This DC cost $100 million. Not exactly pocket change. http://www.coindesk.com/bitfury-details-100-million-georgia-...

Plus, with BitFury online, the cost of a 51% attack just raised to $200 million.

The only reason it is (currently, for a short time) hypothetically possible to 51%-attack the network with a budget in the low hundreds of million of dollars is because most of the miners are not using such efficient 16 nm chips. As the market migrate to these last generation chips, expect the cost to increase to $1+ billion in the next year.

People seem to forget that it is NOT in BitFury's best interest to perform a 51% attack because, bitcoin's value will plummet if they do that.

>People seem to forget that it is NOT in BitFury's best interest to perform a 51% attack because, bitcoin's value will plummet if they do that.

If BitFury can turn $200 million into $400 million now rather than over a couple of years, why on earth would they care about the side-effect of killing off bitcoin?

For the avoidance of doubt, I think that BitFury's best interest is BitFury; as long as they make a decent chunk of money, the end result for bitcoin is - and should be - immaterial to them.

Yes but in practice you can't convert that much BTC into USD that quickly.

>Yes but in practice you can't convert that much BTC into USD that quickly.

Would they even need to convert BTC into USD? Even ignoring the obvious opportunities for shorting an entire economy?

I mean, I'm kinda curious to know what effects they could cause by e.g. choosing to mine zero-block transactions for a few days.

I thought miners already try to mine zero block transactions first, then add in fee transactions? apparently you can chew through the nonce really fast..

Not exactly. Some Chinese mining firms maintain a stratum connection to pools in the US so they can get just the new block header when a new block is found on the network. They then mine on that header until the full block is downloaded and validated by their local bitcoind (which can take 20 seconds, to several minutes in the worst case) This has been referred to as "SPV Mining".

If they find the next block during the time they are mining only against the block header, that block will contain no transactions. This doesn't happen very often, and there are some other issues that can arise from the practice (a multi-block fork happened once), but miners believe that it increases their profitability so (afaik) they continue to do it. More info here: http://bitcoin.stackexchange.com/questions/38437/what-is-spv...

But if that was a predictable consequence, they can't turn $200million into $400million now, because other would anticipate the future state of things and the price would plummet before a couple years. Not that I think that is at all what is going to happen.

>because other would anticipate the future state of things and the price would plummet before a couple years.

Why would the price plummeting matter to them if they've already made their money?

The only way they make money (cash out) is if trust remains in the bitcoin platform. By doing 51%, they tank the platform itself. No liquidity. Provable and transparent majority attack is MAD in the strictest sense.

>The only way they make money (cash out) is if trust remains in the bitcoin platform.

Not if their cash isn't - somewhat ironically - tied up in BTC.

Really, I'm sure between the two of us, we could imagine a thousand and one viable ways of making a tonne of cash very, very quickly that wouldn't involve transacting in BTC at any point!

Not sure I follow you here. How would they make money from controlling BTC other than by selling it? ...which is impossible if they break it, as argued above.

As the mining rewards keep lowering it's getting to the point here someone is going to do this for the lulz. As to cost you can sell all your coins before doing a 51% attack. Short the market and at some point it might even be proffitable to do so.

Yeah, but how many bitcoins is USD$ 100 million worth?

229922 BTC according to Google's exchange rates.

See: https://www.google.com/search?q=100M+usd+in+bitcoin

Or you could just buy bit fury

Or be the sovereign state whose jurisdiction that data center is in.

You couldn't buy BitFury for less than 200 or 300 million dollar. After all they expect this $100 million data center to be profitable so I am sure they value their company at least 2x or 3x this.

It's not pocket change… except for government organizations.

It is profoundly unlikely a state-level actor would bother.

You can cripple Bitcoin transaction clearing with a thousand dollars to DDOS the network with spam. If only state-level actors had a thousand bucks lying around ...

Malice isn't enough. The only special power of a 50% miner is to consistently resolve double-spend attempts in its favor. If this happened, it would surely lower the value of Bitcoin. This, an attacker must be not just malicious but also irrational enough to forfeit the $800,000 in Bitcoin that it creates daily by virtue of its 50% control of the network. (6 blocks/hour x 24 hours/day x 25 bitcoin/block x $450/bitcoin x 50%)

Not true. A malicious 50% miner can cancel any transaction it wants, not just fix doublespend. Assuming the transaction was sufficiently recent (the more hash power they have the more such a transaction can be in the past).

So they can "unspend" their own bitcoins, as follows : use 51% of your hash power to create a parallel blockchain, which is not published. Include all transactions, except the one you used to buy a TV. Put something else in it's place. Keep doing this until the TV is shipped/arrived. Then publish the parallel blockchain. Boom. Unspent.

Parent's point is that if BitFury did that, then nobody would trust Bitcoin anymore, thus crashing the price.

If BitFury resolved a single doublespend transaction differently from the "main" blockchain, people would(/should) realize that it now has the power to cancel transactions, and stop trusting bitcoin ASAP. At that point you can no longer trust the blockchain, since you can no longer know you're looking at the "true" blockchain, and not a fake one that has been presented to you to make you do something (e.g. pay someone real money).

In any reasonable person's version of "wait X blocks for confirmation" (currently mostly 3), X would be infinite.

>Parent's point is that if BitFury did that, then nobody would trust Bitcoin anymore, thus crashing the price.

If they make good money from it, why would BitFury care about bitcoin's long-term outlook?

they make money by mining bitcoin, if the value drops then their return, even if they sell all BTC immediately, would be affected. They just spent $100m on a new mining facility so to trash bitcoin would be to write off that investment. They cannot make good money by screwing over bitcoin without screwing themselves over.

Best case scenario is that at the end of the effective life of this DC BitFury decide to doublespend their coins to allow them to spend all bitcoins once, however by that time their relative % of the network will be less than 50%.

>They cannot make good money by screwing over bitcoin without screwing themselves over.

Why not? Surely this is more a lack of imagination on your part, rather than a hard fact?

Observation is that pretty much nothing crashes the price of Bitcoin.

* During the transaction spam DDOS attacks, the price went up even though it was literally unusable.

* The present price seems sustained by something that looks very Willybotish running between OKCoin and Huobi. https://www.reddit.com/r/Buttcoin/comments/3vnjgk/what_drive...

The remaining American Bitcoin traders are certainly gullible enough to keep buying and trading a 51%-compromised coin. (I mean, there are people who still think Paycoin could make a comeback.) But American traders are a sideshow - all the action is in China (miners, actual traders). So the question would be: will Chinese speculators keep gambling on a 51%-compromised coin?

(And of course the MMM ponzi buyers, whose judgement is sufficiently bad that they wouldn't even understand the problem.)

maybe people will trust bitcoin more if you put the right spin on it (bitcoin is now regulator-approved, etc.).

The attack you just described is semantically identical to a "double spend".

It's not necessarily 'irrational'. A 51% miner could profit from Bitcoin's downfall, or by threatening others, or even by bluffing an attack. See, e.g., the Goldfinger Attack in https://www.cs.princeton.edu/~kroll/papers/weis13_bitcoin.pd....

Stupid question: if control of 50% of the hash power is so unimportant, why does Bitcoin rely on hash power anyway? Why not simply have a consensus system without proof-of-anything?

If you remove proof-of-work, then the question then becomes: what else do you measure consensus by? A few other crypto currencies have tried other metrics but they all aim to for the same thing: removing the need for human trust.

Well, consensus between whom? How would you do distributed, anyone can participate at any time, byzantine consensus but still prevent Sybil attacks?

I think the reason is because then there would be no way for new coins to be mined and given to those who are rewarded for ensuring the security of the network.

>The only special power of a 50% miner is to consistently resolve double-spend attempts in its favor.

No, this post, and the handy table inside, explains the various attacks possible at different percentages of the hash rate:

http://hackingdistributed.com/2014/06/16/how-a-mining-monopo...

Short first hope the exchanges don't fold and run it into the ground with double spends. Alternatively just attack it because you feel scared about it but I do t believe anyone in power is since it is not going anywhere

At any point since bitcoin's inception there have been plenty of major govts that could have easily afforded the resources to pull off a 51% attack.

A real bad thing here is the asymmetry. To prevent 51%, the network has to burn enormous amounts of energy 24x7 forever while the attacker only needs his energy for the duration of the attack.

Counterpoint: physical security largely works this way too.

Well, things work much better in crypto (not proof-of-work, but the "real" one).

And now a single company can. Progress!

It has always been the case that a single company could 51%-attack the network. No regression here. In fact the cost has continually increased over time. So, yes, progress.

Not less than half of their datacenter, but less than all of their datacenter. See the current hash rate here:

https://blockchain.info/charts/hash-rate?timespan=30days&sho...