Papers associated with Bitcoin and related topics in law: Part X

This article was first published on Dr. Craig Wright’s blog, and we republished with permission from the author. Read Part 1, Part 2, Part 3, Part 4, Part 5, Part 6, Part 7, Part 8, and Part 9.

The concept of a ‘rollback’ attack is referenced when it comes to blockchain solutions and attacks or changes to the system. In addition, the concept of decentralization is touted as a solution to “censorship resistance” and promoted with the agenda that no information on the blockchain may be removed or altered—even with interactions from governments. Yet, the notion of censorship resistance as a component of Bitcoin was introduced by individuals who did not build the system or maintain it and had agendas different from those noted in the original release of the Bitcoin white paper (Wright, 2008).

Hassanein et al. (2022, p. 99) define a public blockchain as one where anyone can:

• Join/leave the network at any moment in time.
• Read data in the blockchain.
• Write data to the blockchain.
• Create new blocks and publish them to the network.
• Add new blocks to the blockchain.

Yet, it is important to note that the Bitcoin white paper defined any network based on economic conditions and did not describe a system in which all individuals could add blocks. Rather, the description posited by Hassanein et al. (2022) reflects the cryptocurrency system Karma (Chow, 2007) and related attempts at a digital cash application before Bitcoin. The authors also note that data immutability requires that a “Blockchain rollback is almost impossible” (Hassanein et al., 2022, p. 102).

Politou et al. (2021, p. 1977) take a similar approach, noting that “blockchains are in principle immutable as it is nearly impossible to delete, update or rollback transactions once they are included in a blockchain,” going on to say “that immutability is an emergent, and not intrinsic, property of a blockchain data structure, and therefore an agent or set of agents with a sufficient amount of computing power can modify it, stating that a blockchain is by default immutable is incorrect and misleading.”

The Bitcoin white paper (Wright, 2008, p. 4) explicitly says that spent transactions and thus no longer important transaction information can be discarded with a specific reference to prior transactions: “spent transactions before it can be discarded to save disk space.” Consequently, while an index marker will always exist within the blockchain, the immutability of information is based upon the storage of information by parties who have the incentive to remove excess data. Therefore, such forms of analysis (Politou et al., 2021) that are directed toward explaining immutability and ignoring the primary micropayment capability of Bitcoin may be argued to cherry-pick information and take it out of context.

In a pre-release working paper, Nabilou (2022, p. 8) discusses “an erroneous upgrade to the Bitcoin protocol and its rollback via coordination between developers and miners,” demonstrating how even Bitcoin has been ‘rolled back’ and thus may not be considered immutable under all conditions. The author argues it to be “an apparent violation of the Nakamoto consensus,” while failing to note that the Bitcoin white paper does not specifically refer to blind adherence to rules, but rather says that “[a]ny needed rules and incentives can be enforced with this consensus mechanism” (Wright, 2008, p. 8).

Each author in the section builds upon arguments describing Bitcoin that have been developed after the launch of the Bitcoin white paper and that, in many instances, stand in opposition to the conditional purpose and description laid out in the reference work. For example, the argument that an “issue originates from the famous 51% attack” (Nabilou, 2022, p. 7) contradicts the description of governance documented in the Bitcoin white paper. Here, the information sources fail to check or integrate the original concept and base themselves upon comments by actors within the industry seeking to claim a position that allows them to maintain profitability outside anti-money laundering (AML) and tax rules.

The argument that nodes will follow the longest chain runs contrary to the statement in the Bitcoin white paper noting that nodes (or, rather, node operators) will only accept valid blocks, “expressing their acceptance of valid blocks by working on extending them and rejecting invalid blocks by refusing to work on” (Wright, 2008, p. 8) blocks created by an attacker or that have built upon a previously rejected chain. As a result, each of the authors references concepts of immutability in a way that was not included in the Bitcoin white paper and which fails to understand or comprehend the integration of micropayment systems or that Bitcoin…