Bitcoin's 10000 TH network is extremely vulnerable

[newguy05]

I was just looking at the bitcoin difficulty chart and realized how small this network really is despite the extreme difficulty increases over the last 2 years.  Lets get to it:

1) Currently difficulty is at ~10,000 TH
2) Single 1 TH mining box cost ~$1000 to manufacture (reality is much less than 1k, but for easy calculation lets use $1k)
3) To destroy the bitcoin network you need to control 51% of the network.
4) To bring 10,000 TH (assume evildoer wants to be thorough) online it will cost:  10,000 * $1000 = $10million,  add on another $10millon for R&D,  $20million total.
5) Goldman saches makes ~$30million a day in NET revenue (same with most other banks)
6) It will cost a SINGLE bank HALF day's net revenue to wipe bitcoin out - less than their office supply budget.

We are just an ant...not even ant, a microscopic organism in the financial world.  If bitcoin becomes too big or start hurting those bank's bottomline (transaction fees), all they need to do is sneeze and bitcoin is gone. And there is no regulation/anti-competitive laws to protect bitcoin, it is completely de-regulated at this point.

Heck it doesnt even have to be the banks, even a small hedge fund or single person with some cash can wipe out bitcoin in a single instance.

The other ironic thing is the market cap of bitcoin is around $12billion right now compared to the $20million to destroy it. It shows how far removed from reality everything is, i dont think people really thought this through. If bitcoin can be shorted, someone can just short it, then destroy the network for riskfree win.

The difficulty needs to increase by 1000X at the minimum ($10 billion) to provide some bare minimum security to bitcoin's network

Dont agree with what I said about the current state of bitcoin? then provide your reasons, i love to be proven wrong. But just cant find a fault in my numbers.

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[Barek]

This has always been an issue and was much cheaper in the past.

I am sure it has been discussed before.

I suppose it would be possible to implement some sort of trust system for nodes. Devs and pool operators would need to work together.

[newguy05]

This has always been an issue and was much cheaper in the past.

I am sure it has been discussed before.

I suppose it would be possible to implement some sort of trust system for nodes. Devs and pool operators would need to work together.

one of the key point not to be missed in my previous post is the cost difference.  If the marketcap is at $1million or 10million and it cost $20million to destroy the network, noone would bother.  But the marketcap now is around $12billion and it still cost only $20million to wipe it all out, that is the discrepancy. Dont think the financial world took notice of bitcoin yet, if they did, they would figure this out easily and bitcoin will be in trouble.

[EcuaMobi]

This is definitely a problem.

But I think if someone had 10,000 TH on his own, he'd prefer to mine Bitcoin and get half of every single coin produced, right?
So it's possible to destroy the network but most people wouldn't do it. There's a far better way to use their hashing power.

[Barek]

It is likely to happen and it will be interesting to see how the community reacts.

The ever rising difficulty helps. This is also why slow growth is healthy, because it allows infrastructure to be built.

[BitcoinBarrel]

The more hashing power you are producing the more expensive it costs when you pass a certain level of stability.

I think if it could be done they would have done it, no point in waiting this long.

[vqp]

I understand that kind of attack from a government, specially one with enough opacity in their decisions and technical skills.

Corporations are much more complex. Somebody will have to justify the money spent, decisions are to be made, corporation decisionmakers will argue is an illegal move (it certainly is if you use the hash power for a double spend), other drones will suggest other uses for the money. Is not so easy to propose something like this,at least today.

An individual can do it but it will not be rational, since he can earn much more money by simply mining with that beast.

[mprep]

This is definitely a problem.

But I think if someone had 10,000 TH on his own, he'd prefer to mine Bitcoin and get half of every single coin produced, right?
So it's possible to destroy the network but most people wouldn't do it. There's a far better way to use their hashing power.

Yeah, some owners of banks might even be mining secretly and investing their cash in BTC. Besides if Bitcoin was destroyed, people woild pass on to another cryptocoin, if it gets destroyed - onto another, and so on, so forth.

[newguy05]

This is definitely a problem.

But I think if someone had 10,000 TH on his own, he'd prefer to mine Bitcoin and get half of every single coin produced, right?
So it's possible to destroy the network but most people wouldn't do it. There's a far better way to use their hashing power.

I quoted above post but this is a generic response to all the posts. Banks, credit cards and other parties of interest dont care about making pennies earning those bitcoins.  We are talking about hundreds of billions of revenue at risk for those companies. If bitcoin really catches on as we all hope, then credit cards, wire transfers, atm fees, etc.. will all be at risk.  It will take just 1 company to say i can drop $20mil to wipe this out or face losing tens of billions over the years. What do you think they will do?  It's all about money, they will wipe out entire country's economy and people's lives to make money, think they care about bitcoin?

The only saving grace as i said is bitcoin is not popular right now and not been used, currently it is not hurting the financial firms bottomline. 

The only thing we can hope is a continued rapid increase in difficulty while bitcoin slowly (keyword slow) gain popularity so by the time wall street take notice, the network is so large it will take hundreds of billions to destroy it.

As i said, i dont think people thought this whole thing through.

[Bigeyeone]

This is definitely a problem.

But I think if someone had 10,000 TH on his own, he'd prefer to mine Bitcoin and get half of every single coin produced, right?
So it's possible to destroy the network but most people wouldn't do it. There's a far better way to use their hashing power.

Yeah, some owners of banks might even be mining secretly and investing their cash in BTC. Besides if Bitcoin was destroyed, people woild pass on to another cryptocoin, if it gets destroyed - onto another, and so on, so forth.

I still think their is some competion in the banking and hedgefund world, I think there are a bunch of bank CEO's thinking like, "How can we make money with bitcoin ? can we become a bitcoin bank ? can we maybe fractional reserve bank bitcoin ? ) I dont think the financial sectora as a  whole is against bitcoin, im sure some wanna embrace it, for they own profit naturally.

[coinrevo]

Interesting analysis, however your numbers are way off and the logic quite incorrect. Read some posts by core devs to get a better understanding w.r.t to attack vectors, mining policies etc. Even if there would an equivalent of money invested to give you certainty to destroy the network. Why would somebody waste say 50 million dollars? No institution can simply do this. Although GS is extremely powerful, they can't just do what they want.

A private person could do it, for example in the future a serious Alt-Coin competitor with interest in destroy one coin. That would be the much more likely scenario of an attack, but still extremely improbable, at least for now.

[newguy05]

Interesting analysis, however your numbers are way off and the logic quite incorrect. Read some posts by core devs to get a better understanding w.r.t to attack vectors, mining policies etc. Even if there would an equivalent of money invested to give you certainty to destroy the network. Why would somebody waste say 50 million dollars? No institution can simply do this. A private person could do it, for example in the future a serious Alt-Coin competitor with interest in destroy one coin. That would be the much more likely scenario of an attack, but still extremely improbable, at least for now.

i am happy to hear why my numbers are way off and logic quite incorrect, just saying that doesnt mean much.

And $20mil or $50mil is nothing to those companies budgets, i know because i worked in one for 10+ years. You dont even need to goto the top management to have this kind of money approved. if it hurts their profit, it will be gone, simple.  So far bitcoin has not because it is not popular yet.

[RenegadeMind]

In one talk Andreas Antonopoulos says that it would cost in excess of $400 million. $20 million seems low.

[nairb131]

This is definitely a problem.

But I think if someone had 10,000 TH on his own, he'd prefer to mine Bitcoin and get half of every single coin produced, right?
So it's possible to destroy the network but most people wouldn't do it. There's a far better way to use their hashing power.

Yeah, some owners of banks might even be mining secretly and investing their cash in BTC. Besides if Bitcoin was destroyed, people woild pass on to another cryptocoin, if it gets destroyed - onto another, and so on, so forth.

I still think their is some competion in the banking and hedgefund world, I think there are a bunch of bank CEO's thinking like, "How can we make money with bitcoin ? can we become a bitcoin bank ? can we maybe fractional reserve bank bitcoin ? ) I dont think the financial sectora as a  whole is against bitcoin, im sure some wanna embrace it, for they own profit naturally.

I agree I doubt they would destroy BTC when it is another avenue to be exploited for them to make money.

[droptable]

Banks, credit cards and other parties of interest dont care about making pennies earning those bitcoins. 

We are talking about hundreds of billions of revenue at risk for those companies. If bitcoin really catches on as we all hope, then credit cards, wire transfers, atm fees, etc.. will all be at risk.

your concernes are valid.
the money they make out of fees is much more than what they could make out of bitcoin at the moment.

BUT

dont tread the financial system (feemakers) as a homogeneus group.
they dont work together if they can attac each other.

so

for the industry as a single organism it would be apropriate to attac bitcoin
but for a singel bank (etc) it could be much better to go into bitcoin.

from the point of view of a bank there is no difference between runing an atm-banking-switch-thingy and operating a (self-owned) pool.
its about beeing a middle man and collecting fees.

and the (recent) struckture of mining via (expensive!) specialised hardware gives them the oportunity to be an middle man.

//sry, i´m a legasthenic AND non-native-speaker

[nuno12345]

You prove your point but..

How can a 51% attack destroy bitcoin, i mean for good? it could affect the network and price will follow but to effectively end it for good they would need to keep the attack for 24/7, fork the network, price will follow, users loose credibility in bitcoin but the background(technical details) of bitcoin is still there and in theory it still works and its still a viable way of exchanging currency, just needs more security.

What about other alts and updates?
If bitcoin crashes almost every other coin will be doomed but there are some alternative cryptos that are not vulnerable to 51% attacks.
Everyone knows about 51% attacks and its proved it can successfully fork the network but we also know that practically every coin is open source and updates have been released in the past, so bitcoin gets attacked, next day there will be an update introducing PoS or something else.

?

[coinrevo]

Well, learn what an attack is. Even if you have 51% of the hashing power, that doesn't mean you can destroy the network. If the attack was clearly defined, then there would be a reboot, i.e. a new Cryptocurrency which fixes the issue. If not, people would probably lose faith. I believe every issue will be fixed, even if there would be a reset like this. After all bitcoin is still flagged experimental. Nobody is saying it can't happen.

To suggest that anyone in a bank can drop 50 million to take action which a) is illegal and b) not in their direct interest is simply ludicrous. Yes, there is a lot of corruption in banks, but there are limits.

[lnternet]

market cap is just a measure. it bears no relation to any real life value. saying you can attack a 10 billion market cap with a 10 million investment compares two unrelated values; both are in USD but they are still not comparable. bitcoin has a market cap of 10b, but that does not mean that it is worth 10b.

[mprep]

This is definitely a problem.

But I think if someone had 10,000 TH on his own, he'd prefer to mine Bitcoin and get half of every single coin produced, right?
So it's possible to destroy the network but most people wouldn't do it. There's a far better way to use their hashing power.

Yeah, some owners of banks might even be mining secretly and investing their cash in BTC. Besides if Bitcoin was destroyed, people woild pass on to another cryptocoin, if it gets destroyed - onto another, and so on, so forth.

I still think their is some competion in the banking and hedgefund world, I think there are a bunch of bank CEO's thinking like, "How can we make money with bitcoin ? can we become a bitcoin bank ? can we maybe fractional reserve bank bitcoin ? ) I dont think the financial sectora as a  whole is against bitcoin, im sure some wanna embrace it, for they own profit naturally.

I agree I doubt they would destroy BTC when it is another avenue to be exploited for them to make money.

Well bank owners own banks not to help people, that's for sure. Wasn't the flaws of the banking system one of the reasons cryptocurrency was born?

[cryptozark]

And what is the fear exactly?  That big banks will spend a few tens or hundreds of millions of dollars so they can doublespend on Satoshi Dice?  Besides, maybe the mining pools could get together very quickly to balance out the network.