In this short post I want to set out my case for the moral justifiability of 51% attacks against proof of work cryptocurrencies. In the past, a 51% attack was a theoretical construct that most people didn´t seem to think would be practically achievable or lucrative. This has now changed, as hashpower can be rented on sites like Nicehash and Mining Rig Rentals for a few hours at a time. The attack delivers the attacker two prominent opportunities:
-You can orphan blocks of ¨legitimate¨ miners. This essentially means that whatever work was produced by legitimate miners during your attack became worthless. Mine a secret chain of two hours worth of blocks, release it and you orphaned 2 hours worth of blocks by your competitors. By the time most of the miners have noticed their blocks were orphaned in an attack, their nodes will have been automatically mining on your own chain for a while and it will be too late for them to do anything about it. The amount of money they lost would be equivalent to the amount you had to spend to produce your chain. Because mining is an industry with tight margins, the economic impact on these miners can be very big. The cost may be sufficient in case of a very long attack, to persuade them to quit their endeavor and get a real job.
-The more important opportunity is that you´re able to double spend your coins. This is potentially, incredibly lucrative. How lucrative it is tends to depend primarily on the inflation rate of a cryptocurrency. A low inflation rate means relatively little ¨work¨ is done to maintain the security of the system. A high inflation rate on the other hand, turns the cryptocurrency into a very poor long-term investment. As a consequence, most cryptocurrencies face declining inflation rates, that delay the problem of their ultimately unsustainability into the future. The bank of international settlements explains this issue here
When it comes to the moral justification of a 51% attack, we first have to ask ourselves why proof of work is morally unjustifiable. There are two main reasons for this:
-Proof of work has an enormous environmental impact, that ensures future generations will have to deal with the dramatic consequences of climate change. There is no proper justification for this environmental impact, as it delivers no clear benefits over existing payment systems other than the ability to carry out morally unjustifiable actions like blackmail.
-Proof of work is fundamentally unsustainable, because of the economic burden it places on participants in cryptocurrency schemes. Cryptocurrencies can´t produce wealth out of thin air. The people who get rich from a cryptocurrency becomes rich, due to the fact that other people step in later. In this sense we´re dealing with a pyramid scheme, but the difference from regular pyramid schemes lies in the fact that huge sums of wealth are not merely redistributed, but destroyed
, to sustain the scheme. The cost of the work to sustain the scheme is bigger than you might expect, because the reality is that relatively little money has entered bitcoin. JP Morgan claims that for the crypto assets at large, a fiat amplifier of 117.5 is present, as a purported $2 billion in net inflow pushed Bitcoin’s market capitalization from $15 billion to $250 billion. You have to consider that the Digiconomist estimates that $2.6 billion dollar leaves the Bitcoin scheme on an annual basis, in the form of mining costs to sustain Bitcoin. The vast majority of retail customers who entered this scheme ended up losing money from it. In some cases this lead to suicides.
The fact that proof of work is morally unjustifiable doesn´t directly lead to a moral justification for a 51% attack. After all a sane society would use government intervention to eliminate the decentralized ponzi schemes that are cryptocurrencies. There are a few things that need to be considered however:
-Governments have so far failed in their responsibility to address the cryptocurrency schemes. Instead you tend to see officials insist that proof of work might suck and most cryptocurrency is a scam, but ¨blockchain technology¨ will somehow change the world for the better. Most libertarians who saw these schemes emerge insisted that it´s stupid to participate in them because the government would eventually ban them and round up the people who participated in them. This didn´t happen because of the logistical difficulty of suppressing these schemes (anyone with an internet connection can set one up) as well as the fact that suppressing them would lend credence to the anti-government anarcho-capitalist ideology on which these schemes are based. Goverments might say ¨these schemes facilitate crime, ruin the environment and redistribute wealth from naive individuals to scammers¨, but anarcho-capitalists would insist that governments have grown so tyrannical that they want to ban you from exchanging numbers on computers.
-Because cryptocurrency is fundamentally an online social arrangement, governments have very limited influence over the phenomenon. Binance seeks to become a stateless organization, not subject to the jurisdiction of any particular government. Just as with regular money laundering and tax evasion that hides in small nations that can earn huge sums of money by facilitating these practises, governments are dependent on the actions of individuals to address these practices. Whistleblowers released the panama papers and the tax evasion by German individuals through Swiss bank accounts. Through such individuals, the phenomenon could be properly addressed. In a similar manner, cryptocurrency schemes will need to be addressed through the actions of individuals who recognize the damage these schemes cause to the fabric of society.
-The very nature of a 51% attack means that it primarily punishes those who set up and facilitate the cryptocurrency scheme in the first place. The miners who pollute our environment to satiate their own greed are bankrupted by the fact that their blocks are orphaned. The exchange operators are bankrupted due to double-spend attacks against the scams that they facilitate. When this happens, the cryptocurrency in question should lose value, which then destroys the incentive to devote huge sums of electricity to it.
Finally, there´s the question of whether 51% attacks are viable as a response to cryptocurrency. There´s the obvious problem you run into, that the biggest and oldest scams are the most difficult to shut down. In addition, cryptocurrencies that fell victim to an attack tend to move towards a checkpoint system. However, there are a few things that need to be considered here:
-51% attacks against small cryptocurrencies might not have a huge impact, but their benefit is nonetheless apparent. Most of the new scams don´t require participants to mine, instead the new schemes generally depend on ¨staking¨. If people had not engage in 51% attacks, the environmental impact would have been even bigger now.
-51% attacks against currencies that implement checkpointing are not impossible
, if the checkpoints are decentrally produced. What happens in that case is a chain split, as long as the hostile chain is released at the right time. This would mean that different exchanges may get stuck on different forks, which would still allow people to double spend their cryptocurrency.
-There are other attacks that can be used against proof of work cryptocurrencies. The most important one is the block withholding attack. It´s possible for people who dislike a cryptocurrency to join a pool and to start mining. However, whenever the miner finds a valid solution that would produce a block, he fails to share the solution with the pool. This costs money for the pool operator, but it can be lucrative for the actor if he also operates a competing pool himself. In the best case it leads to miners moving to his pool, which then potentially allows him to execute a 51% attack against the cryptocurrency.
-It´s possible to put up a 51% attack bounty, allowing others to do the work for you. This works as following. You make transaction A : 100 bitcoin to exchange X, for a fee of 0.001 BTC. Once this transaction has been included in a block, you immediately broadcast a conflicting transaction with another node: You´ŕe sending those 100 bitcoin to your own wallet, but you´re also including a 50 bitcoin fee for the miners. The miners now have a strong incentive to disregard the valid chain and to start mining a new chain on an older block that can still include your conflicting transaction. Provided that pool operators are rational economic agents, they should grab the opportunity.
-Selfish mining in combination with a Sybil attack allows someone to eclipse the rest of the network, while controlling less than 51% of the hashrate. Your malicious nodes will simply refuse to propagante blocks of your competitors, thereby giving you more time to release your own block. Selfish mining will always be possible with 33% of the hashrate and as far as I can tell there are no pathways known currently to make the scheme impossible for people with 25% of the hashrate. This potentially makes a 51% attacks lucrative without having to carry out double-spend attacks against exchanges. Although double spending is a form of theft, it´s not clear to me whether a selfish mining attack would get you into legal trouble or not.
The dreaded 51% attack is a morally justifiable and potentially lucrative solution to the Nakamoto scheme
Bitcoin Price Prediction: The Future Of Bitcoin. The Saxo Bank thinks Bitcoin will increase a lot this year. Not quite as much as John McAfee does, but still a lot. Saxo’s Bitcoin prediction 2020: they say the Bitcoin price will rise above $60,000 in 2020! This isn’t all they say, though. They also say the Bitcoin price will then crash and lose more than 98% of its value! That’s quite a ... Satoshi/Bitcoin Price. There are over 1,500 coins and tokens available in the cryptocurrency market, and a majority of them cannot be acquired using USD or any fiat currencies. The only way to acquire the majority of these coins is through buying Bitcoin (BTC) first and then converting your BTC to any of these alternative coins (altcoins). Hence, Bitcoin is the base currency for all ... Binance users can now buy Bitcoin with practically all of the fiat currencies in existence; Binance, which is one of the leading cryptocurrency exchanges in the world, has partnered with the peer-to-peer crypto exchange Paxful. Via this partnership, Binance users can now use 167 different fiat currencies to buy Bitcoin. Bitcoin’s hashrate is nearing ATHs, most blocks mined in a day since 2019 as “weak” Bitcoin miners return. Bitcoin miners are having a field day; if they are taking advantage of the negative adjusted difficulty, that is. The network’s protocol jumped over the weekend to over 110 terahashes per second (Th/S) at of June 8, just 10 Th/S ... 4 weeks Bitcoin Mining Difficulty Hits a New Record, Estimated to Rise Further Cryptonews . The difficulty of mining bitcoin (BTC) has just reached another all-time high, after rising more than expected during today’s difficulty adjustment. Meanwhile, the network’s hashrate is still below its all-time high from back in July. Using futures market to determine the value of the BCH: If reliable sources published realistic estimates of what BCH will trade for in the future once trading begins, use this estimate as the value of your BCH. Pros/cons - futures markets are, in theory, pretty accurate. However, if they are volatile/subject to manipulation, they may provide an incorrect estimate of the true value of BCH. It ... Binance is looking to consolidate more bitcoin mining hashrate to its pool in Russia and the Central Asia region.. The world’s largest crypto exchange is deploying a physical server node for its ... The global Bitcoin Depository Market analysis report 2020 is supposedly an expert in addition to comprehensive assessment on the current state of this Bitcoin Depository business. The research covers all the crucial info on the holistic summary of the entire world Bitcoin Depository marketplace. Additionally, it offers the international Bitcoin Depository market share, access to new chances ... Bitcoin Difficulty Adjustment Estimate - Bitcoin Obv Bitcoin Difficulty Adjustment Estimate Canadian Bank Bitcoin How To Make Bitcoin Free Bitcoincharts is the world's leading provider for financial and technical data related to the Bitcoin network. It provides news, markets, price charts and more. Bitcoin Charts. Blocks: 481823: Total BTC: 16.523M: Difficulty: 923233068449: Estimated: 887736944047 in 1 blks: Network total: 7983858.406 Thash/s: Blocks/hour: 7.25 / 497 s: Home; Bitcoin; Markets; Charts; About. Nov 6, 2020 23:12:25 ...
Binance Stop Loss Tutorial and How to Buy IOTA on Binance ... Estimating FUTURE VALUE Of Your Coins - MARKET CAP Explained! - Duration: 4:29. Bitcoin for Beginners 37,615 views. 4:29. How to buy ... Bitcoin Cash's halving, that occurs every 210,000 blocks or four years, came over a month before Bitcoin's because of its initial problem with its difficulty adjustment algorithm in 2017. ****ALWAYS check with professional tax service providers and legal professionals before you buy, sell or trade cryptos! Thanks for watching, God Bless and have an awesome one! #binance #bnb #crypto Estimating FUTURE VALUE Of Your Coins - MARKET CAP Explained! - Duration: 4:29. Bitcoin for Beginners 37,126 views. 4:29. Pomp Podcast #256: Billionaire Chamath Palihapitiya on How To Invest in ... When to hold BTC, When to hold Alts, and When to be in Stable Coin, using Bitcoin Dominance and Bitcoin Price. Head over to the website https://www.introtocryptos.ca , put your email address in to ... I am not tax lawyer or CPA please consult them before doing your own taxes. This for education and what I think this supposed to be filed. This for education and what I think this supposed to be ... Since the inheritance tax is 40%, and almost 500 thousand bitcoins received at the current exchange rate “pull” about $ 5 billion, the winners of litigation will have to pay the treasury about ...