Have any SPV users lost money because they accepted forged bitcoins?

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I'm making a list of real-life examples of occasions where bitcoins were lost to various known attacks. One of these known attacks is that lightweight (SPV) wallets can't verify whether a transaction only spends UTXOs (a requirement full nodes enforce) so lightweight wallets can be tricked into accepting bitcoins that don't really exist.

Of course, only a dishonest miner would confirm that transaction, making the attack expensive if confirmations have to be involved.

Does anyone know of a real-life example of a user who lost money to this attack, either involving an unconfirmed transaction or a confirmed transaction? I'd prefer an example from Bitcoin, but examples from altcoins are welcome too.

David A. Harding

Posted 2015-05-31T20:05:04.640

Reputation: 10 154

1It would be difficult to know if it ever had, wallets don't support logging to that sort of degree so chances are they would just see no money suddenly with no explanation. It's probably unlikely to have happened, there's easier attacks like a finney attack which has been used to great effect in the past. – Anonymous – 2015-06-05T00:20:22.070

@Bitcoin Given that this attack would cost in the neighborhood of five thousand dollars of electricity, I think it would only be used in cases where there was more than five thousand dollars at stake. If that much money disappeared from my wallet, you can bet that I'd investigate. – Nick ODell – 2015-06-05T00:27:27.723

I'm not sure that premise is correct. Assuming an abundance of malice why would you bother spending money on power, you would just compromise some random mining pool and sneak off with a few blocks, just like has happened in the past. Five thousand USD is small stuff in comparison to some of the BTC heists so far, the recent Bitstamp one was in the order of 5 million USD. There's complaints on forums daily about $10k+ disappearing and often no appreciable explanation for it. I definitely think attacks like this unlikely though, there's probably easier hanging fruit. – Anonymous – 2015-06-05T00:39:04.597

Answers

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I run simplecoin.cz|sk|pl|eu bitcoin exchange. We use different wallets and we made 10k+ transactions. We lost some bitcoins. Most of it was human errors. Some bitcoins were lost when transactions took days to confirm during network flooding. We encountered some double spend transactions (which did not confirm)

On other hand we never lost bitcoins when transaction had one or more confirmations.

I'm not sure if spv wallet can be fooled when transaction has confirmation already. We trade 5k$ almost every day, our conclusion is to wait for confirmation and know your customer.

There's also another risk in accepting even very small unconfirmed transaction and spending it to another customer, because like this you create whole tree of double spends which will never confirm, so you lock your funds for couple days until this toxic stuff gets pruned from memory pool. You also need to resend all this transaction again, it's paid by your time and customer happiness in the end.

Pavel Niedoba

Posted 2015-05-31T20:05:04.640

Reputation: 454

Was that an SPV wallet, though? – Nick ODell – 2016-05-03T21:39:51.557

Yes, bitcoinj based – Pavel Niedoba – 2016-05-04T21:34:31.323

Asked: 2015-05-31T20:05:04.640

Viewed: 552 times

Active: 2016-05-03T21:12:17.910