https://news.ycombinator.com/from?site=patrickcraig.co.uk
For another compression challenge that is still ongoing, try "500000€ Prize for Compressing Human Knowledge" (also known as "Hutter Prize"):
https://news.ycombinator.com/item?id=37502329 - Hutter Prize for compressing human knowledge (2023-09-13, 215 comments)
Next, say I find some predictive model of the data M, where M is composed of N bytes. Furthermore, let us say that the entropy of the dataset under the model is H bytes.
Then, if N + H < D, my model compresses the data.
It doesn't matter if the model is deterministic or probabilistic: a probabilistic model can be used to (losslessly) compress a dataset with entropy coding.
One more argument for compression being equivalent to intelligence: Across many fields of statistical machine learning, there are generalization bounds which have the form:
test error <= train error + model complexity
That is, we don't expect to do any worse on new (test) data, than the sum of the train error and the model complexity (smallest compressed size). Notice that if you interpret the train error as the entropy of the data (i.e. error under a cross entropy loss), then the models which satisfy the statistical generalization bound correspond to those which best compress the data. In other words: the model which produces the shortest description of the data is the one which is expected to generalize best.
I think the other way to read it is that you're fundamentally going to have to choose (by your freedom to control your algorithm's design) which of the maps from (2^|x|) -> (2^|compress(x)|) are the ones that actually end up getting no compression (ie |compress(x)| actually > |x| - bc of pigeonhole principle) and which ones are the ones that do get to be called compressed. So you do have an implied kind of lossiness w.r.t. to what parts of the input domain are actually compressed.
They were lossless last season. :-D
2. A FAQ for the newsgroup is not automatically part of the rules for the challenge.
3. If the entire FAQ is treated as rules text, then the rules directly say you cannot win, and that's not an acceptable way to do rules.
But FYI someone else actually managed to compress that exact same data: https://jasp.net/tjnn/2018/1.xhtml
He obviously knows that. He knows exactly what compression is and that his solution is not it. He showed (successfully) that meeting the challenge as it was worded did not require compression, which the setter of the challenge didn't realize.
If it's a true claim they must have identified some "non-random" aspect of the original data, and then they could have given more info.
Save the sha256 hash of original.dat in compressed.dat. The decompressor cats /dev/random until data of the right size comes out with the correct hash.
Now there are two cases.
1. The reconstructed data is actually equal to original.dat. Challenge won, cash in $5000.
2. The reconstructed data differs from original.dat. It has the same hash though, so you found a collision in sha256. World fame.
In either case, win!
With a big enough file those fractions of a bit add up to a non trivial number of bits. You can be cunning about how you encode your deltas too (next delta makes use of remaining unused bits from previous delta).
I haven't worked through all the details, so it might be in the end result everything rebalances to say no, but I'd like to withhold judgement for the moment.
The challenge (based on expected value) is not to find some compression scheme that will compress 100% or even 50% of files to less than their original size. Instead it's to find any (set of) compression schemes that will compress more than 1/50 = 2% of arbitrary random files to less than their original size. You can construct such a program essentially as they described by asking for a large file size and then searching for a valid decompression program within that file. With standard tools you can make some valid decompression program quite short, which will allow you a reasonable probability that it will appear within a large randomly-generated file.
The cost that you pay for using a compression scheme like this is that where the compression scheme works you'll win some bytes, but in the more common case where it doesn't you'll lose some, even for the simple `cat $1 > original` default decompressor.
Now, a clever contest creator might arbitrarily choose files that win against such decompressors that they can think of, but Mike appears to have not have done so.
There are some formats which search for a valid header anywhere in the file, but then they'd get tripped up by all the mostly-valid headers that don't actually yield a decompressed file.
The problem with comp.compression was always that its Eternal September is new people showing up every week claiming they’ve found a universal compression algorithm that compresses everything - the perpetual motion machine of information theory. Having gotten tired of explaining to people who think they’re fighting “dogma” not the laws of the universe, people start trying to find other ways to make them put up or shut up, so they could have some peace and quiet.
Like sending them a file full of RNG output and wait for them to realize this was their teachable moment.
Winning the challenge - without engaging in out of band bullshit (compressor + output should be the giveaway) doesn’t prove you have found a universal compression algorithm. It only proves the RNG is flawed. Which would be very interesting but not break Shannon.
The problem is compressor + file means “no out of band data” to a reasonable person and we have already established we are dealing with unreasonable people.
Not
> My main motivation was to "out-trick the tricker". I thought the chances of me making any money were very remote.
Nothing in the challenge says anything about doing universal compression. In fact the key point I'm trying to make is that you _don't_ have to make a universal compressor or break entropy to win, instead just find some scheme that makes 2% of random files shorter than the original, even if it makes 98% of files much much longer. The overall entropy is increased. I wouldn't use this for anything else. But it does beat the challenge as stated.
I'd agree that Patrick didn't follow the "spirit" of the challenge or do anything interesting with compression. But in doing this I think he made a good point, which is roughly that you need to be very careful and explicit when posing challenges like this or people are going to use your sloppy wording against you.
The only way to win is to reverse the random number generator used to create the contest file, or to exploit some bias if there is one. But if the file is generated properly, most likely with some CSPRNG, good luck going that route.
The contest creator has to use a random file, any attempt to be clever will actually decrease entropy and may result in the contestant winning.
In that case Mike, the contest creator, may declare the result invalid because you haven't satisfied the intent of the challenge.
Renegadry aside, for those who are more interested in the Information Theory perspective on this:
Kolmogorov complexity is a good teaching tool, but hardly used in engineering practice because it contains serious foot-guns.
One example of defining K complexity(S, M) is the length of the shortest initial tape contents P for a given abstract machine M such that, when M is started on this tape, the machine halts with final tape contents P+S. Obviously, one must be very careful to define things like “initial state”, “input”, “halt”, and “length”, since not all universal machines look like Turing machines at first glance, and the alphabet size must either be consistent for all strings or else appear as an explicit log factor.
Mike’s intuitive understanding was incorrect in two subtle ways:
1. Without specifying the abstract machine M, the K complexity of a string S is not meaningful. For instance, given any S, one may define an abstract machine with a single instruction that prints S, plus other instructions to make M Turing complete. That is, for any string S, there is an M_S such that complexity(S, M_S) = 1 bit. Alternatively, it would be possible to define an abstract machine M_FS that supports filesystem operations. Then the complexity using Patrick’s solution could be made well-defined by measuring the length of the concatenation of the decompressor P with a string describing the initial filesystem state.
2. Even without adversarial examples, and with a particular M specified, uniform random strings’ K complexity is only _tightly concentrated around_ the strings’ length plus a machine-dependent constant. As Patrick points out, for any given string length, some individual string exemplars may have much smaller K complexity; for instance, due to repetition.
What is the distribution of the complexity of a string? Is there some Chernof-like bound?
Weird phrase to hear from a digital carnival scam artist.
If a randomly-generated file happened to contain some redundancy through sheer chance, you could hand-craft a compressor to take advantage of it. This compressor would not work in general for random data, but it could work for this one particular case.
It's a bet worth taking, because the payoff, 50:1 ($5,000 to $100), is pretty good. Play the game 50 times and you might get a file you could compress.
The challenge, then, would be for the person offering the bet to generate a really random file that contained no such redundancy. That might not be easy.
A plausible "decompressor" is at least, say, 30 or 100 bytes, so the random file needs to have 30 bytes less entropy than you expected, which happens with probability X where X << 1/50. Sum over the whole domain of reasonable decompressors, and you still don't get there.
This argument could do with more rigor, but I think it's correct. Give me 100 million to 1 odds, though, and I'll take my chances trying to brute force a compressor.
For example, the all-zeros file is a member of the set of all random 3 megabyte files, and it would certainly be possible to compress that, if by great good fortune you were lucky enough to receive it - albeit something that is unlikely to ever happen in the possible lifetime of the universe, given current physical theories.
Is it possible to quantify this idea of a 'weak' file more accurately?
Unfortunately I can't find the article I'm describing here, maybe someone else can? It was a long time ago so I might be misrepresenting it slightly.
Presume this compressor guarantees the output will always be at least one byte smaller (with the exception of the impossible to find input)
So just keep running your data in a loop through the compressor. If you start with a 1MB file, it will take a maximum of a million iterations until the output shrinks down to zero bytes, which is the smallest possible file. Record how many iterations it too.
You can now extract your file by feeding a zero byte file into the decompressor and running the same number of iterations. Which You can now store every 1MB (or smaller) file in the world in just 20 bits.... But that would means there are only 1 million possible 1MB files?
Even if you put some minimum output size limitation on the compressor, say it can't produce any file less than 512 bits, the same argument applies. It's just that the numbers get bigger.
But as stated, what you said is not possible. To compress by a single byte, only 1/256 files can be compressible, or you'd have multiple different inputs compressing down to the same output.
You basically split the file every time you encounter a specific character, and your compressor just combines all files it finds with the character you split by. If you split at every „X“ Char which might occur 1000 times in the file, the compressor only needs a small script which joins all files and puts an „X“ between them, which is less than 1000 bytes. The „trick“ is storing the location of the Xs you removed in the file sizes of the individual files.
The trick is the missing character is static, in the 'decompressor'. It's inserted between every segment which was trimmed to end where that character existed in the original.dat file. The numbers at the end of each segment file correspond to the segment number, as bourne shells increment numbers. It does not handle errors or validate the output.
It does fulfill the discussed terms of the challenge, which fail to include any reference to an external set of rules.
Of course Patrick’s solution occurred to me immediately once he started talking about splitting up the file. :)
Then I got to wondering if it would be possible to compress a large enough file and save a few bytes, in the spirit of what Mike actually wanted. For instance, if you tried encrypting with a bunch of random keys, you’ll find some such that the result ends with n 0s (say), so then your result could be something like encrypted + key + n. Typically you’d expect to find that the length of the encryption key would be roughly the length of the number of 0s, so you wouldn’t actually net any savings. But I think if you searched long enough, you might “get lucky” and find a key that generated more 0s then the length of the key, so you could theoretically win the challenge. Of course you’d have to somehow embed a program which could decrypt and reassemble everything in a tiny amount of space, but it still doesn’t seem impossible like Mike seems to suggest. Perhaps just requires an intractable amount of computing power. :)
I’m not sure if any of that made sense. I think I’m using the wrong terms for things.
That sometimes the smallest decompressor (including the key, in your example) will result in overall less space, but usually it will result in more (because the smallest key that generates 10 zeros happens to be 14 digits long, etc.).
And so ultimately the more interesting question becomes about those probabilities, and therefore what is the right entry price for the bet to be even?
To some extent, this resembles the approach of "hiding the data in the decompressor". But the key difference here is that you can make it less obvious by selecting a particular programming language capable of universal computation, and it is the choice of language that encodes the missing data. For example, suppose we have ~17k programming languages to choose from—the language selection itself encodes about 14 bits (log2(17000)) of information.
If there are m bits of truly random data to compress and n choices of programming languages capable of universal computation, then as n/m approaches infinity, the probability of at least one language being capable of compressing an arbitrary string approaches 1. This ratio is likely unrealistically large for any amount of random data more than a few bits in length.
There's also the additional caveat that we're assuming the set of compressible strings is algorithmically independent for each choice of UTM. This certainly isn't the case. The invariance theorem states that ∀x|K_U(x) - K_V(x)| < c for UTMs U and V, where K is Kolmogorov complexity and c is a constant that depends only on U and V. So in our case, c is effectively the size of the largest minimal transpiler between any two programming languages that we have to choose from, and I'd imagine c is quite small.
Oh, and this all requires computing the Kolmogorov complexity of a string of random data. Which we can't, because that's uncomputable.
Nevertheless it's an interesting thought experiment. I'm curious what the smallest value of m is such that we could realistically compress a random string of length 2^m given the available programming languages out there. Unfortunately, I imagine it's probably like 6 bits, and no one is going to give you an award for compressing 6 bits of random data.
UTM provides no gain.
It’s a moot point anyway as most programming languages are capable of universal computation.
Again, I’m not claiming we can compress random data. I’m claiming we can (sometimes) make it look like we can compress random data by selecting a specific programming language from one of many possibilities. This selection itself constitutes the “missing” information.
Let s be an algorithmically random string relative to UTM A. Is it the case that there exists some pathological UTM S, such that K(s|S) (the Kolmogorov complexity of s relative to S) is arbitrarily small? I.e. the blank print statement of S produces s. And there always exists such an S for any s?
Is there some way of defining a meta-complexity measure, the complexity of some UTM without a reference UTM? It seems intuitive that although some pathological UTM might exist that can "compress" whichever string you have, its construction appears very unnatural. Is there some way of formalizing this "naturalness"?
Yes. It’s not even that hard to create. Just take a standard UTM and perform a branching “if” statement to check if the input is the string of interest before executing any other instructions.
> Is there some way of defining a meta-complexity measure, the complexity of some UTM without a reference UTM?
Haha, not that anyone knows of. This is one of the issues with Solomonoff induction as well. Which UTM do we pick to make our predictions? If no UTM is privileged over any other, then some will necessarily give very bad predictions. Averaged over all possible induction problems, no single UTM can be said to be superior to the others either. Solomonoff wrote an interesting article about this predicament a while ago.
(A lot of people will point to the constant offset of Kolmogorov complexity due to choice of UTM as though it somehow trivializes the issue. It does not. That constant is not like the constant in time complexity which is usually safe to ignore. In the case of Solomonoff induction, it totally changes the probability distribution over possible outcomes.)
Kolmogorov complexity is useless as an objective measure of complexity.
> It's not my fault that a file system uses up more space storing the same amount of data in two files rather than a single file.
The decompression program needs to be constrained to itself and the singular file to decompress and can not utilise anything other than basic operating system functions for the purpose of reading and writing the constrained files. Any bytes the program accesses otherwise can be used as part of the total count.
It's very hard to constrain this without some form of chest being possiblemespecially if you have some years to set it up.
I also thought about this, but when thinking more about the argument by the challenge creator, I understood that the data in the OS doesn’t help you.
If you’re given a file with 100 bits, there are 2^100 possibilities. If you want to compress to 99 bits, there are only 2^99 possible compressed outputs. So when generating and trying to compress every 100 bit file, you’re not going to be able to compress half of them. The external data doesn’t help you unless you get to modify it after receiving the file to compress. If you can get patched merged into the Linux kernel, you could use the data, but if the data is fixed, you can’t reference the data with less data than the original file (for some cases atleast).
Edit: actually, when thinking about it: you could actually use the OS as another few bits of out of band information you get for free, which makes it possible again. If you have 8 different OS to choose from, you could use their differences to compress any file. At least theoretically, the 3 bits you gain practically probably aren’t enough to make a difference.
curl ftp://path/to/original.dat
The $5000 Compression Challenge - https://news.ycombinator.com/item?id=9163782 - March 2015 (168 comments)
The $5000 Compression Challenge - https://news.ycombinator.com/item?id=5025211 - Jan 2013 (61 comments)
The $5000 Compression Challenge - https://news.ycombinator.com/item?id=4616704 - Oct 2012 (119 comments)
Let's step back and consider a different perspective that builds on some key mathematical principles:
Every binary file, regardless of its content or randomness, can be viewed as representing one specific large number. This isn't controversial - it's just a different way of looking at the data.
Many large numbers can be expressed more efficiently using mathematical notation (e.g., 10^100 is far more compact than writing out 1 followed by 100 zeros). Furthermore, this efficiency advantage tends to increase with larger numbers.
These numerical conversions are perfectly lossless and reversible. We can go from binary to decimal and back without losing any information.
This naturally leads to some interesting questions: What happens to our usual compression impossibility proofs when we consider perfect numerical transformations rather than traditional pattern matching? Could mathematical expressions capture patterns that aren't obvious in binary form? As numbers get larger, does the potential for more efficient mathematical representation increase?
The KDP patent explores some of these ideas in depth. I'm not claiming this solves all compression challenges - but I think it highlights how fresh perspectives and mathematical approaches might reveal new ways of thinking about data representation.
Would be curious to hear others' thoughts, especially from those with expertise in number theory or information theory. How do these mathematical properties interact with our traditional understanding of compression limits?
Likewise this challenge would have been stronger if the requirement was to compress two provided arbitrary files :P
Top 10 repeated byte patterns and their counts:
Bytes: 7eda16, Count: 3
Bytes: 65b1a4, Count: 3
Bytes: 71d745, Count: 3
Bytes: b72808, Count: 2
Bytes: 60e3ee, Count: 2
Bytes: 6e9152, Count: 2
Bytes: 26446b, Count: 2
Bytes: e4a05a, Count: 2
Bytes: 67f86a, Count: 2
Bytes: 92c487, Count: 2
Since the most common three byte sequence only appears 3 times, it seems like a non-starter. No longer byte sequences appeared more than twice either.I generated the random digits with this:
dd if=/dev/random of=random.bin bs=1024 count=1440Which is basically what he’s done here. He’s cheating by marking the location of the repeating sequence using unique files, rather than some other actually more efficient location system.
This is a fun discussion! I think it helps to make compression feel more approachable for armchair enthusiasts.
The sophistication of my compression understanding at the time extended to lempel-ziv and huffman and well... that's about it. So I was like, “Okay, I’m not going to create the world’s best compression method on a whim.” So I started thinking: if I can’t compress the file, maybe I can just fetch it from somewhere else.
The first thing I tried was writing a program that searches online by uploading the file onto a public FTP. From there, I could fetch it. Simple enough, right?
Well, here’s the issue with that: there’s no guarantee I’d even have internet connectivity. That’s probably the first thing he’d block.
So, he gives us the file. I think it was something like 10 MB, and when I looked through it, the entropy was high. Like, really high. Standard compression tools like 7Z or rar wanted NOTHING to do with it.
Then I started thinking again. Maybe this guy’s running all the submissions back-to-back. He’s probably processing them in sequence because he’s got tons of entries coming in. So I thought: if I can’t download the file, maybe there's a chance it's already on the machine from somebody's previous simulation - I can find it somewhere on the hard drive. My program might not be a great decompression system, but you know what it is? A fantastic file search.
So, I threw together a program that tree searched the entire disk with a simple checksum to verify I’d found the exact right file. If it matched, I’d just copy the file into the current directory and say, “I’m done.” - though if it found the file too quickly it would continue idling for a while so as to avoid suspicion. (I was also banking on the fact that someone else’s program might’ve run before mine, leaving the file lying around somewhere for me to grab.)
Of course, I couldn’t make this look too obvious. I mean, imagine submitting a tiny C++ program claiming it could compress a 10 MB file into just a few kilobytes. He’d immediately know it was fake.
So, I padded the compressed binary, adding a bunch of random hexadecimal and binary junk to bulk it up to around 5 MB. It was still phenomenal—better than any other method on the market for this type of file—but at least it seemed somewhat plausible. I mean, maybe I’d "discovered" some revolutionary new compression algorithm or something and smashed the weissman score.
The contest went on for nearly a month, and the guy had a leaderboard tracking scores. Most people were hovering just slightly above standard compression rates—around 9 MB. Nothing groundbreaking, though.
So, it’s a Friday night. I finish the program, pack it all up, and send it off. Then I go to bed. Needless to say, I woke up with a quite an excited response from my professor.
Edit: I loved this (minus the missing ending). Really sucked me in with the level of detail.
There's a game called Skedaddle, and a Usenet group, rec.players.skedaddle. A well-known player, Mike, offers a $5000 challenge for a feat, called the four-froot-hoot, which he believes is simply impossible to achieve.
A fellow skedaddling enthusiast, Patrick, takes him up on the challenge, some baseline terms are negotiated, and Patrick presents his putative four-froot-hoot. Some might say it meet the terms of the challenge.
Mike objects, he says "you're a rat, Pat! look at the FAQ, Jack, that's not even skedaddle" and indeed, the F.A.Q. of rec.players.skedaddle does indeed state in plain language, that it ain't even skedaddle so it can't be a four-froot-hoot.
You make a bet in the club, you play by the club rules.
The "it ain't even skedaddle" aspect is just incorrect. Compression is a term of art, and it is very general. Saying that "hiding" things in the filesystem is cheating is no different than saying that using the previous frame to reduce the size of the following frame in a video compressor is cheating. Yes, you do have to be careful of exactly what your inputs are, but there is great value in taking advantage of additional forms of input even if they might be initially unexpected.
Besides, Mike's smugness deserves some comeuppance.
Additionally Mike's behavior during the exchange makes him feel all the more untrustworthy. His condescension, playing the fool and intentionally misinterpreting the test to "win", remarks made that seem specifically placed to needle and aggravate Pat knowing there's no way to force him to pay up, and threats of accusations of fraud were a show of really poor character. At the least it would've been more of a class act (even if he never paid out) to admit that Pat outplayed him due to naivety and a self inflated sense of cleverness on Mike's part, to admit that he is not familiar with betting culture and got in over his head.
> With this offer, you can tune your algorithm to my data.
One can generate a 1GB file or 10GB file. It is highly likely that there is some form of a repeatable pattern in there to shave off 50-100 bytes by sliding window search.
Then the decompressor is essentially - at this index, expand this pattern. The compressed file excludes the range of pattern.
One may not always get such a pattern, but on multiple tries it’s very feasible. Payout just needs one win in 50 tries.
You could generate a 100GB file. The bigger the file the higher the chance of repeating pattern.
The challenge is won if compressed_file + decompressor is less one byte than original file.
One could have a self executing decompressor to save some file overhead bytes.
One argument: if your method worked, then we could compress nearly any file. This violates the pigeonhole principle.
Another example: for a 4GB file you’d need roughly a 4 byte integer to specify where the repeat started and where the second was, for 8 bytes. Then you need a length byte. Now you need a repeated 10+ bytes sequence to make this compress anything. There are 256^10=2^80 possible such 10 bytes sequence sequences, and only ~2^32 of them in a 4 gb file. So the odds of a repeated are around 1 in 2^50.
Tweak methods and estimate as you wish. It fails.
On top of this, it takes more data to store the address of the repeating byte pattern than the original pattern does. Therefore you are creating more data than you are saving.
If it was this easy then hundreds of people would have taken on the challenge and won the £5k.
In practice, I wonder what size of file we're talking about that would result in net compression on random data 50% of the time?
I have no intuition whether it's 1 GB, 1 TB, 1 PB, or beyond.
maximum compression = indelineable from random data
Now lets look at how modern compression actually: works. Images, movies, text-documents, audio files... there is fundamental --structure-- in all this data. In text it might be using only a certain character range, a certain lexical word list, and so on. There may be geometric information in images and movies that could be turned into code to drastically cut down file size. With audio -- you can sample it and discard what you don't need. And so on and so fourth. Structure. But how do you apply any of these methods to random data? There is no structure, you can't sample it, reduce it, simplify it... Every bit has meaning.
So please, dear human thinking about compression of random data. It is an insane waste of intellectual effort. It's impossible. Don't do it. I made the same mistake (and setup vast amounts of HPC to work on algorithms.) COMPLETE. Waste of time.
The crux of the ongoing debate over the post has to do with the ambiguity of the stated requirements.
For there to be any rational discussion, you need to have proper unique definitions for what is being communicated. Without a definition (identity) no system of truth seeking will provide a definitive truth.
Most notably, "compression" has many different meanings currently in practical use. For example many people use the word compression and simply mean that the uncompressed size is more than the compressed size; lossy vs lossless doesn't matter when its good enough, all that matters is its been reduced, and an example of that might be H264 video.
Other more rigorous individuals will use it to mean entropy encoding, which has a strict definition, part of which is lossless, and in these cases they often view Shannon's theorems as gospel, and at that point they often stop thinking and may not try to sharpen their teeth on a seemingly impossible task.
These theorems are often very nuanced, with the bounds very theoretical or still undiscovered, though still seemingly correct. When someone is told something is impossible, they don't fully apply themselves to try to find a solution. Its a worn path that leads nowhere, or so they imagine.
This mindset of learned helplessness prevents a nuanced intuitive understanding of such problems and any advances stagnate. People take the impossibility at face value, and overgeneralize it (without that nuanced understanding), this is fallacy and it can be very difficult to recognize it when there is no simple way to refute it on its face.
Here is something to consider. Shannon's source coding theorem relies on the average uncertainty of probabilities as a measure of entropy (information). Some exploration is needed to understand what makes this true, or where it fails. It has been my experience that only a very few exceptional people ever attempt this process.
The main question that jumps out in my mind since compression has been a thing I've been interested in for years; is, can an average entropy in statistics tell us accurately whether this is true in systems with probabilities and distributions that are a mix of mathematical chaos but also contain regularity within their domains? Statistics can be unwieldy beasts, and act as regular sources of misunderstanding and falsehood without a very rigorous approach.
For a similar problem, people may find this article particularly relevant with regards to the chaotic 3-body problem in astrophysics.
https://www.aanda.org/articles/aa/full_html/2024/09/aa49862-...
It's not interesting to see people play word games with each other in the HN comments, so why is it interesting to see this kind of disingenuous behavior? Trolls have always existed. I don't get what's interesting about it.
Putting up the initial challenge, especially with the accompanying commentary, is just as much trolling as that.
Some volunteer puts in time maintaining something and makes a claim that is obviously correct and - most likely in jest - promises cash to anyone who shows it to be wrong. Then some rules lawyer decides that he's better than the unpaid volunteer and does his best to humiliate him, just for the lulz.
Is it any surprise that volunteers rarely stick around for long?
Nowadays lots of companies run bug bounty programs where if you find a bug and report it responsibly you can get real cash. This is a valuable service. And I'm positive that these programs get gobs of submissions from people trying to see if they can find a bug in the rules, rather than in the software. If the people vetting the submissions to such programs weren't getting paid for it, I'm sure they would quit in disgust.
I'd agree that if this was a free entry situation he'd be fully within his rights turning down trolls, rules lawyers, etc. for the same reasons you mentioned. Trying to scam a well intentioned but naive bounty post would be sad behavior. But this guy was clearly taking money on a position he never intended to pay out on and not losing any sleep over it.
Any time you say that something can't be done, you will attract people who say "I have found a way to do it!" Even more so if you have a proof that it can't be done. This phenomenon is far older than the internet; the term "morbus cyclometricus" suggests its origins in antiquity.
The FAQ maintainer was not looking to profit off fools. They wanted to chase them off; after spending several pages explaining why the task is impossible it is tedious to explain to a crank (the term generally used for such people, as described by Underwood Dudley) that they are in fact wrong, the task is impossible, and here's why. It's easier to say "Pay me if you want to waste me time" and reasonably assume that no one will do it.
It's similar in spirit to the James Randi challenge. You're not going to win it, because you're not going to prove that math or science is wrong. But the JREF had as its goal to expose the charlatans, and had the time and resources to devote to the task. A newsgroup FAQ maintainer has neither the time nor the resources. So they shouldn't have volunteered? Then you have no volunteers. Hooray for the internet.
Now yes, every once in a great while someone will come along and legitimately do something that was claimed un-doable; the obvious case is George Dantzig. But that case also shows that any scientist or mathematician who can be shown an error in something thought impossible will be thrilled at the discovery, because that is new knowledge, which is the whole point. Poking a hole in the rules of the contest, finding a weasel way around them, is not something interesting at all.
Suppose if you shave 1 bit off of a sample bit stream you win and you lose if that fails. Your compressor looks at the first 2 bits and if it starts 11 it starts with 1 and otherwise it starts 0 then the bit stream. Now you have a 1 in 4 chance to compress a random string by 1 bit and. A 3 in 4 chance of making it longer by 1 bit.
It’s ultimately not about compression but what odds are worth it.