Bitcoin is raising some interesting questions about the value of currencies. We are intimately familiar with fiat currencies detached from precious metals. The Chinese started the first fiat currency in the 11th century and arguably the West first did it in 1971 when Nixon closed the gold window. (most reserve currencies were pegged with the dollar at the time) To me, gold value seems about as arbitrary as governmental law so the difference doesn't seem big but then again I've lived my entire life within a fiat currency world.
However, bitcoin is backed by the full faith and credit of the laws of mathematics so it is not a fiat currency. It is based in our collective agreement that there exists no reasonable back door to get around certain mathematic tests. We take that and the unfeasibility of a bad actor gaining a quorum on the peer to peer network and taking control of the currency. This could happen if a zero-day exploit was quietly introduced into the codebase that a significant number of peers runs allowing the network to sidestep the mathematical requirement.
Therefore, the value we assign to the currency is not only based in how the math works but our collective assumption that the software the majority of the bitcoin peers run has not been tainted in some way. To do that, I have to be reasonably confident that my Internet routing hasn't been altered, the DNS answer I got when downloading the software wasn't altered, the SSL certificate chain with all of it's assumptions is trustworthy and the initial peers I connect to when starting my client are legitimate. That is a long list of fairly improbable compromises, but with the bitcoin ecosystem passing one billion dollars, perhaps not totally implausible. After all, an attacker just has to compromise one of these elements. I'd suggest DNS might be the lowest hanging fruit here but I haven't fully investigated.
There is another attack vector that might allow quorum on the bitcoin network. Every time there is a significant breakthrough in computational capability, control is disproportionately in the hands of the few front-runners. This has happened a number of times in the currency's history. Initially, all computation was done on CPUs, but fairly quickly people started doing the computationally complex hashing on much faster GPUs on high-end video cards. At that jump, a relatively small number of peers controlled a disproportionate percentage of the computational capacity of the bitcoin network. More recently, FPGA mining again opened up another gap. I think there is still a little bit of a disparity here as FPGAs aren't nearly as popular as GPUs right now. (in fact, the number of CPU miners has only recently started to fall) It is happening again right now as ASIC mining becomes the norm. (see the ASIC products from Butterfly Labs and Avalon as examples) It will happen again, but in a much more massive way when quantum computing becomes practical.
This last case is where I see the biggest possibility for abuse of cryptographically secure systems such as bitcoin. (SSL, ssh, PGP and IPSec too!) Even though bitcoin scales up its difficulty factor to take on these advances in computation capability, the size of the change in the quantum computing jump will be so big that it will open up the largest opportunity ever for a rogue actor to gain quorum on the network. I don't know what the total value of the ecosystem will be at that point, but it is probably a safe bet that it will be significantly larger than it is today.
I can imagine nation states being big contenders here given the likely high initial cost of quantum computing. But large companies and independently wealthy actors might be quicker to pick up on the opportunity and commit to a project like this. Either way, it would be a troubling turn of events. The other vectors (DNS poisoning to run a dark net and zero-day code exploits) are more likely something the smaller actors would target.
So what do you think? Is there something else I'm not mentioning that might alter the trust perceived in the bitcoin network? What do you think is the most likely attack vector against bitcoin? And perhaps most importantly, do you trust bitcoin enough to keep a significant percentage of your wealth as bitcoin?