The latest research from Coin Metrics sheds light on the impracticality of 51% of attacks on Bitcoin and Ethereum networks, debunking fears of network manipulation by nation-states.
Total Cost to Attack: A New Metric
Coin Metrics researchers introduce the Total Cost to Attack (TCA) metric to evaluate the financial feasibility of launching 51% of attacks on blockchain networks.
It is no longer feasible for nation-states to disrupt the Bitcoin (BTC) and Ethereum (ETH) networks through 51% of attacks, according to a recent report by Coin Metrics. The research findings suggest that the exorbitant costs associated with executing such attacks make them economically unviable.
The study, authored by Coin Metrics researchers Lucas Nuzzi, Kyle Water, and Matias Andrade, delves into the concept of 51% attacks, where malicious actors gain majority control over the mining hash rate in proof-of-work systems like Bitcoin or staked crypto in proof-of-stake networks like Ethereum. The ability to manipulate the blockchain’s integrity theoretically accompanies such control.
Coin Metrics’ research challenges the notion of nation-states conducting continuous 51% attacks on blockchain networks due to the impracticality and lack of profitability associated with such endeavours.
Using the innovative Total Cost to Attack (TCA) metric, the report assesses the overall cost of launching 51% of attacks on Bitcoin and Ethereum. The findings indicate that the financial incentives for nefarious actors to carry out these attacks are virtually non-existent.
The study reveals that even under the most lucrative double-spend scenarios, where attackers could potentially earn $1 billion after investing $40 billion, the return on investment would be a mere 2.5%. The report underscores the monumental challenges and prohibitive costs associated with executing such attacks on a large scale.
In the case of Bitcoin, the report estimates that a 51% attack would necessitate the purchase of approximately 7 million ASIC mining rigs, amounting to around $20 billion. However, the scarcity of ASIC rigs renders such an attack logistically implausible.
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Similarly, attacking the Ethereum network would require extensive resources, with estimates exceeding $34 billion, including the need to manage over 200 nodes and significant expenses on services like Amazon Web Services (AWS).
Coin Metrics also addresses concerns regarding a potential 34% staking attack on the Ethereum network by Lido validators, dismissing it as both time-consuming and financially unfeasible.
Experts laud Coin Metrics’ research as a groundbreaking contribution to the field, providing empirical evidence that dispels fears of large-scale network manipulation by nation-states. The rigorous analysis offers reassurance to stakeholders within the cryptocurrency ecosystem, highlighting the resilience of Bitcoin and Ethereum networks against hostile actors
enormously important paper, highly recommend reading. https://t.co/4IVy9Y4AUm
— nic "bankful" carter (@nic__carter) February 15, 2024