Is the minimum amount of money required to purchase >50% hash power equal to max worth of all existing bitcoins?

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20 BFL Bitforce Mini Rigs (each, $30k) will give about 30THash/Sec hash power for $600k. That's way above 60% of hash power of then total 51THash/Sec.

10.694M total Bitcoin * $18.5 current mtgox best ask rate = $197.839M

So, BFL should ship at least 6595 such miners, or price it based on, (total worth of all Bitcoin / no of miners planned to ship).

Does this mean, these miners priced so low, or currently bitcoins comparatively valued so high? Or, these two parameters just unrelated?

Please note that these miners are yet to be shipped.

vi.su.

Posted 2013-01-24T04:47:11.590

Reputation: 1 714

Answers

4

OK, the question here is worthless anyway for 2 reasons.

  1. Getting 51% hashing power over the network doesn't give you all of the Bitcoins. All that does is allow you to spend Bitcoins, and then later roll back the blockchain and spend them again.. If you've let the blockchain commit 6 blocks to get a "real" transaction committed, then it's going to take you a while to undo that whole chain as the rest of the network continues to run away from you with the soon to be previous real blockchain. That's going to be expensive because if one person or group thinks they can do it, then you can bet two people or groups will think they can.. All so you can buy your pizza again with your same bitcoins, and steal some petty amount of money from whomever you spent it with the first time.. Your reward isn't all the money (unless you think you can catch up 4 years of signed blocks.. dunno maybe you could), and even if it was, it wouldn't be worth it.
  2. If you do pull off this Bitcoin coup.. What are you really going to do? It isn't run away with 200 million USD. It's destroy the value of Bitcoin.. at least until balance is restored (in which case, you've stolen nothing). You think Mt Gox is going to let you cash out when you send them the coins from their wallet that you've taken by rewriting the blockchain? Do you think they even could? You think you'll find the market depth to cash it all out? I can tell you now.. You won't.. Even if you use all the exchanges, it won't be there.. You'd be stealing more coins than actually exist. I know I've personally destroyed 280 of them. I've heard of many others destroying more.. You'd get them back in the full rewrite of the blockchain required to steal everything, but the USD behind those doesn't exist on the exchanges.. It never did.. In theory, you could steal the sum of all the asks on all the exchanges if you could undo enough transactions to do so.. If you didn't time it right though, a lot of them are going to go away as the price plummets like it was two July's ago..

Satoshi's genious wasn't making it impossible to cheat the system (although it is very difficult), it was making it so that it was not to your advantage to do so. If you can hit 51% or greater, your best option is to just take 51% of the new coins.. Maybe occasionally you rewind and undo some large transactions you made with your own coins, but if you did that too much, then you've ruined yourself soon enough..

Jeff Buck

Posted 2013-01-24T04:47:11.590

Reputation: 41

@Lohoris: Regardless of the facts, any answer on SE which starts with "The question is worthless" isn't good. – Meni Rosenfeld – 2013-01-24T13:53:04.930

Right, >50% attacks probably won't get you valuable coins. But they can be pretty handy if you're a government or bank trying to destroy Bitcoin. – Meni Rosenfeld – 2013-01-24T13:53:56.880

@MeniRosenfeld maybe it could be phrased in a more polite way, but the core is really good. – o0'. – 2013-01-24T15:57:23.363

@MeniRosenfeld sure it could be useful if you would like to destroy bitcoins, but in that case it makes no sense to compare the cost to the BTC value. Comparing the cost of such an attack to the value of bitcoins makes only sense if that attack granted you possession of those bitcoins. – o0'. – 2013-01-24T15:58:18.963

@MeniRosenfel, exactly my point too. When someone tries to destroy Bitcoin then they could build much better ASIC chips at the fraction of the cost of BFL minirig's retail price. – vi.su. – 2013-01-24T16:12:59.797

@Lohoris: I agree of course that equating the Bitcoin market cap with the total value of all mining hardware is wrong. But Jeff seemed to be implying nobody will ever have an incentive to try doing a hashrate attack, which is simply wrong. – Meni Rosenfeld – 2013-01-24T16:29:32.280

3

The only reason it looks economical to perform a 51% attack is because no substantial amount of ASIC hardware has started mining on the network yet. Once the existing ASIC orders are shipped out, the total network hash power will be much higher.

Further to that, the ASIC harder suppliers would not ship such a large amount of hardware to a single buyer if they thought it would put the network at risk. Their business model depends on the ongoing success of Bitcoin.

Highly Irregular

Posted 2013-01-24T04:47:11.590

Reputation: 10 514

Yes, but ASIC suppliers could not prevent pooling sold miners. – vi.su. – 2013-01-24T05:29:30.060

1True, but it seems an unlikely idea that a secret consortium would conspire to purchase the majority of ASIC mining equipment in order to bring down the network when they are the ones with the most to gain by keeping Bitcoin popular and successful. – Highly Irregular – 2013-01-24T08:06:59.297

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These two parameters are mostly unrelated. There is some proportionality which also depends on many other factors, but equilibrium can always be reached by floating the number of units to which there is demand.

Meni Rosenfeld

Posted 2013-01-24T04:47:11.590

Reputation: 18 542

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