More specifically, bitcoin holders are trusting that some collection of entities with more than 50% share of the mining power won't collude.

It seems like a reasonable assumption honestly, everyone would know and value would tank.

I'm by no means a fan of bitcoin, but miner collusion was never what kept me away. I like the original arguments for bitcoin related to a decentralized currency and privacy. Neither have proven to be possible on the bitcoin blockchain and I see absolutely no value in btc if I have to use off chain solutions to make it fit any real world use case.

If a party could control the irregular tide of Bitcoin’s value rising and crashing, then it holds a means to stimulate or impoverish whatever economies rely on Bitcoin. This could be particularly attractive for parties who want to avoid formally declaring sanctions or for situations where sanctions might not be effective.

I would see a 51% attack as a nuclear option, since it could take a while for cryptocurrency users to once again believe that the network is secure, but you could imagine a situation where there is geopolitical conflict with a country, the people in that country adopt a cryptocurrency due to fiat currency collapse, and then it becomes useful to induce a cryptocurrency collapse as well.

Edit: oops, might have added this comment in the wrong place.

I suppose, but, not on the basis of "they are granted the authority to do this thing, but will not abuse it", so much as, "it is costly for them to do this thing, and it is unlikely to be worth it to them" ?

A timeless classic on this question:

https://m.youtube.com/watch?v=ncPyMUfNyVM

I'd like to hear how he'd kick the bad actors off the network. Bitcoin is fundamentally permissionless.

Off the top of my head: it seems unlikely that you can recoup the enormous investment required to get to 51% by making fraudulent transactions without anyone noticing and crashing the value of bitcoin, or agreeing to switch to a clean fork.

I'm not sure how early users tolerated this risk though.

That's potentially true if someone is trying to profit off 51% attacks.

But the true worst-case scenario is one where a coalition of governments decided to use 51% attacks as part of a plan to kill bitcoin.

They don't need to invest in mining equipment, they could just declare bitcoin as illegal and seize the biggest mining operations. It would take maybe 10 coordinated raids to grab more than 51% of rigs. Then they turn their seized mining farms towards mining a chain that rejects all transactions. Nobody would be able to move their bitcoins, other mining farms wouldn't be able to sell their coins and they would shut down from the combined threat of no revenue and potential future raids.

When combined with raids on the major exchanges to eliminate off-ramps, the value of bitcoin would crash as everyone rushed to liquidate.

And once the value of bitcoin crashes, it's much easier to continue the 51% attack, they would be able to shut down most of their rigs and leave them in reserve. You couldn't switch to a clean fork, as the government miners would just follow the fork, make their empty blocks look valid with spam transactions.

Agreed, that's an extreme but reasonably plausible scenario. In general, I don't think there's much you can do on this earth that could resist such a coalition.

I guess some encryption could hold even if the whole world agreed to break it, so there might still be a gap for an absolutely indestructive currency. Of course, excluding aliens or future generations with sufficient technology, or total data erasure somehow. Or our extinction, but it's not a fault of the currency if there's no one to give it value.

You don't even need to get that far, perhaps you don't even need 51% of miners. A much lower percentage of people loosing faith in the value of the currency, or just agreeing not to value it, or just realizing it's not actually very useful, would be enough to kill it. Most of the value of crypto is speculative anyways, when the bubbles burst, the actual real utilitarian value of the currency that is left is small enough that it just gets crushed with the momentum of the bank run.

That's a much larger threat in practice, and it has happened to a lot of crypto over the years.

Just throwing some thoughts out for the sake of conversation, this has already been endlessly discussed much more thoroughly for nearly two decades. I'm not even much into crypto, it's just fun to think about the possibilities.

A 51% attack allows you to rewrite history, which allows you to "double spend". For example, you could send funds to an exchange and withdraw them in cash, then during the attack send them to yourself instead. The amount of computer power defines how far back you can reorg the chain.

The transactions you create still have to follow protocol rules, which means you can only send funds from wallets you have the keys for - you cannot create money out of thin air, or steal funds from someone else's wallet.

You can't "double spend" without anyone noticing, even a minimal amount is in theory detectable by the exchange and the word would spread like fire.

Perhaps the exchange would let it go if the amount is small enough, so that the value of the currency doesn't crash for everyone, but remember you are trying to recoup the enormous investment needed to get to 51%.

It's true that you can withdraw a large amount of money once, let the whole thing crash and run away with the cash. But you need to control that money to withdraw it, so you'd need to take it from other's accounts using your 51% advantage, and get the cash from the exchange before anyone notices. How are you gonna do that for such a large amount of money?

The exchange would never let you withdraw anywhere close to such an amount anyways, they just don't have it. Even if you somehow do it on all exchanges at the same time, it's too much. Even if they somehow have the capital, they just wouldn't let you, because they know it will tank the value of the currency, even if the withdrawal is legitimate.

I really can't see how you can steal more than you spent with the 51% move. The only thing you can do is spend a lot of money to crash the currency with a big loss on your side.

Exchanges almost always have large amounts of stable coin, and no limit on withdrawing them.

It makes it so easy to get large amounts of cash equivalents out of an exchange and then launder them though mixers (even laundering it though the deposit wallets of other exchanges would obscure the path long enough for them to covert it to real cash).

An attacker can deposit coins, trade it for USDT and have it deposited in another exchange before they even reveal the 51% attack.

you could go further and say that bitcoin holders are trusting that no major vulnerability will be found on the network.

yes absolutely.

But it's been going strong for 15 years now, completely open for attack 24/7 and with an enormous bounty for anyone successful. And yet, tick-tock, next block.