Why Nation-States Can’t Dismantle BTC and ETH Networks
As a crypto enthusiast, you may have heard about 51% attacks and the potential threat they pose to blockchain networks like Bitcoin and Ethereum. But a recent study by Coin Metrics has shed light on why it’s practically impossible for nation-states to carry out such attacks due to the prohibitive costs involved.
The study, conducted by Lucas Nuzzi, Kyle Waters, and Matias Andrade of Coin Metrics, introduces the “Total Cost to Attack” (TCA) metric to estimate the expenses involved in such malicious activities. Their findings suggest that attacking either Bitcoin (BTC) or Ethereum (ETH) would not be financially feasible or profitable for attackers, essentially nullifying the incentive for such actions.
The Impracticality of Attacking Bitcoin
For Bitcoin, the attempt to gain control would necessitate acquiring around 7 million ASIC mining rigs, an investment of about $20 billion. However, the market lacks the availability of such a vast number of ASIC rigs, and even if a potential attacker decided to manufacture them, the cost would still exceed $20 billion.
- The attack on Bitcoin is not only impractical but also economically inefficient
- The most advantageous double-spend attack yielding a mere 2.5% return on a hypothetical $40 billion expenditure
The Challenges Faced by Ethereum
Ethereum faces a similar situation with its transition to a proof-of-stake model, where the report evaluated the feasibility of a 34% attack by Lido validators. The analysis concluded that any attempt to compromise the Ethereum network using Liquid Staking Derivatives (LSDs) would be both costly, exceeding $34 billion, and time-consuming, taking up to six months due to the churn limit, which restricts immediate stake deployment.
- The logistical challenge of managing over 200 nodes and incurring significant expenses further diminishes the plausibility of such an attack
- The cost exceeds $34 billion and time-consuming, taking up to six months due to churn limit
Expert Commendation
Nic Carter, a partner at Castle Island Ventures, commended the report for providing a detailed and empirical examination of the impracticality of 51% attacks on these leading cryptocurrency networks. He noted that previous analyses lacked the concrete, data-driven approach seen in Coin Metrics’ research, marking it as a pivotal contribution to understanding the security and resilience of Bitcoin and Ethereum against potential nation-state-level threats.
With this new insight from Coin Metrics’ research, it’s clear that nation-states would face insurmountable challenges in attempting to dismantle or compromise the integrity of Bitcoin and Ethereum. The prohibitively high costs involved make it financially unfeasible for any potential attacker. This study provides reassurance about the security and resilience of these leading cryptocurrency networks against potential nation-state-level threats.
So as an investor or enthusiast in crypto space, you can rest assured knowing that these networks have robust defenses against such attacks. It’s essential to stay informed about developments like this that contribute to understanding the security landscape within the crypto industry. With this information at hand, you can make more informed decisions about your involvement in the world of cryptocurrencies.
In conclusion, Coin Metrics’ research has highlighted why nation-states are unable to dismantle BTC and ETH networks through 51% attacks due to prohibitive expenses involved. This provides reassurance about the security and resilience of these leading cryptocurrency networks against potential nation-state-level threats. As an investor or enthusiast in crypto space, staying informed about developments like this is crucial for making informed decisions about your involvement in cryptocurrencies.
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