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Budish (2018) gives some attempts at formulas to determine attackers' incentives under various hypotheses: http://faculty.chicagobooth.edu/eric.budish/research/

by schoen 8y ago

Budish (2018) gives some attempts at formulas to determine attackers' incentives under various hypotheses: http://faculty.chicagobooth.edu/eric.budish/research/Economic-Limits-Bitcoin-Blockchain.pdf http://faculty.chicagobooth.edu/eric.budish/research/Economi... It's tricky to directly apply these to cryptocurrency adopters' risk, although they apply more directly to "transaction size" than to "wallet size". You can probably apply some of Budish's calculations to transaction size unless you anticipate there's a way that your transaction counterparty could be defrauding you and other people in roughly the same way at roughly the same time. (For transaction size, the main risk is that you give someone something else of value in exchange for a transaction that's subsequently removed from the consensus history.) But for wallet size, the risk is not that someone steals your cryptocurrency from your wallet, but that your cryptocurrency becomes less valuable because other people recognize risks more immediately as a result of discovering and publicizing a successful attack. But that has most to do with how other people respond to the news of the successful attack, which is harder to predict.

philwelch 8y ago
> But for wallet size, the risk is not that someone steals your cryptocurrency from your wallet, but that your cryptocurrency becomes less valuable because other people recognize risks more immediately as a result of discovering and publicizing a successful attack. But that has most to do with how other people respond to the news of the successful attack, which is harder to predict. And that's going to be governed by irrationality, especially given the irrationally exuberant bubble effects of the cryptocurrency market in the first place. But once that wears off...I don't know. If you somehow managed to make a cryptocurrency that couldn't be profitably attacked, and made the base minimum cost of such an attack high enough, you'd still be vulnerable to a state-level adversary, but every system is vulnerable to a state-level adversary.

by schoen 8y ago

philwelch 8y ago

> But for wallet size, the risk is not that someone steals your cryptocurrency from your wallet, but that your cryptocurrency becomes less valuable because other people recognize risks more immediately as a result of discovering and publicizing a successful attack. But that has most to do with how other people respond to the news of the successful attack, which is harder to predict. And that's going to be governed by irrationality, especially given the irrationally exuberant bubble effects of the cryptocurrency market in the first place. But once that wears off...I don't know. If you somehow managed to make a cryptocurrency that couldn't be profitably attacked, and made the base minimum cost of such an attack high enough, you'd still be vulnerable to a state-level adversary, but every system is vulnerable to a state-level adversary.