How a nation state, Kamikaze, could kill Bitcoin
Bitcoin has survived so far for more than 11 years. The network continues to function as intended, in part, thanks to the assumption that miners will always act in their own economic interest.
But what if a powerful and rich actor intends to destroy Bitcoin? What would happen if that actor had no interest in preserving the value of the network?
Does the Bitcoin security model crumble when actors behave irrationally?
Bitcoin protects itself from attack using its incentive structure. Miners who play according to the rules get rewards and block rates. Those who want to break the rules must pay a large initial and continuous cost and risk devaluing all other currencies in circulation.
Attempting to play or modify the network in favor of a particular miner would require the participant to order 51 percent more hash power. The mining equipment and the electricity needed to operate it are expensive.
Once network users are aware of the attack, many will probably try to sell their Bitcoin. This makes any attack much more expensive since any return of subverting the network will have a significantly lower price.
In an article last year entitled “A model for Bitcoin security and the decrease in block subsidy,” analysts Hasu, James Prestwich and Brandon Curtis argued that Bitcoin’s market value would plummet following a successful attack by double spending if this is possible would mean that it would be an economic suicide for a miner, even if they operated 100 percent of the hash rate, as if to abuse the system.
What happens if the attacker doesn’t care about the cost?
The issue of the Bitcoin security model has re-emerged in the cryptocurrency industry. In response to a Hasu article detailing the lack of risk posed by mining centralization, some Twitter users raised the issue of an irrational actor.
As mentioned earlier, and is detailed in much more detail in Hasu’s work, the Bitcoin security model depends on those who extract it seeking to preserve its value. Otherwise, what would be the point or philosophy of mining?
Although it would undoubtedly be incredibly expensive to obtain a dominant part of the current Bitcoin hash rate, if a sufficiently well-financed attacker simply wanted to destroy the network, it could theoretically cause enough damage to it to make it functionally useless.
Fintech CEO Mike Kelly argues that Bitcoin is not as resistant to an attack at the national state level as many think. By stating that governments “just don’t take Bitcoin seriously” at this time, he reasons that a nation enthusiastic enough could take advantage of major mining operations, DoS of the entire network and, ultimately, leave only three options, all of which imply a big drop in the price:
Kelly’s comments come in response to a video clip by Andreas Antonopoulos published during a discussion about the Bitcoin security model. In it, Antonopoulos confidently tells listeners at a conference that he is not afraid that such an attack is possible. Referring to a potential attacker the size of a nation, he says the following:
“Bitcoin has reached a level of computing that no national state can topple only through computing. We would like to kick those b ****** out of the network. They would have lost a billion dollars doing this and everything they had to to do would be a double expense. “
Antonopoulos also addresses the idea that the nation could be attracted by economic incentives that drive the honest actors of the network, as in which, they could exploit the network themselves.
Accusing Antonopoulos, and the industry in general, of “shaking hands” as a “critical weakness,” Kelly says the respected Bitcoin researcher is “unusually irrational.” He also asks if Antonopoulos wishes to illuminate the market on how Bitcoin is protected from an attack that would surely increase the price.
Disclaimer: This press release is for informational purposes information does not constitute investment advice or an offer to invest. The views expressed in this article are those of the author and do not necessarily represent the views of infocoin, and should not be attributed to, Infocoin.