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.

[CoinCidental]

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.

i agree
they could have killed it last year  for 10% of the every rising cost to kill it  now

anyway ,btc is  a fly on the windscreen of the fast car  that is the  global economy

[lnternet]

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?

they make a chain which includes no tx. they will have the longest chain, so your block which has tx in it doesn't get into the chain.

Besides, maybe the mining pools could get together very quickly to balance out the network.

you don't seem to understand the meaning of 51%

[droptable]

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?

they make a chain which includes no tx. they will have the longest chain, so your block which has tx in it doesn't get into the chain.

Besides, maybe the mining pools could get together very quickly to balance out the network.

you don't seem to understand the meaning of 51%

you can stop the blockchain from including meaningfull transactions.
you just stop putting in transactions in your new found blocks.

so it will take forever for a transaction to be transfared.
the intrinsic use of bitcoin would be destroyed.

//yes, if the poolowners and the comunity work togehter they could fight back, eg
// if your new-found-block deosnt cointains x transactions it is not valid, etc...

[Gabi]

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.

Please learn what a 51% attack is before posting.

[jaked]

If bankers had a fraction of the faith/expectations/awareness in BTC as people here do, they'd be very concerned by it.
Fortunately, they don't.

By the time BTC becomes a real threat to them, it'll be too late for them to stop it.


BTW, you can't buy 10,000TH without raising the ASIC/GPU prices significantly.
Even if you develop it silently, your suppliers will raise their prices.

Also, putting additional hash power into the network will raise the difficulty.
Putting up a 51% attack will require much more than $10m.

[CoinCidental]

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?

they make a chain which includes no tx. they will have the longest chain, so your block which has tx in it doesn't get into the chain.

Besides, maybe the mining pools could get together very quickly to balance out the network.

you don't seem to understand the meaning of 51%

its not that simple
if i arrive today with my 51%  i cant  negate everyone else and the history
of btc

[newguy05]

many misconceptions, addressing 2 points...

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.

It bears all the relations to real life value.  I give you a simpler example - lets say apple computers is worth 500 billion usd bookvalue.  But there is an otc contract that allow you to buy(destroy) the company for 5 billion, what do you think will happen? 

-----------------------

The notion that if bitcoin is gone it will be quickly replaced by another alternative cryptocurrency and everyone goes on their merry way is patently false. Virtual currency is nothing but the faith of the community supporting it. It is a very difficult task for another virtual currency to re-achieve the same level of trust, faith, and popularity of bitcoin if it is gone. Again creating the network/currency is easy, but having people using it is not.

Same as saying, if all the gold disappeared tomorrow, it's easy to just use copper as replacement, everyone will just accept it and treat copper as gold....

[newguy05]

its not that simple
if i arrive today with my 51%  i cant  negate everyone else and the history
of btc

no i think you can, the 51% is a one touch loss, once hit it's game over. History is fine, but everything at that moment cannot be trusted, when that happens the network/trust collapses on itself.

[CoinCidental]

the blockchain isnt going to re-write itself
any effort to fork it or whatever may be ok until its noticed (rapidly id imagine )
even then they dont stand to gain the entire network under my understanding

id be a lot more worried with sha -256 being cracked but the posibilites of that
seem to be quite far away ........

i could be wrong ......but i dont think so

im sure someone with better understanding than me will tel you why a sudden 51%
would not wipe btc from the face of the world or leave all the coins in "evil hands " etc

[Gabi]

Yes you are wrong. A 51% attack=bitcoin is useless.

[newguy05]

the blockchain isnt going to re-write itself
any effort to fork it or whatever may be ok until its noticed (rapidly id imagine )
even then they dont stand to gain the entire network under my understanding

id be a lot more worried with sha -256 being cracked but the posibilites of that
seem to be quite far away ........

i could be wrong ......but i dont think so

im sure someone with better understanding than me will tel you why a sudden 51%
would not wipe btc from the face of the world or leave all the coins in "evil hands " etc

no i am not saying the whole thing just drops dead the second you have 51% control, but at that point it is pretty much game over a slow death.  I am sure whoever does it will not just put exactly 51%, they would do something large like 3-5x the network. So for the good guys trying to counter and correct, they will need to bring online just as much hash power in short amount of time, which isnt going to happen.  Yeah if someone has the same 3-5x network power at standby, then as soon as detected it can be corrected.  But that's almost never going to happen.

But that's not really my point, 51%, 100%, 200%, 400% hardware, that's all chump changes. My point is the network is extremely vulnerable right now from companies or resourceful individuals who wants to kill it. They havent because bitcoin isnt big enough to affect their bottomline..yet.

[kendog77]

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.

You're analysis is flawed and $20 million estimate is low for a number of reasons:

1.) In order for someone to pull this off, they would need $20 million worth of mining hardware today. If they start now, it will be months before they can bring the hardware online, at which time the difficulty will be much higher. In less than 5 days, the difficulty will go up another 25% so they will need $25 million worth of hardware.

2.) The analysis only covers the manufacturing and development costs, and ignores the cost of labor to set everything up, power, and facilities to run 10,000 TH. The ignored costs are not small.

3.) If someone really could bring 10,000 TH online today for $20,000,000, that setup would earn almost $3,000,000 in bitcoin per day. It doesn't make any sense for someone to spend $20,000,000 to destroy something that would earn them $3,000,000 per day.

4.) If Bitcoin is destroyed, I have little doubt that users will switch to a non SSA-256 coin like Litecoin. Some other crypto that doesn't contain the flaw would take over, so anyone trying to destroy crypto would end up playing whack-a-mole and waste millions of dollars.

5.) If the user was malicious, I suspect they would have millions of dollars worth of liability and end up getting sued into oblivion. Can you imagine how much negative publicity a company would get for even trying to destroy Bitcoin?

[bittymymitty]

Can't see a financial service company doing this, but definitely can see a Government sponsored org looking into this.  China, US, or even the intelligence branch of a tiny little foreign nation could sponsor this attack and overrun the system.  There's almost no way of resolving it, if equipment gets too expensive, tiny home-based miners would stop mining and only large coops would be in the game, that would also lead to 51% vulnerability.  Difficulty will rise, but cost/hash will fall at the same rate, which keeps the cost of 51% attack relatively constant.  China has been cracking down lately, that recent ban on mining tutorials and equipment is concerning..

[gbianchi]

here they give really higher 51% attack cost:
http://www.coinometrics.com/bitcoin/brix

[runam0k]

Surely people would see this coming a mile off. You don't just bring 51% of the network online overnight.

Consider the massive losses existing miners, ASIC manufactures and Bitcoin users would face. I suspect there would be a concerted effort worldwide to increase hash rate. I'd definitely plug in my USB Erupter.

Is identifying and attacking the miner an option (relevant nodes or IP addresses)?

[toknormal]

There's always Power PC.

That's what Power PC was invented for - exactly to address this 51% issue that hangs around the neck of proof of work coins. Since it's a proof of stake coin it's far less vulnerable - just make sure you've got at least as much Power PC as you have Bitcoin and you'll be ok if the rollover ever happens.

[BeepBeep2]

There's always Power PC.

That's what Power PC was invented for - exactly to address this 51% issue that hangs around the neck of proof of work coins. Since it's a proof of stake coin it's far less vulnerable - just make sure you've got at least as much Power PC as you have Bitcoin and you'll be ok if the rollover ever happens.

You surely mean peercoin, and not IBM Power PC micro-architecture-
http://en.wikipedia.org/wiki/Peercoin

[toknormal]

You surely mean peercoin, and not IBM Power PC micro-architecture

  Sorry, I can't resist calling it that. Lived with that abbreviation for so many years it's tattooed on my brain.

(I'm actually on a private crusade to rename the coin     )

[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?

they make a chain which includes no tx. they will have the longest chain, so your block which has tx in it doesn't get into the chain.

Besides, maybe the mining pools could get together very quickly to balance out the network.

you don't seem to understand the meaning of 51%

Sorry.  I was rushing out the door and didn't get to elaborate.

Miners of *any* cryptocurrency would have vested interest in keeping bitcoin alive as it is the posterchild of crypto currency and an attack on bitcoin would cause confidence in all cryptocurrencies to take a HUGE hit, so much in the same way that mining pools and ASIC providers currently limit themselves from taking over too much of the network, the hashing power currently being used to mine alts would flock to bitcoin to try to balance things out, and that combined hashing power could balance out the hashing power of some outside attacker such as a government or big banking.  I don't mean in 1 big pool that would itself be over 51%, but basically I'm just stating the hash power reserves exist in the alts.

Of course you can't force people to switch their hashing power, but it seems like it would be in their best interest to do so to maintain the integrity of crypto as a whole.  

[lnternet]

Miners of *any* cryptocurrency would have vested interest in keeping bitcoin alive as it is the posterchild of crypto currency and an attack on bitcoin would cause confidence in all cryptocurrencies to take a HUGE hit, so much in the same way that mining pools and ASIC providers currently limit themselves from taking over too much of the network, the hashing power currently being used to mine alts would flock to bitcoin to try to balance things out.

I couldn't have guessed you meant that

It's a fair point, but I don't think the total alt-hashrate is that significant? If there was an attack on BTC of this kind Im sure it wouldn't be 1) obvious and  2) gradual and 3) close in terms of hashrate.

1) If I'm trying to become the 50%+ hast rate owner, I do so by slowly, by adding nodes legitimately. I may buy a mining pool or two, or just gain access to them. Then just wait for the right moment to change the protocol I use.

2) Once I have enough hast rate, I'm not releasing a bit day by day, so people notice empty blocks or a growing orphaned chain that someone keeps building. I suddenly change from normal mining to destructive mining.

3) I won't attack with 51%. I will attack with 55% or 60%, so even if everyone quickly goes to max hash by mining on CPU and switches from alts, I still keep over 50%.

[johnyj]

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.

1. No one can get 10,000 such mining boxes manufactured in 3 months, and it is very likely in 3 months the difficulty will rise another 10 times

2. Even if someone manufactured 10K such mining boxes, they need a HUGE site to setup those boxes, and 10MW power supply at least, many cooling towers...

3. Combine 1 and 2, anyone who tried to do this will most likely end up with commanding 5% of the network hash power after 3 months with a huge cost

4. Someone might want to manufacture 100K such boxes to stay ahead of the curve, but then the scale of the site will rise to another astonishing level and they might need a small nuclear power plant to power all those ASICs and cooling towers, all these could take years to build

5. Finally, even if someone successfully commanded 60% of hash power, what he actually can do is very limited. He won't be able to affect existing hodlers' coin, just make the future transactions less trustworthy, so once people find out, they will stop transactions and hold their coins and wait for the situation to resolve

[alexeft]

Current network power is ~11500 Th.
To 50% this one would need ~3800 pieces of the latest announced knc miner at ~$10k each, a total cost of ~$40 mil
just for hashing machinery.

If the difficulty continues to rise by 25% each time, in one year the cost to 50% would be ~$8.5 billion.
In 2 years it would be ~$1.79 trillion.

Admittedly, the cost to 50% bitcoin looks too low right now but I think it can be easily explained by the fact
that we are only a few months in the era of asics. Given time, the picture will be totally different.

[LiteCoinGuy]

http://www.coinometrics.com/bitcoin/brix

[Gabi]

here they give really higher 51% attack cost:
http://www.coinometrics.com/bitcoin/brix

That website is epic wrong. Yes i have read their "assumptions" but these definitely does not justify such a high cost.

If the difficulty continues to rise by 25% each time, in one year the cost to 50% would be ~$8.5 billion.
In 2 years it would be ~$1.79 trillion.

Or maybe not. Do you realize that difficulty is rising because much better hardware is being released and NOT because more people invest? We moved from GPU to lower performance ASIC and now moving to higher performance ASIC so difficulty is skyrocketing, but it is exactly like when we moved from cpu to gpu mining. Same investment but much higher difficulty, because the hardware was different.

[suprememilo]

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.

1. No one can get 10,000 such mining boxes manufactured in 3 months, and it is very likely in 3 months the difficulty will rise another 10 times

Intel or another semiconductor company could easily do it.

[newguy05]

many companies can easily do it, all you need is a data center and a few thousands blades.  Those banks have dozens of data centers alone just for their high frequency trading, this is like buying some office supply for them. Just need to get the asic chip designed, then crank out the units, install in a data center, turn it on at once. boom...

[johnyj]

here they give really higher 51% attack cost:
http://www.coinometrics.com/bitcoin/brix

That website is epic wrong. Yes i have read their "assumptions" but these definitely does not justify such a high cost.

If the difficulty continues to rise by 25% each time, in one year the cost to 50% would be ~$8.5 billion.
In 2 years it would be ~$1.79 trillion.

Or maybe not. Do you realize that difficulty is rising because much better hardware is being released and NOT because more people invest? We moved from GPU to lower performance ASIC and now moving to higher performance ASIC so difficulty is skyrocketing, but it is exactly like when we moved from cpu to gpu mining. Same investment but much higher difficulty, because the hardware was different.

There are definitely much more miners joining the game

My investment on ASIC mining rigs have increased by 10x comparing to GPU era, but my mining income has shrunk to 1/10 of GPU era. I don't think that everyone else increased their investment by 100x, more likely to be 10x more people joining the mining game with 10x more investment

[runam0k]

many companies can easily do it, all you need is a data center and a few thousands blades.  Those banks have dozens of data centers alone just for their high frequency trading, this is like buying some office supply for them. Just need to get the asic chip designed, then crank out the units, install in a data center, turn it on at once. boom...

Sure, once GS wakes up to the fact Bitcoin is a threat to its business, it will destroy Bitcoin from one of its data centres.

Guess I'll believe it when I see it.

[johnyj]

many companies can easily do it, all you need is a data center and a few thousands blades.  Those banks have dozens of data centers alone just for their high frequency trading, this is like buying some office supply for them. Just need to get the asic chip designed, then crank out the units, install in a data center, turn it on at once. boom...

It will take them years to build such data center, and the power consumption is the biggest issue. Most of today's ASIC device manufacturers' hosting service suffered from power supply and cooling capacity for the site and could not expand their capacity above certain thread

For example that cloud hashing company in iceland, I guess they are only capable of maintaining hundreds of rigs

[e521]

I agree with above, this could be done but it will require too much effort and especially time.
I am not sure how many miners are involved nowadays but if we switch CPUs and GPUs back to BTC I think we can go up a few TH

There are many other ways to destroy bitcoin just with a few words, rather than 51% attack (or 60% if you want that extra power)

[JohnsonRobinson]

...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.

Have to disagree.  50 million is absolute peanuts to these guys.  They dish this out in bonuses each year.  Fed is printing 84 Billion each month and according the Max Keiser, this is expected to go to over 300 Billion with the Bernanke's successor coming on board...Janet Yellen.  

Also, it's anything but a waste if it wipes out something that threatens their business(es), which are worth much more than that.

Question is, since cryptos are certainly here to stay, what's the next biggest coin that solves this?  Peercoin?

[Lauda]

You're assuming that one can get them all UP in the same time, or before the difficulty adjusts. No.

[Bansheroom]

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.

No fault in the numbers...perhaps something protects bitcoin you never thought of...

I dont know if 10000 TH are availabe to buy right now, i dont think so.
How much TH in Hardware is produced each day and how much and fast can a single company/person aquire of it withtout accelerating the bitcoin-hype too much?

Anyway if you manage this, i assume the community switches all services to litecoin, you have then to buy the new and expensive Scrypt-ASICS (and perhaps AMD) just to see the community switch to Quark or whatever (still?) rich person/company cant compute.

[Realpra]

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.

I suggested a trust filter before.

Possible trust filter algorithm:
1. A full node only accepts a block if ONE of the PAST 50-100 blocks were on its "trusted miner" list.
2. Miners could sign their blocks in different ways without requiring total compliance or a protocol change of any kind.

Result:
If one bad actor 51% attacks the network and prevents all transactions, nodes with trust filter enabled will STILL require some competitors blocks to be allowed leading to the 51% denial of service attack to FAIL.

Similarily rewriting block history far back with your own blocks only would fail.

[dyseac]

If the US government wanted to take bitcoin down, why waste $30mill doing so. They can just declare all aspects of bitcoin usage / trade illegal with severe jailtime. With their influence they could then convince all other western institutionalized countries to do the same thus removing the value of the currency.

Much easier than actually "destroying" it - I mean what's the point of that. People using it for illegal activities will just create another coin. or jump from Bitcoin to Litecoin to Dogecoin etc..

I think they're working out a way to make $30 mill from it rather than spend $30 mill destroying it

besides, how many coins did the FBI confiscate from Silkroad? why would they want to throw that value out the door? !

[drewster]

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.

I want to make sure this is super clear:

ZZZZZZZZZZZZZZZZZZZZZZZZZZZZzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzz..............

[proton]

It seems to me that for any bank or profit-driven entity that can invest significantly in Bitcoin mining, it would be better that Bitcoins appreciate as opposed to being made worthless.

Let's suppose by investing 50000 BTC (~$40M as of Jan 2014), I can get 51% of the total hashing power. This should give me 3600 BTC a day.  Sure, I would have electricity costs, but these should be a fraction, my income should be in the order of say 2000 BTC a day.

I can then recover my investment in a few months (even with accelerated complexity & cost) and the rest would be pure profit in Bitcoins.  In this case, I would prefer that Bitcoin appreciates in value and thus I get great returns with my initial investment.

Of course, it would be a different conclusion when a group (or more likely to be a group governments than corporations) decides first the Bitcoin network should be destroyed, rather than them making profit/loss decisions on the new investment.  But, in that case, we should consider that BTC network would respond to this attack in some fashion as well to protect the worth of network. 
   

[kalus]

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.

You're analysis is flawed and $20 million estimate is low for a number of reasons:

1.) In order for someone to pull this off, they would need $20 million worth of mining hardware today. If they start now, it will be months before they can bring the hardware online, at which time the difficulty will be much higher. In less than 5 days, the difficulty will go up another 25% so they will need $25 million worth of hardware.

2.) The analysis only covers the manufacturing and development costs, and ignores the cost of labor to set everything up, power, and facilities to run 10,000 TH. The ignored costs are not small.

3.) If someone really could bring 10,000 TH online today for $20,000,000, that setup would earn almost $3,000,000 in bitcoin per day. It doesn't make any sense for someone to spend $20,000,000 to destroy something that would earn them $3,000,000 per day.

4.) If Bitcoin is destroyed, I have little doubt that users will switch to a non SSA-256 coin like Litecoin. Some other crypto that doesn't contain the flaw would take over, so anyone trying to destroy crypto would end up playing whack-a-mole and waste millions of dollars.

5.) If the user was malicious, I suspect they would have millions of dollars worth of liability and end up getting sued into oblivion. Can you imagine how much negative publicity a company would get for even trying to destroy Bitcoin?

------------------cut thread here ---------------------

[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.

You're analysis is flawed and $20 million estimate is low for a number of reasons:

1.) In order for someone to pull this off, they would need $20 million worth of mining hardware today. If they start now, it will be months before they can bring the hardware online, at which time the difficulty will be much higher. In less than 5 days, the difficulty will go up another 25% so they will need $25 million worth of hardware.

2.) The analysis only covers the manufacturing and development costs, and ignores the cost of labor to set everything up, power, and facilities to run 10,000 TH. The ignored costs are not small.

3.) If someone really could bring 10,000 TH online today for $20,000,000, that setup would earn almost $3,000,000 in bitcoin per day. It doesn't make any sense for someone to spend $20,000,000 to destroy something that would earn them $3,000,000 per day.

4.) If Bitcoin is destroyed, I have little doubt that users will switch to a non SSA-256 coin like Litecoin. Some other crypto that doesn't contain the flaw would take over, so anyone trying to destroy crypto would end up playing whack-a-mole and waste millions of dollars.

5.) If the user was malicious, I suspect they would have millions of dollars worth of liability and end up getting sued into oblivion. Can you imagine how much negative publicity a company would get for even trying to destroy Bitcoin?

------------------cut thread here ---------------------

There are actually some good responses to find fault in my logic, but the response you quoted is actually one of the worst (no offense to the poster), every single point is just flat out wrong.

Understand spending 20 or 50 million to bring 10-50k TH online is nothing in the real business world, we are not talking BFL or Avalon here. Lookup how much a single sp500 bank makes in revenue in a day, lookup how many hardware/chips apple/Foxconn/tsmc can dump out in a day.  Did those BFL/Avalon scams really conditioned the community to think mass producing asic boxes is difficult?

Understand the corps don't give a shit about mining 3600 or whatever btc a day to make a few million $, lookup how much they make in transaction fees, wire fees, credit card fees. All will be gone if btc fulfill its intended purpose.

Also understand you can replace 1 currency network with another, but to actually have people trust and support the new network, is extremely difficult. See replace gold with copper analogy earlier.

Finally understand there is no liability, implied to otherwise. Btc is not legal tender under any country including us. There is no regulation nor law to prevent company or person to destroy it.

As I said only reason none bothered is because it is not popular enough to affect their bottom line yet. Difficulty needs to catch up - at minimum another 1000x increase before it becomes popular, otherwise there will be trouble.

[lumierre]

It's bound to happen that total mining hardware cost:BTC market cap ratio is going to continue decrease as the rewards from mining get lower. Security will get lower and lower as rewards to mining taper. It's a fact that not most people look at. If Bitcoin does keep a constant  mining hardware cost:BTC market cap ratio until block rewards reach close to 0, the transaction fees will be much much higher than today (Heck, it's already expensive today). That's where Proof-Of-Stake coins such as Peercoin come in. It's quite an innovation not really taken seriously. It's nice to see brand new coded cryptocurrencies realizing this.

[kendog77]

Right now, I'm more concerned about ghash.io controlling ~40% of the network.

As long as people keep overpaying for hash power from cex.io, they can keep expanding their farm at an alarming rate.

https://blockchain.info/pools?timespan=24hrs

[mprep]

Right now, I'm more concerned about ghash.io controlling ~40% of the network.

As long as people keep overpaying for hash power from cex.io, they can keep expanding their farm at an alarming rate.

https://blockchain.info/pools?timespan=24hrs

Went to the link... damn, this might get out of hand if the hashrate of ghash.io keeps increasing.

[kendog77]

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.

You're analysis is flawed and $20 million estimate is low for a number of reasons:

1.) In order for someone to pull this off, they would need $20 million worth of mining hardware today. If they start now, it will be months before they can bring the hardware online, at which time the difficulty will be much higher. In less than 5 days, the difficulty will go up another 25% so they will need $25 million worth of hardware.

2.) The analysis only covers the manufacturing and development costs, and ignores the cost of labor to set everything up, power, and facilities to run 10,000 TH. The ignored costs are not small.

3.) If someone really could bring 10,000 TH online today for $20,000,000, that setup would earn almost $3,000,000 in bitcoin per day. It doesn't make any sense for someone to spend $20,000,000 to destroy something that would earn them $3,000,000 per day.

4.) If Bitcoin is destroyed, I have little doubt that users will switch to a non SSA-256 coin like Litecoin. Some other crypto that doesn't contain the flaw would take over, so anyone trying to destroy crypto would end up playing whack-a-mole and waste millions of dollars.

5.) If the user was malicious, I suspect they would have millions of dollars worth of liability and end up getting sued into oblivion. Can you imagine how much negative publicity a company would get for even trying to destroy Bitcoin?

------------------cut thread here ---------------------

There are actually some good responses to find fault in my logic, but the response you quoted is actually one of the worst (no offense to the poster), every single point is just flat out wrong.

Understand spending 20 or 50 million to bring 10-50k TH online is nothing in the real business world, we are not talking BFL or Avalon here. Lookup how much a single sp500 bank makes in revenue in a day, lookup how many hardware/chips apple/Foxconn/tsmc can dump out in a day.  Did those BFL/Avalon scams really conditioned the community to think mass producing asic boxes is difficult?

Understand the corps don't give a shit about mining 3600 or whatever btc a day to make a few million $, lookup how much they make in transaction fees, wire fees, credit card fees. All will be gone if btc fulfill its intended purpose.

Also understand you can replace 1 currency network with another, but to actually have people trust and support the new network, is extremely difficult. See replace gold with copper analogy earlier.

Finally understand there is no liability, implied to otherwise. Btc is not legal tender under any country including us. There is no regulation nor law to prevent company or person to destroy it.

As I said only reason none bothered is because it is not popular enough to affect their bottom line yet. Difficulty needs to catch up - at minimum another 1000x increase before it becomes popular, otherwise there will be trouble.

I don't understand how you can say a bad actor would have no financial liability. I'm all for fair competition, but burning down your competitors house is not fair, legal competition.

Something analogous to this would be for credit card issuer A to hack into credit card issuer B's network to destroy it. Just because B has poor security does not give A the right to destroy it, and A would be liable for financial damages.

People sue for just about anything these days, and the bar is fairly low, so I have no doubt that the bad actor would face a lot of legal action by folks harmed by their actions. Also, the damage to the bad actors reputation may cause more financial harm than any lawsuit.

[qualia8]

This is my #1 worry for bitcoin, and has been for a long time.  See my fantasy post over on /r/bitcoin from 9 days ago:

http://www.reddit.com/r/Bitcoin/comments/1u2mfr/an_offer_to_vampire_banks_repressive_governments/

The exact numbers are really irrelevant.  A few billion is still to be found in GS's seat cushions.

[kwukduck]

First off, by the time you can get TH miners without preorder at a massive scale, the rest of the network will also be hashing on the same generation of devices, drastically increasing the difficulty once again.

Please sell me some of those TH miners for 1k USD....

Secondly, you have to sustain your attack. And its not just the devices, housing, cooling, energy, management etc.

[qualia8]

Do you really think the US govt, or the PRC, or a major bank is incapable of finding the cash, acquiring the hardware, and running the machinery? 

The NSA datacenters don't have ASICS as far as we know, but they seem to be doing fine on running a large-scale operation.

Moreover, they needn't build from the ground up.  If it's China, they can just co-opt what's already in the country.

Lastly, if they threw $50 million at the issue, difficult would spike to absurd levels, making mining a losing proposition for everyone, thereby forcing out those who can't afford to spend electricity for nothing.  This makes 50% much easier, as lots of computing power goes offline and simultaneously up for sale.

How people can comfort themselves with "oh, it's too hard for the threatened $7 trillion cartel to figure out and implement" is beyond me.  This is why Satoshi wanted bitcoin to build slowly and fly under the radar.  While small -- and it is still very small -- bitcoin is easily crushed by the powers that be.

[newguy05]

First off, by the time you can get TH miners without preorder at a massive scale, the rest of the network will also be hashing on the same generation of devices, drastically increasing the difficulty once again.

Please sell me some of those TH miners for 1k USD....

Secondly, you have to sustain your attack. And its not just the devices, housing, cooling, energy, management etc.

they are not going to buy it from KNC or cointerra.....

jesus christ are some people really this..... i thought a minimum intelligence level is required to own bitcoins.

[bittymymitty]

First off, by the time you can get TH miners without preorder at a massive scale, the rest of the network will also be hashing on the same generation of devices, drastically increasing the difficulty once again.

Please sell me some of those TH miners for 1k USD....

Secondly, you have to sustain your attack. And its not just the devices, housing, cooling, energy, management etc.

Look at that link.. https://blockchain.info/pools?timespan=24hrs Ghash.io is getting pretty close, 39%

[bittymymitty]

They sent out a press release about hitting 51%.. https://ghash.io/ghashio_press_release.pdf  I'm pretty sure any large financial institution can replicate what ghash.io got and blow past 51% with a small slice of their IT spend.

[minerva]

Pfft. Forget financial institutions.

Any government that wants to kill Bitcoin... they have billion dollar signals intelligence budgets. They can perform attacks. Period.

[mrkent]

Here's a game theory conclusion as to why logical entities wouldn't invest in 51% attack to do it.

Even if a 51% attack automatically "destroys" Bitcoin, people would just jump to a diverse group of cryptocurrencies. It would be a wackamole game for the attacker. Everytime an altcoin is taken down, the attacker loses some money, while the coinfolks are net neutral. The attacker, expecting this, would best not play that game in the first place.

Of course a successful attack on all crypto-coins is possible using more creative means.

[minerva]

Here's a game theory conclusion as to why logical entities wouldn't invest in 51% attack to do it.

Even if a 51% attack automatically "destroys" Bitcoin, people would just jump to a diverse group of cryptocurrencies. It would be a wackamole game for the attacker. Everytime an altcoin is taken down, the attacker loses some money, while the coinfolks are net neutral. The attacker, expecting this, would best not play that game in the first place.

Of course a successful attack on all crypto-coins is possible using more creative means.

So only Quarkcoin will survive?

[runam0k]

First off, by the time you can get TH miners without preorder at a massive scale, the rest of the network will also be hashing on the same generation of devices, drastically increasing the difficulty once again.

Please sell me some of those TH miners for 1k USD....

Secondly, you have to sustain your attack. And its not just the devices, housing, cooling, energy, management etc.

Look at that link.. https://blockchain.info/pools?timespan=24hrs Ghash.io is getting pretty close, 39%

Yes and everybody knows about it. Keep in mind ghash is a collaborative effort. One miner with a very high network percentage would not appear overnight or otherwise go unnoticed.

[timmmers]

As if any powerful organisation is going to piss about in the bowels of the bitcoin network. They don't need to. The rich and the powerful all watch each other's backs. If you think about the banking crisis THEY caused, an how little happened to the people responsible ..they all protected each other to the extent that they didn't even stop bankers getting massive bonuses during the height of the crisis..although they made noises that they were going to.

IF they wanted it gone, a few connected people who all piss in the same pot get together, a few phone calls, "Hiya Barak, let's close bitcoin down mate, it's costing us profits?" "Really? OK , let's say a lot of terrorists use it shall we, ban it? I'll tell Cameron to do the same. " "Great mate, thanks!"

Game over. Hardly broke sweat. Old boy's networks run the financial establishments in the free world and the governments too, have done for centuries.

[Elwar]

Here's a game theory conclusion as to why logical entities wouldn't invest in 51% attack to do it.

Even if a 51% attack automatically "destroys" Bitcoin, people would just jump to a diverse group of cryptocurrencies. It would be a wackamole game for the attacker. Everytime an altcoin is taken down, the attacker loses some money, while the coinfolks are net neutral. The attacker, expecting this, would best not play that game in the first place.

This.

Bank spends $20 million, destroys Bitcoin. People change their code slightly, now using LiteCoin.

Bank spends $20 million, destroys Litecoin. People change their code slightly to PPC.

Same thing happens, by now the code change is just the click of a button, points to the next crypto-currency.

Meanwhile, bank is spending a lot of money on something that does not increase their revenue.

Change that from bank to government...after enough money spent, it takes a toll on their economy. If it is a government where the people have a say, there would be protests about their foolish spending to attack something that hurts nobody.

[davidgdg]

.....

Finally understand there is no liability, implied to otherwise. Btc is not legal tender under any country including us. There is no regulation nor law to prevent company or person to destroy it.

There would very likely be liability for tortious conspiracy to injure and goodness knows what else. There is no way in a million years that the board of a large company would authorise such a scheme, with the horrendous associated legal exposure. Once you factor in punitive damages, loss of profit etc, even a company as large as GS would probably be ruined.  

Governments on the other hand are a different matter ....

[davidgdg]

As I said only reason none bothered is because it is not popular enough to affect their bottom line yet. Difficulty needs to catch up - at minimum another 1000x increase before it becomes popular, otherwise there will be trouble.

Difficulty is irrelevant. What is important is cost. Broadly speaking you would expect the cost to be proportionate to the price of btc, because the more btc is worth the more efforts will be put into mining and hence the greater the cost of a 51% attack.

Thus the real defence against such an attack is simply the continued growth and success of bitcoin.

[Oldminer]

I actually hope BTC fails so other more advanced alts can take its place.

Time for bitcoin to be retired imo. Its a prototype that's run its course. It's served us well, but its time to move on. There's much better altcoins around.

[kendog77]

I actually hope BTC fails so other more advanced alts can take its place.

Time for bitcoin to be retired imo. Its a prototype that's run its course. It's served us well, but its time to move on. There's much better altcoins around.

Spoken like someone who owns a lot of alt coins and hardly any BTC... 

[exocytosis]

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

But $400 million (or a bit more) isn't a lot of money for players such as GS or JPM Chase. If such banks start seeing BTC as a threat somewhere down the line, I'm sure they'd be willing to spend a measly 400 m. to take it down. That's just the cost of doing business for them, just like paying $ 80 billion fines. It's a small sum for the megabanksters, and a sum they'd gladly spend if it meant they got rid of a serious competitor.

[runam0k]

But $400 million (or a bit more) isn't a lot of money for players such as GS or JPM Chase. If such banks start seeing BTC as a threat somewhere down the line, I'm sure they'd be willing to spend a measly 400 m. to take it down. That's just the cost of doing business for them, just like paying $ 80 billion fines. It's a small sum for the megabanksters, and a sum they'd gladly spend if it meant they got rid of a serious competitor.

You're nuts if you think a big bank would ever do this. Even if it is chump change to them, which it probably is, they simply would not do it.

Just like they don't spend hundreds of millions of dollars trying to crush other competitors in this way. It would lead to criminal prosecutions, massive lawsuits and irrevocable damage to reputation.

A country maybe, but they'd have to really want to do it. Which means Bitcoin would have to be very significant. Which means many times its current size. Which means very significantly more difficult to bring down.

[exocytosis]

Just like they don't spend hundreds of millions of dollars trying to crush other competitors in this way. It would lead to criminal prosecutions, massive lawsuits and irrevocable damage to reputation.

JPM and other megabanks face lawsuits all the time. Didn't JPM recently pay a fine of $ 80 billion or something on that order of magnitude? It didn't hurt them one bit, since it's just the cost of doing business for them. They're expecting such fines anyway, so they make sure they have the cash to spend whenever the shit hits the fan.

And does it look like Jamie Dimon or Lloyd Blankfein cares about their reputation? Remember, these players are so well-connected in political and judicial circles that they're never going to jail anyway. At most their banks get some silly 100 billion dollar fine before continuing doing business as usual. It's nothing to them, and what reputation they do have isn't hurt the slightest by crushing something as small and insignificant as a cryptocurrency. And if it is hurt, they don't care anyway. (Arguably, their reputation (among the common man) has already gone down the drain for the last five years or so. Yet, they continue doing business as usual.)

I want Bitcoin to succeed. That's why I hope someone can address the OP's points.

Yes, it's a game of whack-a-mole, since a dozen other cryptocurrencies pop up if the banksters decide to destroy BTC. But can cryptocurrency as a concept ever truly succeed (i.e. achieve mainstream adoption) if it's just destroyed every time some serious financial player sees it as a threat?

Currently, BTC is tiny, so the megabanks lack incentive to destroy it. It's not a real threat to them yet.

But hey, I'm a newbie, so maybe I'm totally wrong. That'd be a relief for me.

[JohnsonRobinson]

I actually hope BTC fails so other more advanced alts can take its place.

Time for bitcoin to be retired imo. Its a prototype that's run its course. It's served us well, but its time to move on. There's much better altcoins around.

Just curious what you would rank as the top few to get into as a hedge.

[runam0k]

At most their banks get some silly 100 billion dollar fine before continuing doing business as usual.

You'd think so, but that's not strictly true.

Banks regularly test the limits of what they are allowed to do to make money. When they go too far they are fined, they have all sorts of internal meetings and investigations, procedures are put in place and people will (and do) get pushed out.

Then they immediately start to test the limits of what they are allowed to do to make money.

I agree, the levels of fines and the lack of jail time/senior management heads rolling is unfortunate - signs of our weak/compomised law enforcement agencies and powerless shareholder boards.

Of course none of that means GS or any other megabank would go so far as to sit down and say, "let's spend $50m to break Bitcoin". That goes well beyond testing the limits of what they are allowed to do to make money.

It's nothing to them, and what reputation they do have isn't hurt the slightest by crushing something as small and insignificant as a cryptocurrency.
...
Currently, BTC is tiny, so the megabanks lack incentive to destroy it. It's not a real threat to them yet.

As you rightly point out, it's even less likely now, given the insignificance of Bitcoin, relatively speaking. And when Bitcoin is big enough to cause real concern, squashing it will be next to impossible.

Far more likely, the banks will use their influence to pressure governments and central banks into acting against Bitcoin. Look at what happened in China. Now imagine the US government and Fed making similar declarations.

[wickedgoodtrader]

It will become even more of an issue when block rewards halve and mining becomed unprofitable if the price of btc doesn't rise. Miners will shutdown and drop the hashrate.

[Coin_Master]

If the US government wanted to take bitcoin down, why waste $30mill doing so. They can just declare all aspects of bitcoin usage / trade illegal with severe jailtime. With their influence they could then convince all other western institutionalized countries to do the same thus removing the value of the currency.

Opinions on this forum are getting funnier and funnier.  You think that when the US government declares all aspects of something illegal with threat of severe jail time, that it stops it happening?  If that were true there would be no 'terrorism', no 'murder', no 'cocaine imports from south america'.
Get real man, all it does is drive the price up!