What would happen to bitcoin if someone went ahead with a 51% attack?

[coolbeans94]

The 51% Attack

What is it?

The 51% attack is perhaps the best-known of Bitcoin’s security vulnerabilities and it’s been on our collective radar since day 1. Bitcoin stores its transaction information in database chunks that are collectively referred to as the “blockchain.” As new transactions occur, they go into a new block on the end of the chain. While most of the time, the chain remains one straight line of blocks, on occasion a “fork” happens – two conflicting blocks appear and the network has to decide which one is valid. Each miner votes by continuing to tack new blocks onto the end of whichever block they think is valid – eventually the longest chain wins.

This also means that if I’m clever I can intentionally create two conflicting transactions, one in which I send money to a merchant and one in which I’m sending that same money to an address that I control. If I control more than half of the network’s processing power then I can decide which block ultimately gets accepted as true. Of course the longer back in time I go when creating these conflicting blocks, the more blocks I have to add to the end of my fraudulent chain before anyone accepts it as valid, so I’m pretty limited in how far back I can revise history and the further back I go, the more it costs me. This is the primary reasoning behind transactions not being considered complete until they’ve got 6+ confirmations.

Should I be worried?

For brevity’s sake: no, not really. The 51% attack is the oldest and best-understood attack in all of Bitcoin. Everyone is watching for it, we all know how it’s supposed to work and the “fix” is built right into the client – just wait for your 6 confirmations. Realistically, worrying about the 51% attack is a good indicator of high paranoia levels since it’s so amazingly cost-prohibitive to perform that we’re basically talking about a government focusing the full power of every top-secret ridiculously expensive supercomputer they’ve got at us – especially once some of those fancy new ASIC products start coming online.

-Source: http://codinginmysleep.com/bitcoin-attacks-in-plain-english/

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[franky1]

the perfect solution would be to have moral understanding that ASIC manufacturers wont send too many units out to one person....

..... life isnt perfect

A government/bank/whatelse can just start manufacturing their ASIC, it is not so hard for them.

government are not a threat. they know that 99% of the working population have employment contracts and live under the government rules of employment such as minimum wage in FIAT and tax in FIAT. so honestly, they dont care, bitcoin wont take over, not unless they change their own laws.... if anything it will just work alongside FIAT.

although this second it only requires 700T/hash to 51% (which if these ASIC manufacturers are quoting $15k/Thash) it would cost $10,500,000 to match the general public.

banks know that there are only 3600 coins produced a day which is less then half a million per day. banks make more money then this, trading on forex exchanges in just a few hours. both government and banks understand owning more then 51% makes things pretty much their property and under their control. but by doing so it loses the faith and the value of the general public. so there is no reason to 51% attack bitcoin,because it simply will de value their input.

secondly if governments were to make a reprogrammed client with new rules in their favour. the majority of us, would simply not download it. the same thing goes for them forking the chain during a 51%. the general public will just continue to run the previous versions of QT client and ignore the government version.

if banks were to stay under the threshold of 51% just to mine coins for their christmas bonuses. they would only get 1800 coins a day which equates to the low-mid $200k range per day. meaning it would take well over a month to break even. in that time the general public would have bought up units too making the hash rate increase further making the banks have to get more equipment just to keep a level income.

banks would prefer to spend $10million buying 80,000 coins and controlling the market, knowing if they only make 2.5% pumping and dumping the market daily they can be in instant profit, without spending money on equipments, technicians, storage warehouses, air cooling, electric, beyond the standard computers they use in their current offices.

and if you have ever watched MTGOX when just 1000 coins hits the order wall, then its easy to expect more then 2.5% swing in price using 80k coins.

so get mining out of your heads. banks and governments wont mine for profit or to attempt to ruin bitcoin. they will just buyout the exchange market for alot less money, hassle, risk.

[Gabi]

so I’m pretty limited in how far back I can revise history and the further back I go, the more it costs me. This is the primary reasoning behind transactions not being considered complete until they’ve got 6+ confirmations.

Nonsense, if you manage to do a 51% attack, 6 "confirmations" are totally useless

Realistically, worrying about the 51% attack is a good indicator of high paranoia levels since it’s so amazingly cost-prohibitive to perform that we’re basically talking about a government focusing the full power of every top-secret ridiculously expensive supercomputer they’ve got at us – especially once some of those fancy new ASIC products start coming online

Lol? Supercomputers? Why the hell someone should use supercomputers for the attack?

As i showed, it just take like 10 millions $ or so for the attack, so long for the "amazingly cost prohibitive" and the "focusing the full power of every top secret ridicolously expensive"