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On 19 August 2014 19:40:39 GMT-04:00, Jeff Garzik <jgar...@bitpay.com> wrote:
>Encryption is of little value if you may deduce the same information
>by observing packet sizes and timings.

That is simply incorrect. The resources required to do that kind of monitoring 
are very high; even the NSA can't pull it off consistently for non-targetted 
operations due to limitations on upstream bandwidth and other resources. 
(remember that many of their taps are non-cooperative ones, obtained by 
breaking into routers at ISP's) This I've confirmed with direct conversation 
with Jacob Applebaum and other Tor devs. Every additional bit of encrypted 
information flowing over the internet increases the work they need to so to 
deanonymize you. This is not unlike how CoinJoin, while not providing 
guaranteed anonymity, makes the job of attackers significantly more difficult 
by creating large amounts of statistical noise. In addition the Bitcoin P2P 
protocol has natural anti-traffic analysis properties due to its asynchronous 
nature.

Re: MITM attacks, again, the resources required to conduct them on a large 
scale instead of passive attacks just don't exist. For instance the NSA has to 
be relatively selective in using them for fear of being detected; being able to 
detect attacks is a huge improvement over the status quo anyway.

Having said that using Tor by default in Bitcoin Core is an even easier way of 
enabling encryption and authentication, and would help protect all Tor users 
from surveillance. The easiest way to do this would be to make the 
Debian/Ubuntu packages depend on Tor, and include a install-time script to 
setup the hidden service. I've verified with the Tor devs that they would 
welcome the additional load on the Tor network that Bitcoin would add.
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