All Token Distribution is Flawed — A Primer on Sybil Attacks

2 min readApr 2, 2018

There is a purpose behind Bitcoin‘s distribution using PoW mining and not via an ‘airdrop’ or ‘sale’ by Satoshi and the simple reason is because of Sybil Attacks. What is a Sybil Attack?

“ The Sybil attack in computer security is an attack wherein a reputation system is subverted by forging identities in peer-to-peer networks. It is named after the subject of the book Sybil, a case study of a woman diagnosed with dissociative identity disorder.” — Wikipedia

In other words, ‘airdrops’ and ‘ICOs’ can be attacked by anyone (especially the deployer) in order to secretly give themselves massive amounts of the token. Why? Because you don’t know who owns the Ethereum accounts which recieve the tokens. For example:

Lets say I start a new token called Token X and I do an ICO. During the ICO period, I secretly ‘buy’ half of the tokens from my own ICO, so the Ether I spent goes right back into my own wallet and I get massive amounts of the tokens. That is a big problem.

Next, I start a new token called Token Y and I do an airdrop. During the airdrop, I made a bot that registers hundreds of thousands of accounts to the airdrop (I programmed the airdrop anyways) and so I end up with 70% of the airdropped tokens across thousands of new accounts I control and nobody realizes it.

That is why Proof of Work mined tokens are the only provably fair and fool-proof tokens that exist today. 0xBitcoin is the first example of a fair PoW mined token but others are being built too. As a community we need to educate ourselves on the issue of Sybil attacks and introduce measures to prevent this type of behavior. That is why EIP 918 has been introduced; to provide the only sybil-attack-resistant token distribution method for Ethereum ERC20 tokens.