Ethereum could afford a 51% attack on Bitcoin, and profit greatly from it

[franky1]

First off, price would not be 6-20 billion dollars. More like hundreds of billions of dollars.

You're talking about suddenly trying to purchase an amount equal to ALL the miners in existence, AND having to compete for these purchases with the existing mining industry which is always expanding, so prices of ASICS would go up. This would take wayyy more money than you suggest, and years to accomplish.

under all assumptions made by topic creator of lets say ethereum stakers selling off coin to purchase all batches of asics for X months(meaning no honest network growth)

current bitcoin honest network is averaging 600exa = ~2.56m asics


at a average of $6.3k per asic to get the performance needed of 2.56m asics. thats $16billion
(note there are other current range asics much higher cost/electric draw, but ill go with low budget prices)

then with the electric needed to run those asics, at a low planetary range of electric $0.04/kw = $14c/hour per asic
running a asic farm of multiple asics usually requires doing electric contract deals with energy suppliers of energy contracts of 6-24 months. usually 24 months to cover the ROI timescale

this is $2,453 of electric for 2 years per asic which is another $6.23billion. meaning in locations with the cheaper rate electric would be a hardware and electric cost for a 2 year lifecycle ROI expectation of mining of ~$24bill

if those wanting to mine in more expensive end of the planets electric rates ($0.50/kwh = $1.75/h per asic) this can become over $100billion for hardware and electric on a 24 month upfront cost

[NotATether]

ethereum highly likely cant/wont 51% attack bitcoin, its just not economically viable/effective/beneficial

firstly
ethereum is not even a PoW algo chain. so even if current ethereum users were collude to want to 51% attack bitcoin.. they just cant decide one day and just do it
instead they would need to sell alot of their staked coin and then buy a heck of alot of asics. and this is not a cheap thing, nor a fast thing

It's not even just random coins they're selling. They'd probably have a lot of coins staked in the new Proof of Stake system so they would have to sell those too, tanking ETH by 1) all the coins they are dumping on the exchange and 2) the fact that there is now "staking power" in the ETH network will also make it's price suffer.

And that's if their staked coins are not even locked. Otherwise no chance of taking them out.

It would be a sort of Mutually-Assured-Destruction if they tried that.

[franky1]

ethereum highly likely cant/wont 51% attack bitcoin, its just not economically viable/effective/beneficial

firstly
ethereum is not even a PoW algo chain. so even if current ethereum users were collude to want to 51% attack bitcoin.. they just cant decide one day and just do it
instead they would need to sell alot of their staked coin and then buy a heck of alot of asics. and this is not a cheap thing, nor a fast thing

It's not even just random coins they're selling. They'd probably have a lot of coins staked in the new Proof of Stake system so they would have to sell those too, tanking ETH by 1) all the coins they are dumping on the exchange and 2) the fact that there is now "staking power" in the ETH network will also make it's price suffer.

And that's if their staked coins are not even locked. Otherwise no chance of taking them out.

It would be a sort of Mutually-Assured-Destruction if they tried that.

at $24b to $100b is at current eth price, thats about 7m eth to 30m eth need to be sold*. this is way more than 1-4% of eth coin
its a minimum of 5% and upto 25%..

*.. and thats before even including all the factors of eth price crash whilst those coins sell meaning even more coins need to be sold just to get some (depleting) dollar price to then invest in asics

.. it is worth noting to sell eth, there needs to be a buyer. so new buyers would then take over the limited control of ethereum, which infact could be bitcoiners buying very cheap eth to then PoS attack the ethereum network, and arbitrage the ethereum market

so whilst colluding ethereum stakers sell out and wait months to get hardware hoping to attack bitcoin.. bitcoiners can market manipulate ethereum market and instantly attack ethereum due to its PoS system.. meaning bitcoin can attack ethereum faster than ethereum can attack bitcoin

[mjdamgaard]

you think 1–4% is not enough to crash a market.. but here is the thing.. not all coins circulating are on the market.. only a small proportion of coins crculating are on market orders so a sudden increase of coins hitting the market supply would cause change

take for instance bitcoin, there are over 19m coins in circulation.. but there are not 19 m coins on the market. most market orders are 0.0X coins per order.. so if there was a sudden period where people were colluding to sell for instance 190,000(just 1%) coin the market orders would flood with sell orders compared to the norm.. now translate that to the numbers of ethereum circulation amount and market supply and see some scenarios of then dumping 1-4% of that circulation on the market supply.. you will soon see how it affects the markets

we seen it many times in the bitcoin market when the market orders were <1btc each. but then whales created walls and orders of just 1000 coin order lumps.. it had enough impact on the markets

This seems surprising to me. According to https://bitinfocharts.com (today), the transaction volume is roughly 0.6% each day. So I have a hard time wrapping my head around the proposition that transfers of 1%-4%, potentially over several days or months, would crash Ethereum?

you linked stats about blockchain transactions. not market volume
also of the $10b estimated actual market volume of ethereum today, majority of that is not sourced from staked ethereum holders but instead from a small amount of traders whom are bitcoin based and are arbitraging the markets in a loop pattern several times a second

so now put the math to work.. if you had an actual group of actual ethereum holders that want to wealth transfer to then invest in bitcoin hardware. the numbers even over many days would effect the markets

also i know you want to imagine it as many people selling just 0.0x eth every second for weeks on end, but in reality knowing that over 2 million bitcoin asics need to be bought over say 6 months to keep the collusive gang in check/entertained that their plan can succeed. they would need to sell hundreds of thousands of eth periodically to then bulk order in batches the hardware

[...]

and lastly

Yes, we certainly agree that it would likely require some change in the public perception of crypto. But who knows, that could happen. And it seems to me that once the Ethreum stakeholders truly realize that there could be up to a trillion dollars on the line, they will have more than enough motivation (and means) to make the public more acutely aware of the competition between the two blockchains.

you keep trying to make the false presumption that a 51% attack would lead to ethereum taking the top market cap.. and then win trillions because of it

sorry to inform you once again that the market cap $$ number is not real money stored in a vault waiting to be paid out..
the market cap is just a empty math number of taking the current price based on a small order of 0.0xcoin and then multiplying the number by how many coins in circulation.. its not based on real $$ held anywhere

infact if you only care about replacing a altcoin as the top market cap #1 stat.. do the simple thing.. create a altcoin with 5 trillion coins pre-mined/minted. sell 0.00x of those coins on a popular exchange for $0.01 and instantly create a market cap of multiple trillions.
yep a "#1 market cap attack" can occur at the cost of just $0.01

This is a Bitcoin forum, so it is naturally expected to hear the opinion that other cryptocurrencies such as Ethereum might be somewhat inflated. But the picture that you are painting here seems just a little bit too unbelievable, and I for one need a bit more convincing. Ethereum is a cryptocurrency. As a commodity, its value is based on the fact that it can be used to make transactions and pay for stuff. If what you are saying is true, then its whole value is so incredibly inflated that it is essentially a complete bubble waiting to burst at any given moment. Or am I perhaps misunderstanding something?

If what you are saying is true, Ethereum investors are due to lose in the order of $440B at any given moment now, once some of them start realizing that it's all a complete bubble and start to sell their Ether. Or are they all in collusion to maintain this bubble do you think?

Now consider the fact that the price of Ethereum has had fluctuations of about 25% in this year alone! It seems that by your arguments, it is a miracle that Ethereum hasn't crashed this year. So I hope that you can see how your proposition that using 1%-4% of the Ether for its actual purpose of 'paying for stuff' will lead to a crash Ethereum seems a little hard to believe. But I'm happy to hear your arguments if you really want to maintain this position.

However, I also don't hope the conclusion of this discussion will be that 'No, Bitcoin do not need to consider trying to mitigate this attack vector at all' if that conclusion relies solely on the proposition that Ethereum is bound to crash at any given moment now, or that all its investors are somehow colluding to inflate its price out of proportions. I think that there are other more meaningful counterarguments to the attack vector..

[franky1]

if you check how ethereum (when it was PoW) had its own independent market sentiment and volatility based on its international variance window of value premium based on the differing mining costs due to electricity price variance... and then when going PoS you can see it become more of a shadow of bitcoin movement/wiggles cloning the ups and downs of the bitcoin market. and from the point of may 14th 2021 when it went very stable in comparison to bitcoins market. as seen by the bitcoin:ethereum market chart of the last 5 years where from may 14th 2021 the variance of the 2 markets went from instable to stable.

this is due to the bitcoin market taking control of the sentiment of ethereum market by arbitraging the market
check out the 5 year charts of the btc:eth market (stabilised where over 3 years the ratio only changed from 1btc:12eth to 1btc:20eth) whereby ethereum is slowly losing its ratio amount whilst still shadowing bitcoins price at the depleting ratio(slowly changing/losing its peg)

its went from a massive 1btc:60eth(2019 independent) to a 1btc:12eth(2021 controlled) when bitcoiners took control of ethereum sentiment and artificially fixed ethereum at a bubble market

this arbitrage ability KEPT the ethereum market up high even when the ethereums cost base of acquiring new coin by other means dropped by 95%
this means whilst the PoS coin acquisition market dropped to ~$50 a coin cost, the speculative market remained artificially held up at $thousands purely due to the arbitrage opportunities performed by bitcoiners

this bubble can burst
its also worth noting that you STILL think that its only going to need 1-4% of ether.. again i suggested you do some math, and i even done some math for you based on a hypothetical of freezing the prices.. now if you realise the 5-25% of coins will actually cause a price change.. meaning even 5% is best case of zero market crash, and its more likely to be a higher number of coins sold to get to the dollar amounts to need to buy the asics to perform an attack..

and as said, but worth emphasising
whilst ether stakeholders sell off and wait months to gather hardware to attack bitcoin but end up becoming honest bitcoin miners due to their ROI being at risk.. the bitcoiners whom could decide to buy up the cheaper ethereum can INSTANTLY attack the ethereum network due to its instant access to coin to then stake to then control code changes and block verification without need to wait months. so ethereum can be attacked far easier than bitcoin

so play some scenarios out and run the math. its fun and educational

for instance,
imagine the arbitrage market route of
ETH->USD->BTC
when a eth staker sells for dollar it causes a eth price decrease. then when they hand $ to asic manufacturers, those manufacturers could invest that $ in BTC causing a BTC price increase.
USD->BTC
then using the BTC to buy CHEAPER ETH,
USD->BTC->ETH
 the traders can repeat the arbitrage cycle and cause more ETH price crash, repeat
ETH->USD->BTC->ETH->USD

[SickDayIn]

The cost of a 51% attack has been estimated to be $6–$20 billion [1]. This is only 1.3%–4.4% of Ethereum's current market cap. And it is only 0.5%–1.5% of its potential growth if Ethereum knocks down Bitcoin and conquers its full share of the cryptocurrency market.

This really doesn't make any sense.

The cost of a 51% attack should be measured in compute, not dollars. Let's say it was $20 billion, using a percentage valuation of market cap is not a binary calculation. You can't just sell 4.4% of the total supply of Ethereum at a fixed price to fund a 51% attack. Also, 4.4% of Ethereum in circulation is not owned by a single person or entity, that would be able to make this sale and fund this attack. Your theory is founded on a lot of assumptions and mistruths.

[mjdamgaard]

First off, price would not be 6-20 billion dollars. Very possibly over 100 billion dollars. Oh and don't forget all these people are gonna be paying taxes on their ETH sales so add a bunch more billions of ETH needed to sell.

You're talking about suddenly trying to purchase an amount equal to ALL the miners in existence, AND having to compete for these purchases with the existing mining industry which is always expanding, so prices of ASICS would go up. This would take wayyy more money than you suggest, and years to accomplish.

Then you need to add in the cost of finding places to run miners and set up the infrastructure, so add more billions of dollars.

Selling the Ether to get this done would drastically decrease Ethereum's price, meanwhile Bitcoin's price would be unaffected, making Ethereum's long term outlook to other market participants look weaker and weaker as the attackers are selling and setting up this plan over the course of a few years.

Oh by the way, in the several years that it would take to set this all up, the rest of the bitcoin hashrate will have grown so then these attackers will have to spend even more time and money (and selling ETH) to account for that and still be able to pull off the attack.

Finally, the people engaging in the attack would now no longer have a reason to want to do it because now instead of being Ethereum owners they are Bitcoin miners! They sold their Ethereum to mine Bitcoin. They are bitcoiners now, no longer participating in Ethereum. Their economic value is now tied to Bitcoin, no Ethereum. And besides, as stated above, by the time the attack could actually go off, Ethereum's market will have lost a lot of ground to Bitcoin so many of them at that point would probably not want to go back to Ethereum anyway when they are already now participants in a more successful cryptocurrency.

See how your entire idea works against itself. This is the power of Bitcoin and PoW. Bitcoin has global-level security and engaging in a 51% attack is pure folly.

It's not rocket science to find out the Capital Expenditures of Bitcoin miners. Many are publicly traded companies with open reports. I think the authors of the referenced paper, Nuzzi et al., have been able to make a valid estimate.

Yes, it would take some time if the Ethereum stakeholders choose to set up the farms themselves, but it can be be done, even if it will take several months.

This is a bit of a tangent but you mention that Bitcoin's price would be unaffected. Personally I don't foresee that. It seems to me that when knowing that an attack is underway, some Bitcoin investors would already start to get uneasy, and some would sell their bitcoin. And since this will cause the price of Bitcoin to drop, the 51% attack will then only be easier to afford in theory, as the mining rewards would be decreased and some of the honest miners therefore ought to fall off. This could create a feedback loop where, once the attack is looming in the near future, more and more Bitcoin investors will migrate elsewhere, potentially to Ethereum.

And just to put things into perspective, if we assume the lower estimate of around $6B for the attack, then even if only 20% of the Ethereum investors choose to contribute in funding the attack, they will only have to part with money proportional to 5% of their owned Ether in order to afford it.

And while we are on that topic, there seems to be people here who doubt that the Ethereum investors would be able to withdraw even as low as 1% of the total Ether without causing a crash of the whole cryptocurrency. But even though I personally find this proposition kinda far-out, in reality most investors do not just invest in one thing. The vast majority of Ethereum investors would thus have other kinds of assets as well that they can trade, and most likely easily more than ~5%. I hope we can soon put this particular sub-discussion behind us.

But if the participating miners simply rewrites the blockchain ledger and steal a lot of bitcoin

What do you mean "steal a lot of bitcoin"? Do you know how the blockchain works?

No amount of mining allows someone to steal bitcoin from other wallets. In a 51% attack the attackers can choose which txs to mine and which not to mine so they would be able to censor the transactions, and they can double spend their own bitcoin, but they can't steal any bitcoin. The only way to steal would be from the double spending, stealing from the merchants they were supposed to be paying. And if a 51% attack is happening, pretty quickly everyone is going to know about it, and it'd be easy enough for bitcoin participants to stop taking payments from known attackers addresses until the attack ends. This is where the transparency of the Bitcoin network comes in handy.

Besides, the entire idea is preposterous for the reasons outlined in my previous comment.

If the attackers rewrite a large part of the ledger, they can keep all the transactions that they want while discarding or replacing all the others. If they thus make sure to trade a lot of bitcoin back and forth in the time before the attack, they can in principle steal vast amounts if they then keep all their incoming transactions but discard and replace all outgoing transaction from their wallets.

This is but one example of the harm they can do. It is widely accepted that a 51% attack would be devastating to Bitcoin. (But we can of course discuss it further if you are not convinced yet.)

[franky1]

This is a bit of a tangent but you mention that Bitcoin's price would be unaffected. Personally I don't foresee that. It seems to me that when knowing that an attack is underway, some Bitcoin investors would already start to get uneasy, and some would sell their bitcoin. And since this will cause the price of Bitcoin to drop, the 51% attack will then only be easier to afford in theory, as the mining rewards would be decreased and some of the honest miners therefore ought to fall off. This could create a feedback loop where, once the attack is looming in the near future, more and more Bitcoin investors will migrate elsewhere, potentially to Ethereum.

if the network knew the hash power was to get 2x competition(network doubles where half is a colluding group).. meaning older miners get half as much sats... its the same as a halvening event in regards to miners prospects.. we already seen miners re-evaluate global bottom value change from $25k per btc to now being ~$50k bottom due to reward halving this year
so it ends up the same thing. if miners have X cost but getting X/2 rewards then they wont sell the rewards at X they would only sell for x*2 to break even
then new users wanting to get into bitcoin but now unable to mine due to al batches for Y months are sold out. will work out the prospective costs of mining and then just buy coin on the market.. again causing a market rise effect

as we have already discussed the implications of a multi-month ramp up of batches to get a colluding group to 2x the hashrate/difficulty to get 51% of the network.. to match/beat the honest half of the network.. those honest miners would take that opportunity to buy more coin cheap at the $50k-$70k(current) knowing that the impending hashrate /difficulty growth and reduction in sat rewards would cause the market to INCREASE

and as said whilst the lead up to the collusive gangs trigger date for the attack, those getting early batches would honest mine and try to get ROI and end up not wanting to shoot self in the foot at trigger date because now they are highly invested in bitcoin and wont want to lose their investment
(in short a influencer cant convince hundreds of random ethereum users to collude becasue users end up caring more about their own investment, instead it would only work if there was one mass eth holder that doesnt care about losing investment because all he cares about is 'taking bitcoin down')

anyway, back to discussing a scenario of an impending attack in the next X months:
in that same time as the eth stakerconverting to be bitcoin miners.. exchanges would look into solidifying their deposit algo's to not allow new deposits to trade unless it meets X confirms. and then even when trading on exchange mysql databse balance. not allow withdrawals for X time to ensure that any nafarious pool trying to re-org the blockchain would need to re-org many many many blocks back.. meaning (as mentioned before) the colluding group would need far more then 51% of the network to be able to re-write blocks very far back

if you run the math of average block speed and how far back a 1% speed benefit means in reality to going backwards and then moving forwards to catch up and over take.. 1% benefit over honest network wont get the colluding group to go that far back. so services can just enforce the "6confirm rule" or a 72 hour wire transfer delay(if aim was to sell coin for dollar and cash out) to evade colluding pools from trying to double spend

[DaveF]

...Yes, it would take some time if the Ethereum stakeholders choose to set up the farms themselves, but it can be be done, even if it will take several months....

YEARS not months. That much excess mining gear does not exist, so you would have to have been stockpiling for at least a year if not 2 or 3 to get that amount of gear. Or you could just take over the used markets and buy it all but then you are suffering from having an mixed batch of used equipment you have to deal with.

-Dave

[d5000]

Ok, let's pretend that's really a serious "paper". [1]

Ethereum is a very different cryptocurrency than Bitcoin. Ethereum focuses on smart contracts, while Bitcoin focuses on stronger decentralization and censorship resistance. It is not a homogenous market where each supplier has a "share".

Thus it is at least a very disputable assumption that Ethereum will rise in value if Bitcoin disappears or falls drastically in value. But the whole incentive structure of this attack depends on this assumption.

Ethereum actually has almost always crashed too when Bitcoin has crashed. So if Bitcoin is 51% attacked and crashes, Ethereum would also probably crash hard, because the "cryptocurrency market" as a whole would lose trust. Think about the ETFs which engage in both blockchains and their investors. They would actually probably retire from the whole crypto market as they don't want to be associated with users wasting billions on a failed attack between their own products.

I'm almost sure that these effects would make the attack a huge loss for the attackers. Well, as long as they don't short Ethereum too (and other blockchains ...) while they perform the attack (this may actually a real vulnerability for a coordinated attack against crypto as a whole ... but supposedly there are not enough coins to short)

Ethereum could actually have to fear this kind of attack much more from its own competitors like Solana, because these are active in a much more similar market. Ethereum could actually have a hard time if Solana and other Ethereum killers come too close ... (at this moment, all Ethereum killers together have only 30% or so of ETH's market cap, but they come already close to the feared 34% attack ... ).

The last sentence between parenthesis was aktually a joke. Market cap is not the same than sales.

The fact that Ethereum is now PoS is exactly the underlying reason why it is not really vulnerable to a similar kind of attack, aimed back at itself. Feel free to disagree with me on this point: I would not mind at all discussing this further.

Thank you for capitulating so early, so everybody knows that there's nothing to see here.


[1] I read the "paper" and it is ridiculously shallow. Its main section only explains a smart contract to bribe miners, which is the least important part of the puzzle. The rest is wild speculation. No wonder this "researcher" has zero citations.

[mjdamgaard]

if you check how ethereum (when it was PoW) had its own independent market sentiment and volatility based on its international variance window of value premium based on the differing mining costs due to electricity price variance... and then when going PoS you can see it become more of a shadow of bitcoin movement/wiggles cloning the ups and downs of the bitcoin market. and from the point of may 14th 2021 when it went very stable in comparison to bitcoins market. as seen by the bitcoin:ethereum market chart of the last 5 years where from may 14th 2021 the variance of the 2 markets went from instable to stable.

this is due to the bitcoin market taking control of the sentiment of ethereum market by arbitraging the market
check out the 5 year charts of the btc:eth market (stabilised where over 3 years the ratio only changed from 1btc:12eth to 1btc:20eth) whereby ethereum is slowly losing its ratio amount whilst still shadowing bitcoins price at the depleting ratio(slowly changing/losing its peg)

its went from a massive 1btc:60eth(2019 independent) to a 1btc:12eth(2021 controlled) when bitcoiners took control of ethereum sentiment and artificially fixed ethereum at a bubble market

this arbitrage ability KEPT the ethereum market up high even when the ethereums cost base of acquiring new coin by other means dropped by 95%
this means whilst the PoS coin acquisition market dropped to ~$50 a coin cost, the speculative market remained artificially held up at $thousands purely due to the arbitrage opportunities performed by bitcoiners

this bubble can burst
its also worth noting that you STILL think that its only going to need 1-4% of ether.. again i suggested you do some math, and i even done some math for you based on a hypothetical of freezing the prices.. now if you realise the 5-25% of coins will actually cause a price change.. meaning even 5% is best case of zero market crash, and its more likely to be a higher number of coins sold to get to the dollar amounts to need to buy the asics to perform an attack..

and as said, but worth emphasising
whilst ether stakeholders sell off and wait months to gather hardware to attack bitcoin but end up becoming honest bitcoin miners due to their ROI being at risk.. the bitcoiners whom could decide to buy up the cheaper ethereum can INSTANTLY attack the ethereum network due to its instant access to coin to then stake to then control code changes and block verification without need to wait months. so ethereum can be attacked far easier than bitcoin

so play some scenarios out and run the math. its fun and educational

for instance,
imagine the arbitrage market route of
ETH->USD->BTC
when a eth staker sells for dollar it causes a eth price decrease. then when they hand $ to asic manufacturers, those manufacturers could invest that $ in BTC causing a BTC price increase.
USD->BTC
then using the BTC to buy CHEAPER ETH,
USD->BTC->ETH
 the traders can repeat the arbitrage cycle and cause more ETH price crash, repeat
ETH->USD->BTC->ETH->USD

Sorry I'm lagging a bit behind the discussion. My internet is not the best where I'm at right now.

Well, for the sake of the argument, let us just agree that it could be as low as 5% for now? And then we can always discuss later if it could be even less.

So as I understand you, you are saying that Ethereum's value is not at all based in its estimated use as a cryptocurrency (by the investors), now and in the future, but its value is instead based solely on some current money scheme, and one which is dependent on the existence of Bitcoin?

I hope I'm not the only one who doesn't know about this. Can you perhaps briefly explain how this scheme works to inflate the price of Ethereum? Or if you have some links/references, maybe you could give them?

I will posit, however, that if Bitcoin indeed has this security flaw and Ethereum does not, then it would seem to me that Bitcoin is the inflated cryptocurrency, and that Ethereum is bound to overtake it at some point, unless of course Bitcoin is able to mitigate this attack vector.

To your point about Bitcoin being able to attack Ethereum, the point of Ethereum's consensus mechanism, in its current state, is that at least a third of the stakers is supposed to confirm a block before it reaches finality. So that would already be 33% of the Ether required (assuming that intention of the attack will be leaked and that the Ethereum investors have enough time to join the staking process). This is $144B.

And what's more, the Bitcoin investors would only be able to grow their assets by ~30% if they somehow manage this, whereas the Ethereum investors would be able to grow their assets by ~200%, i.e. given that the attack causes the rival to take its competitors full share of the cryptocurrency market.

If the roles were reversed, on the other hand, and Bitcoin was ~30% of the price of Ethereum, the Bitcoin investors would not even have the money to afford the attack, albeit if we count only their wealth in Bitcoin assets.

And on top of all this, if you for instance read the 'Proof-of-Stake and Security' section of https://ethereum.org/en/developers/docs/consensus-mechanisms/pos/#pos-and-security, it seems that the Ethereum investors would just choose to revert the 51% attack in case that it happens (similarly to what they did with the DAO). This is possible when the voting power of the cryptocurrency ledger is ultimately distributed to the stakeholders/investors rather than whoever controls a portion of the hash rate in the world.

[bitbollo]

the real "problem" lets call in this way isn't only that you need to own 51%.
This doesn't give you the chance to "own" the blockchain. You have just 51% of hashpower, likewise you have the chance to get your block in 51% vs other users. But this not means an user with a neglictible amount could ... find your block!

Well if this wasn't enough, if you want to build blocks by your own, you need to go faster versus other miners. It will not enough build 1 block. You need even more.

In the past there was CEX.IO that with their pool owned 51% of total hashpower. It doesn't happens nothing but of course in most of the cases it would be pretty useless since a miner is likewise a bitcoin owner.
Even if it will able such magic machine able to outperform the whole hashpower... it would be useless attack bitcoin since there is a very little market cap.
But the real problem arise since it's all pubblic and undeniable. imagine what happens if block is produced each second. In matters of hours there will be no market...

[mjdamgaard]

The cost of a 51% attack has been estimated to be $6–$20 billion [1]. This is only 1.3%–4.4% of Ethereum's current market cap. And it is only 0.5%–1.5% of its potential growth if Ethereum knocks down Bitcoin and conquers its full share of the cryptocurrency market.

This really doesn't make any sense.

The cost of a 51% attack should be measured in compute, not dollars. Let's say it was $20 billion, using a percentage valuation of market cap is not a binary calculation. You can't just sell 4.4% of the total supply of Ethereum at a fixed price to fund a 51% attack. Also, 4.4% of Ethereum in circulation is not owned by a single person or entity, that would be able to make this sale and fund this attack. Your theory is founded on a lot of assumptions and mistruths.

What I am imagining is that the Ethereum stakeholders could first of all start being vocal about this security risk of Bitcoin. This wouldn't require any effort, really, and no risk. And already it might make some investors migrate from Bitcoin to Ethereum, which would thus grow their assets. In fact, I think they are bound to do this at some point, since it could potentially gain them a lot with almost no effort.

I've mentioned that once this migration has started, it might cause a positive feedback loop (due to lower mining rewards, which in turns makes the 51% attack even more affordable), causing more and more investors to follow suit. But let's assume that this talk alone won't exactly cause a total crash of Bitcoin yet (which is of course a reasonable assumption).

But now the Ethereum stakeholders/investors are in a situation where the more they talk about how they might actually consider an attack in some near future, the more the Bitcoin investors might get uneasy and start moving their assets to Ethereum instead. So while they might be hesitant to come out in support of an attack at first, with up to around a trillion USD on the line, they are bound, in my opinion, to be more and more bold in terms of being publicly open towards participating in an attack.

They might also very well invest some effort into drumming up public support for an attack, using the argument that the elimination of PoW would end up sparing the world from a large electricity consumption. Given how a very large part of the public is very mindful of energy consumption and CO₂ emissions, I don't think that will have a hard time at all swaying a large part of the public.

And after this whole (long) prelude, if the Bitcoin investors haven't already started to abandon ship, but stubbornly maintains that Bitcoin isn't at risk, and/or that a 51% attack wouldn't cause much harm to it, then the Ethereum investors might very well slowly start to band together to fund some initial acts of showcasing their power, e.g. by making what I refer to as 'partial attacks' in my preprint.

And if somehow the Bitcoin investors still cling to their blockchain, and also won't commit to try to hard-fork to a PoS consensus mechanism in order to mitigate the attack vector, well, then who knows, some of the Ethereum stakeholders might then even be bold enough to try to fund (perhaps anonymously) an actual 51% attack against Bitcoin.

Long story short: The whole process might take several months or years in total, and might include a large portion of the Ethereum investors in the end.

[mjdamgaard]

...Yes, it would take some time if the Ethereum stakeholders choose to set up the farms themselves, but it can be be done, even if it will take several months....

YEARS not months. That much excess mining gear does not exist, so you would have to have been stockpiling for at least a year if not 2 or 3 to get that amount of gear. Or you could just take over the used markets and buy it all but then you are suffering from having an mixed batch of used equipment you have to deal with.

Fair enough, let's agree to assume that it could take years (i.e. given that the existing Bitcoin miners are somehow very loyal and cannot be bought by the competitors/attackers).

[mjdamgaard]

if the network knew the hash power was to get 2x competition(network doubles where half is a colluding group).. meaning older miners get half as much sats... its the same as a halvening event in regards to miners prospects.. we already seen miners re-evaluate global bottom value change from $25k per btc to now being ~$50k bottom due to reward halving this year
so it ends up the same thing. if miners have X cost but getting X/2 rewards then they wont sell the rewards at X they would only sell for x*2 to break even
then new users wanting to get into bitcoin but now unable to mine due to al batches for Y months are sold out. will work out the prospective costs of mining and then just buy coin on the market.. again causing a market rise effect

Wait, are Bitcoin miners able to sell their mined bitcoin to a higher price than the market price?? Who are buying these coin? It would make sense that the Bitcoin stakeholders as a whole could benefit buy making sure that the miners get enough rewards to continue keeping the hash rate high, but it highly surprises me if a few Bitcoin investors are willing to selflessly make sacrifices on behalf of the group in order to make this happen.?

Edit:
By the way, I promise to get back to you about your other points in the same post.

[franky1]

So as I understand you, you are saying that Ethereum's value is not at all based in its estimated use as a cryptocurrency (by the investors), now and in the future, but its value is instead based solely on some current money scheme, and one which is dependent on the existence of Bitcoin?

I hope I'm not the only one who doesn't know about this. Can you perhaps briefly explain how this scheme works to inflate the price of Ethereum? Or if you have some links/references, maybe you could give them?

I will posit, however, that if Bitcoin indeed has this security flaw and Ethereum does not, then it would seem to me that Bitcoin is the inflated cryptocurrency, and that Ethereum is bound to overtake it at some point, unless of course Bitcoin is able to mitigate this attack vector.

you seem to not know about the underlying economics. especially if you then try to make out that it implies a flaw in bitcoin.. you really have things warped round the wrong way

the reason bitcoin is $50k plus and not $500 is because there is underlying value bottom no one wants to sell below because at some point no one on the planet can mine for less and so no one wants to sell for less.. theres real costs and integrated economics of the PoW that do affect the value premium window which the market price sits in.,. PoS has the fault in its economics of not having this value bottom protection. and it can crash to zero far more easily than bitcoin would

..
as to your question.. if ethereum had its own economic sentiment of its own independent community valuing ethereum for its own ethereum purposes.. the market price would never shadow bitcoins market wiggles at a certain ratio
but just check out the market charts
ethereum only hit its ATH when bitcoin hit its ATH.. bitcoin has known market cycles, known factors of its price evolution.. so when ethereum is also peaking/following at the same time as bitcoin, you know its being controlled by bitcoin
ethereum lost its independence of market sentiment on 14th May 2021, and ethereum just become a lame sheep to bitcoins market

bitcoin has a underlying store of value bottom support of $50k meaning its in good secure support. yet ethereum price can crash down to $50.. so keep that in mind

[mjdamgaard]

So as I understand you, you are saying that Ethereum's value is not at all based in its estimated use as a cryptocurrency (by the investors), now and in the future, but its value is instead based solely on some current money scheme, and one which is dependent on the existence of Bitcoin?

I hope I'm not the only one who doesn't know about this. Can you perhaps briefly explain how this scheme works to inflate the price of Ethereum? Or if you have some links/references, maybe you could give them?

I will posit, however, that if Bitcoin indeed has this security flaw and Ethereum does not, then it would seem to me that Bitcoin is the inflated cryptocurrency, and that Ethereum is bound to overtake it at some point, unless of course Bitcoin is able to mitigate this attack vector.

you seem to not know about the underlying economics. especially if you then try to make out that it implies a flaw in bitcoin.. you really have things warped round the wrong way

the reason bitcoin is $50k plus and not $500 is because there is underlying value bottom no one wants to sell below because at some point no one on the planet can mine for less and so no one wants to sell for less.. theres real costs and integrated economics of the PoW that do affect the value premium window which the market price sits in.,. PoS has the fault in its economics of not having this value bottom protection. and it can crash to zero far more easily than bitcoin would

..
as to your question.. if ethereum had its own economic sentiment of its own independent community valuing ethereum for its own ethereum purposes.. the market price would never shadow bitcoins market wiggles at a certain ratio
but just check out the market charts
ethereum only hit its ATH when bitcoin hit its ATH.. bitcoin has known market cycles, known factors of its price evolution.. so when ethereum is also peaking/following at the same time as bitcoin, you know its being controlled by bitcoin
ethereum lost its independence of market sentiment on 14th May 2021, and ethereum just become a lame sheep to bitcoins market

bitcoin has a underlying store of value bottom support of $50k meaning its in good secure support. yet ethereum price can crash down to $50.. so keep that in mind

The fluctuations of the price of Ethereum does seem to follow those of the price of Bitcoin as far as I can see. The way I see it, perhaps as naive as I am, this indicates that these fluctuations are due to investors' overall confidence/regard for cryptocurrency fluctuating (put in simplified terms), whereas the relative regard for value of Ethereum vs. the value of Bitcoin remains comparatively constant in the meanwhile.

You seem to think that this is wrong. Is this an opinion you see mirrored elsewhere? Am I simply out of the loop in terms of how cryptocurrency is valued?

Is its price not ultimately based on how useful the investors foresee it to be as currency, and thus how many people will draw utility from the it and use it as a means of payment, in the present as well as in the future?

You also talk of some mechanism that ensures that the price of Bitcoin will never fall below a certain threshold. Can you perhaps provide a link or reference explaining this, or can you elaborate a bit more? It seems a tad unbelievable to be quite honest, but I'm happy to be corrected.

[mjdamgaard]

Ok, let's pretend that's really a serious "paper". [1]

Ethereum is a very different cryptocurrency than Bitcoin. Ethereum focuses on smart contracts, while Bitcoin focuses on stronger decentralization and censorship resistance. It is not a homogenous market where each supplier has a "share".

Thus it is at least a very disputable assumption that Ethereum will rise in value if Bitcoin disappears or falls drastically in value. But the whole incentive structure of this attack depends on this assumption.

Ethereum actually has almost always crashed too when Bitcoin has crashed. So if Bitcoin is 51% attacked and crashes, Ethereum would also probably crash hard, because the "cryptocurrency market" as a whole would lose trust. Think about the ETFs which engage in both blockchains and their investors. They would actually probably retire from the whole crypto market as they don't want to be associated with users wasting billions on a failed attack between their own products.

I'm almost sure that these effects would make the attack a huge loss for the attackers. Well, as long as they don't short Ethereum too (and other blockchains ...) while they perform the attack (this may actually a real vulnerability for a coordinated attack against crypto as a whole ... but supposedly there are not enough coins to short)

Ethereum could actually have to fear this kind of attack much more from its own competitors like Solana, because these are active in a much more similar market. Ethereum could actually have a hard time if Solana and other Ethereum killers come too close ... (at this moment, all Ethereum killers together have only 30% or so of ETH's market cap, but they come already close to the feared 34% attack ... ).

The last sentence between parenthesis was aktually a joke. Market cap is not the same than sales.

The fact that Ethereum is now PoS is exactly the underlying reason why it is not really vulnerable to a similar kind of attack, aimed back at itself. Feel free to disagree with me on this point: I would not mind at all discussing this further.

Thank you for capitulating so early, so everybody knows that there's nothing to see here.


[1] I read the "paper" and it is ridiculously shallow. Its main section only explains a smart contract to bribe miners, which is the least important part of the puzzle. The rest is wild speculation. No wonder this "researcher" has zero citations.

In regards to Ethereum and Bitcoin not being competitors on exactly the same market, this is a really good point. I certainly think that you are right that Ethereum's market is more than just the core cryptocurrency itself, but also the smart contracts, NFTs, etc. And assuming that PoW is regarded by some as a more decentralized technology than PoS, then you are also right that Bitcoin have a market for their cryptocurrency that isn't fully in competition of Ethereum.

However, we must agree that they are still competitors to a large extent in terms of their core cryptocurrency, nonetheless.

I for one could actually imagine a future where PoS cryptocurrencies will be 'the thing to have,' and where PoW blockchains are marginalized, and especially because if PoS cryptocurrencies ever take over, then the attack vector described in this topic could very well mean that the PoW blockchains will be kept down.

In regards to the potential for an attack on Ethereum, see my recent Reply #51. I don't believe that Bitcoin would even be able to retaliate, and the other PoS blockchains pose a much lesser threat, to say the least.

Ha, I don't quite see how that's capitulating, and I certainly didn't mean to!

And about your last point, I also have some critiques of my own of that paper, but I don't suspect that their calculations of the CapEx is completely off, at least at the time it was written. And now I've seen someone (User @Stompix) estimate $12B in the mentioned AltcoinsTalks thread, as well as @franky1 here with an estimation of ~$24B (for both the CapEx and the OpEx).

[DaveF]

...Yes, it would take some time if the Ethereum stakeholders choose to set up the farms themselves, but it can be be done, even if it will take several months....

YEARS not months. That much excess mining gear does not exist, so you would have to have been stockpiling for at least a year if not 2 or 3 to get that amount of gear. Or you could just take over the used markets and buy it all but then you are suffering from having an mixed batch of used equipment you have to deal with.

Fair enough, let's agree to assume that it could take years (i.e. given that the existing Bitcoin miners are somehow very loyal and cannot be bought by the competitors/attackers).

So, do you really thing while someone is buying billions and billions of dollars of mining gear over a couple of years (and not mining with it) nobody is going to notice.
Remember, other people will keep buying gear and increasing difficulty and that would make you have to buy even more gear (and not mine with it) otherwise you will be driving up the difficulty on yourself.

ETH being a POS coin with as I stated above 60% of it's capacity at 3 providers would be easier and cheaper to kill. Think about it $20 billion will get you 1% of Amazon stock and a complete buyout of Hetzner & OVH
With 1% control of the Amazon stock it would be simple to put a proposal out to the board an have them shut down all ETH nodes hosted there along with the others you could take out 60% of the ETH nodes leaving people hanging. And then watch as a bunch of the remaining stakers all start to sell to get their coins out before the total crash.

Could probably do it for a lot less Hetzner has 18% of all ETH nodes out there and the company is valued at less then $3 billion OVH has 12% of the nodes and it valued at a lot less add in a couple of others for for $5 billion you could control over 35% of the ETH nodes and close to 50% of the staked nodes. Then you come in one morning and shut them all off. Sit back and watch the chaos.

Most people staking have no idea what to do or how it works, all the know is they clicked a few keys and now their ETH is earning less then having sold it for cash and putting that cash in a savings account. (3.25% give or take for ETH vs 4%+ for a good savings account and if you want to lock up your cash like the ETH stake people have their ETH locked up you can get 5%+ on a short term CD)

If someone (or some government) wanted to attack BTC there are better / cheaper ways of doing it then mining. EVERYONE knows this more or less. And as I keep pointing out since no person / government has done it it just kind of proves that they know that even if massively attacked BTC would improvise & adapt & overcome.

-Dave

[HeRetiK]

I'm almost sure that these effects would make the attack a huge loss for the attackers. Well, as long as they don't short Ethereum too (and other blockchains ...) while they perform the attack (this may actually a real vulnerability for a coordinated attack against crypto as a whole ... but supposedly there are not enough coins to short)

Doesn't matter if there'd be enough coins to short though; in the end shorts are just IOUs and as we all know that there's no limit to those, at least if we talk about shorting on centralized exchanges. It would still be a risky play though, given that squeezing shorts can be just as profitable.


--


Either way, as interesting as I find this whole discussion to be, there are probably cheaper and more effective ways to sway the market in one way or another.

Imagine what you could do with even the low end of $6 billion. That's 17 times the budget of Avengers: Endgame, except it's a whole cinematic universe about crypto (tacky, I know, please don't do this). 8 stadiums like the crypto.com arena, except the crypto-community builds and owns it, instead of merely sponsoring it. Provide UBI for a small town of 1,500 people (named after the cryptocurrency of your choice), each receiving a yearly income of 50k over a lifespan of 80 years.

Or, you know, just buy a handful of politicians.

I believe either of these would probably more effective than attempting a 51% attack on Bitcoin.