As announced in #bitcoin-assets, BitBet was attacked earlier today through a transaction withholding mechanism. The attack unfolded as follows :

A BitBet bet (Jeb Bush will be Republicans' 2016 Presidential Nominee) was closed and resolved on 21 February. This created a list of winners with a reasonable expectation to be paid their winnings. A first transaction was broadcast, to satisfy the claims of the winners, spending some inputs, and offering a fee of 0. This transaction was, as you'd expect, neither mined nor included in the mempools of most Bitcoin nodes. A second transaction was broadcast, spending the same inputs as A1, including a fee of 0.0001, call it A2. For a ~1.5kb transaction, this fee is on the low side, so it perhaps could be argued that it not being mined would be expected. Nevertheless, transaction A2 was also not included in the mempools of most Bitcoin nodes. As neither transaction A1 or A2 were mined after 54 (48) hours, a further transaction was broadcast, spending the same inputs as A1 and A2, and including a fee of 0.000175, call it A3. By any measure, a fee in excess of 10 satoshi per byte should be sufficient to have transactions mined. Nevertheless, contrary to expectation, transaction A3 was not included in either a block or the mempools of most Bitcoin nodes. After a further 48 hours, a fourth transaction was broadcast, spending the same inputs as A1, A2 and A3, and including a fee of 0.00022, call it A4. Just like the previous three, transaction A4 was not either included in a block or advertised by most Bitcoin nodes. After a further 16 hours, transaction B was broadcast, that included the same outputs as transactions A1-A4, but different inputs. Transaction B, like transaction A4, included a fee of 0.00022. Transaction B was advertised by most Bitcoin nodes immediately thereafter, and was included in a block within half hour of being broadcast. Two hours after B was included in a block, transaction A1 was re-broadcast by an unknown third party. Twenty minutes later, the 0 fee, week old, not-advertised-by-anyone-ever transaction was included in a block.

On the basis of these events, the following allegations can readily be supported :

That the notion of "a majority of Bitcoin nodes" is void of content, most of the relay network being under the control of the same entity and supporting functionality not contemplated by the Bitcoin protocol (such as selective mothballing of specific transactions). 1 This specifically means that "someone" 2 has the ability to nuke transactions out of the network irrespective of whether they are validly signed or not, directly replicating functionality already available to fiat governments in fiat payment processors such as Visa or Paypal.

This specifically means that "someone" has the ability to nuke transactions out of the network irrespective of whether they are validly signed or not, directly replicating functionality already available to fiat governments in fiat payment processors such as Visa or Paypal. That a cartel of Bitcoin miners is deliberately and systematically withholding blocks for an interval of about 20 minutes to a half hour, so as to ensure themselves a (significant) advantage over any would-be competitors. 3

That neither above item makes sense or could long survive without the other, meaning that necessarily the culprit is one and the same. Note for the record that an entity controlling 51% of the network (as is by a large margin the case with the Antpool/F2pool cartel) can safely withhold blocks for an indefinite period – if a competitor publishes a longer chain all the cartel has to do is keep mining on its own, eventually they'll prevail.4

Note that there are no alternative theories that more parsimoniously explain the chain of observed phenomena, and consequently the validity of the above allegations is a matter of objective truth. One may disagree on the strength of subjective feeling, or put forth his own interpretations, but these – much as in the case of alternative explanations for biological evolution – suffer from a fundamental logical weakness.

Update March 2, 2016 18:49 UTC: In a further development on this story, Bitbet has now announced a moratorium on payments until the issue is resolved. (N. ed.)