyone”) is reversible, so when the real bank account owner realizes their money is missing, the bank tends to freeze the receiving (ie. BTC seller’s) bank account to make sure they can’t remove the disputed funds.  This process can take weeks or months, and banks’ anti-fraud departments generally treat bitcoin sellers who get defrauded with hostility (ANZ is reported to be the exception here).  A less common scam is fraudsters impersonating the Australian Tax Office and telling the victim to EFT to the localbitcoins seller.

Mitigations for sellers include any combination of:

1. Only accepting old-fashioned cash deposits via a branch (though I’m aware of one US report where a fraudster convinced the teller to reverse the deposit, I haven’t heard of that in Australia)
2. Insisting on “localbitcoins.com” in the transfer message (to avoid the ATO fraud problem)
3. Only dealing with buyers with significant reputation (100+ trades with over 150 BTC is the Gold Standard)
4. Insisting on real ID checking (eg. Skype chat of buyer with drivers’ license)
5. Only dealing with buyers whose accounts are older than two weeks (most fraudsters are in and out before then, though their reputation can be very good until they get caught)
6. Only allowing internal transfers between the same bank (eg. Commonwealth), relying on the bank’s use of two factor authentication to reduce fraud.

Many buyers on localbitcoins.com are newcomers, so anticipate honest mistakes for the most part.  The golden rule always applies: if someone is offering an unrealistic price, it’s because they’re trying to cheat you.

Volume: Good (1M AUD/month)
Price Premium: $5 – $20 / BTC
Charge: 1% (selling), 0% (buying)
Hassle: Medium
Summary: 7/10

Option 3: btcmarkets.net

You’ll need to get your bank account checked to use this fairly low-volume exchange, but it’s reasonably painless.  Their issues are their lack of exposure (I found out about them through bitcoincharts.com) and lack of volume (about a quarter of the localbitcoins.com volume), but they also trade litecoin if you’re into that.  You can leave standing orders, or just manually place one which is going to be matched instantly.

They seem like a small operation, based in Sydney, but my interactions with them have been friendly and fast.

Volume: Low (300k AUD/month)
Price Premium: $0 / BTC
Charge: 1%
Hassle: Low
Summary: 7/10

Option 4: coinjar.io

I heard about this site from a well-circulated blog post on Commonwealth Bank closing their bank account last year.  I didn’t originally consider them since they don’t promote themselves as an exchange, but you can use their filler to sell them bitcoins at a spot rate.  It’s limited to $4000 per day according to their FAQ.

They have an online ID check, using the usual sources which didn’t quite work for me due to out-of-date electoral information, but they cleared that manually within a day.  They deposit 1c into your bank account to verify it, but that hasn’t worked for me, so I’ve no way to withdraw my money and they haven’t responded to my query 5 days ago leaving me feeling nervous.  A search of reddit points to common delays, and founder’s links to the hacked-and-failed Bitcoinica give me a distinct “magical gathering” feel. [Edit: they apparently tried and failed four times to transfer the 1c verification to my ING account; with 1-2 business day support response, this took quite a while.  They never explained why this was failing.  Using my wife’s CBA account worked however, and I got my funds the next day.  Upgraded their score from 4/10 to 5/10.]

Volume: Unknown (self-reports indicate ~250k/month?)
Price Premium: $0 / BTC
Charge: 1.1% (selling) 2% (buying)
Hassle: Medium
Summary: 5/10

If you trade, I’d love to hear corrections, comments etc. or email me on rusty@rustcorp.com.au.

At linux.conf.au I gave a last-minute talk previewing my work on pettycoin (video, slides), an experiment to shard a bitcoin-like network.  The idea is to trade off some security and robustness in return for scale, but use it only for small amounts where fraud is less worthwhile.  On the bitcoin network today this is already seen with zero-confirmation transactions, and this is the niche pettycoin seeks to fill.

There are numerous problems to be overcome (one being the time taken by my day job, of course).  But segmenting the network and the blockchain is an interesting challenge: bitcoin’s blockchain is already designed so that you can have partial knowledge (mainly so you can prune used outputs).  But there’s a clear divide between full nodes, and second-class partial nodes.  I want a system where no one need know everything, and I’m getting closer to that goal.

Consider the simplest useful transaction in the bitcoin network, with one input (ie. a previous transaction’s output) and one output.  To verify this is a fairly simple process:

1. Is the transaction well-formed?
2. Find the transaction whose output this is spending.
3. Does the signature match the address of that output?
4. Has that output already been spent?

With bitcoin, you’re expected to know every transaction with unspent outputs, so if you can’t find the transaction at step 2, the verification fails. Even better, you can verify that previous transaction, too, all the way back to the creating of the coins involved.  Your only worry is that the blockchain you have is the same as everyone else’s, so they’ll accept your transaction later.

If you don’t expect to know everything, it’s more difficult.  You can use a merkle proof to show that a transaction was present in a block; it takes just log(N) hashes for an N-transaction block.  So you could prove that all those previous transactions are in the blockchain (though that might be thousands of transactions) by providing me with each transaction and proof.

But this can’t prove that there are not duplicate transactions in the blockchain itself.  Only knowing the entire contents would do that.  So we’re relying on the rest of the network, each with a partial view, to check that didn’t happen.

This leads to the two requirements for any aspect of the pettycoin system which a node can’t verify by itself:

1. The information to verify must be seen by some honest nodes.
2. Each node must have an efficient way of reporting if it sees a problem.

The former is a bit tricky.  Consensus is formed by the blockchain, but you don’t want to see all of it.  You might expect to see some fraction of it, but if you don’t, how would you alert the network in a way that can’t be faked?   Imagine a miner holds back 5 transactions in the block, the miner might wait for your complaint message on one, then release that transaction making you look like the dishonest one.  By making you cry wolf, they can ensure you are ignored.

The solution used in pettycoin is that miners have to prove that they know the transactions in the 10 previous blocks.  They do this by hashing the transactions from the previous block into a merkle tree like normal, only they prefix each transaction with their payout address (this is called prev_merkle in the code).  The only way to generate this hash is to know the contents of each transaction, and you can’t make a valid block without it.  Unfortunately, the only way to demonstrate that this hash is wrong (thus the block is invalid) is to also know the contents of each transaction in the block.  Thus transactions are batched into groups of 4096; you only need send 4096 transactions to prove that one of the hashes in a block is wrong.  Miners will insist on knowing the transactions for those blocks, knowing that if they fake it they’ll likely be caught.

Reporting most other problems in a block is fairly:

1. You can prove a duplicate spend in the block chain by showing both transactions and the merkle proofs that they are in each block.  The second block is invalid.
2. You can prove a malformed transaction by showing the transactions and the merkle proof it is in the block.  That block is invalid.
3. You can prove an overspend by showing the transactions used as inputs.  That block is invalid.

But if a transaction in a block relies on an output of a transaction which never existed, you can’t prove it.  Even if you know every transaction which ever happened, you can’t prove that to me (without sending me the whole blockchain).  The initial design lived with such warts in the blockchain, instead insisting that you would have to show all the predecessors when you paid me (via a payment protocol).  That predecessor tree quickly becomes unwieldy, however.

The new approach is that for each input of a transaction in the blockchain, the miner has to include the block and transaction number where it appeared.  Now anyone who knows that previous transaction can check it, and if there’s a problem it’s easy for any node to prove by showing the transaction which is in that previous block (with merkle proof that it is).

This means that the blockchain can be trusted, if half the mining power can be trusted.  This is a weaker guarantee that bitcoin, but sufficiently strong for pettycoin.  If you send me a new transaction along with transactions it uses as inputs  and merkle proofs that they are in the blockchain, I only need ensure that the new transaction isn’t a double-spend.  That’s the same as the bitcoin network, with zero-confirmation transactions (though pettycoin has a special double-spend report message to expedite it a little).

Next post, I’ll respond to the best criticism of pettycoin yet, the problem of gateways (by Jason Gi)…