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Author Topic: 50% attack for ~800 BTC after block reward halving  (Read 5234 times)
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January 30, 2015, 04:30:40 PM

I don't think the costs will be quite as low as you expect. Even if the cost of the miners themselves drops to 0, there could still be significant other costs involved with bringing that hardware back online. If a company owns its facility and is solvent at the time it wants to shut off, the attacker might just be able to buy it out and seamlessly change over to a different fork. That's not guaranteed to happen though, many of the failed companies might end up like Cointerra where they have not paid their bills and the hosting company is in the possession of the equipment. Even if they own their own buildings and the equipment is ready to turn back on, you might have pushback from the power utility if the previous owner has stuck them with an unpaid 6 figure power bill.

No numbers to back it up, but I would guess to costs related with gaining control of half the network hashrate would be significantly higher than the actual market value of the XXX PH/s you're buying.
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February 02, 2015, 05:43:16 PM

I still didn't get something on that link , why do they mean by "An attacker that controls more than 50% of the network's computing power" , what does it mean ? Shocked
Means he have a lot a lot a lot of Miners and he have more then 51% ? don't get it

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February 02, 2015, 05:59:16 PM

... You are assuming that the price will drop to zero because there will be a sudden increase in supply.  You are ignoring the fact that the attacker is creating a sudden increase in demand.  ...

That is the important fact. Satoshi's system has a lot of incentives and disincentives that make it logical to game. For example, people sometimes are concerned about some actor "buying all the coins cheap". Of course the more aggressively one buys, the more expensive each coin becomes.

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February 02, 2015, 06:19:38 PM

You are pretty close with your analysis but there are a few practical flaws which you are overlooking.

One, you have to assume that the miners that are switched off are also being sold.

Two, the switched off miners that make up the total 50% of the entire mining force are allocated in one place of at least geographically near to each other.

Three, the 'attacker' will be buying all the switched off miners from wherever they maybe located in the world - which is practically impossible.

This single purposed functionality of ASIC hashers have always been concerning to me as they become nothing more than paperweights once their mining days are over, at least with older FPGA units you could repurpose them for other encryption and decryption tasks.

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Dread Pirate Roberts
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February 02, 2015, 06:25:18 PM

i think thats really hard to believe when DoS attack has been begin
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February 03, 2015, 12:53:54 AM

lol good luck at 50%ing BTC need much power for that and at least 50% of intir network hash and then some. People tried and failed many times before and more hash coming on would be a mission imposable to do such an attack unless you had a big massive amount of people to follow it but highly doubtful. Maybe the government and NSA might able pull something off like that but still I doubt would happen as Bitcoin getting very big now.

Take another look at the premises here.
At reward halving, when the reward comprises >99% of the mining income, if price is stable or declining...  then we may see a lot of miners idling equip.
Thus if reward halves, and idle equipment is roughly 50% of the equipment before the reward halving, it may be rented and an attack launched.

If the premise conditions are met, it would not take a massive amount of people, or a government.  It would merely require a great concentration of wealth.  If other resources are added to this (force of law, hacking, massive data centers, governments, etc)  That just makes it easier to reach the threshold.

One method to defend against this, major commercial stakeholders (exchanges, etc) ought require more confirmations around this time.  Many exchanges are also limiting transactions, and requiring identifications so even if it is attempted and successful, the malicious miners may not 'get away' with it.

Other alt coins have more advanced coinbase reward systems that smoothly adjust rather than halving to accommodate for this.

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February 03, 2015, 07:10:06 AM

You're premise that miners can be expected to idle their machines when the reward halves is wrong.

With miners needing to sell most of 3600 new coins per day, the only thing that keeps the price of bitcoin even relatively stable at a given price point is a roughly equal rate of new money flowing in. When the price holds for a stretch you can bet the reason is that at least one whale feels the current price can be sustained by the incidental rate of incoming new money plus their own willingness to buy at that level. They view the need to buy mined bitcoin each day as an obligation, since failure to do so will cost them even more in terms of a falling price.

Anyone who's wrestled with the decision of how much more money to invest in Bitcoin to support the current price level should have realized that there's a balance to be struck between how many bitcoins are mined each day and how many bitcoins are purchased by new money each day.

The long price decline since Q4 2013 shows that bitcoin holders would rather be pushing $0.8M of new money into bitcoin each day than $4M (if the price were to go back to $1000). Think of it as the savings rate of the true bitcoin believers of which there are probably between 250,000 and 500,000 globally at the moment ( Most of these people are limited in how much new money they can pump into bitcoin each day by their ability to earn non-bitcoin money each day.

Back to your premise: When the block reward halves, all other things remaining equal, you should expect the price to double. More specifically, if the price at the time of the halving truly reflects the savings rate of bitcoin holders, then the price should double.

Why? Because the savings rate is the sustainable rate of new money flowing in to buy mined bitcoins. The same amount of new money after the halving will buy half as many bitcoin at twice the price. Miners should just hold off selling until the price rises to that level. They should absolutely NOT turn off their equipment.

Of course when the price level is rising during a span of excessive exuberance, or falling due to a contagion of anxiety, what will determine the new price level once the dust settles is the new savings rate of the new/remaining pool of bitcoin holding believers.

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