4 ms·

> Once the reward drops to zero, transaction fees will be born directly by parties to the transaction and will have to be high enough to stave off a 51% attack

by paulgb 6y ago

> Once the reward drops to zero, transaction fees will be born directly by parties to the transaction and will have to be high enough to stave off a 51% attack directly. This is something I don’t see talked about much, but the asymptotic state of Bitcoin when mining fees are zero is interesting to think about. It’s not obvious to me that the economic incentives against running a 51% attack will exist in the “terminal” stage of Bitcoin in the way that they do in the “inflationary” (positive mining reward) stage.

arcticbull 6y ago
Would the economic incentives not remain unchanged as a function of unit price of BTC? It feels like in the terminal state there’s going to be a high stakes game of chicken between attackers and holders to see who’s willing to pay more for control of the whole network. This is likely exacerbated by a move to layer 2 networks to avoid the 7tx bottleneck isn’t it? I’m not sure personally this is just something I’ve been noodling on.
- paulgb 6y ago
  Yes, I agree that the incentives to run a 51% attack are purely a function of the market value, but I mean that without the incentive to mine in excess of what transaction costs would pay for being socialized by the whole community, it seems unlikely that transaction fees will be enough to secure the network from a bad actor. Especially if, as you point out, layer 2 networks become a more desirable place to do transactions. Basically, it seems like the terminal state of this is a gigantic freeloader problem where everyone wants the network to be secure but nobody is incentivized to do it.
  - benlivengood 6y ago
    > Basically, it seems like the terminal state of this is a gigantic freeloader problem where everyone wants the network to be secure but nobody is incentivized to do it. It'll be in the interest of exchanges and payment processors to prevent double-spend at least, and they have an incentive for the blockchain to be trustworthy vs. running their own attacks and could adjust their own fees to maintain >51% control of miners across the lot of them. There's also a fallback recovery mechanism; for any attacker willing to invest $X in a 51% attack the remaining users only have to invest an additional $X*.04 to regain 51% control and make a hard fork that most miners would switch to. My guess is that faced with evidence of a double-spend most miners would switch to the hard fork to avoid losing the block rewards the attacker's chain stole from them. This relies on rapid detection of the attack and availability of a hard-fork client.

by paulgb 6y ago

arcticbull 6y ago

Would the economic incentives not remain unchanged as a function of unit price of BTC? It feels like in the terminal state there’s going to be a high stakes game of chicken between attackers and holders to see who’s willing to pay more for control of the whole network. This is likely exacerbated by a move to layer 2 networks to avoid the 7tx bottleneck isn’t it? I’m not sure personally this is just something I’ve been noodling on.

paulgb 6y ago
Yes, I agree that the incentives to run a 51% attack are purely a function of the market value, but I mean that without the incentive to mine in excess of what transaction costs would pay for being socialized by the whole community, it seems unlikely that transaction fees will be enough to secure the network from a bad actor. Especially if, as you point out, layer 2 networks become a more desirable place to do transactions. Basically, it seems like the terminal state of this is a gigantic freeloader problem where everyone wants the network to be secure but nobody is incentivized to do it.
- benlivengood 6y ago
  > Basically, it seems like the terminal state of this is a gigantic freeloader problem where everyone wants the network to be secure but nobody is incentivized to do it. It'll be in the interest of exchanges and payment processors to prevent double-spend at least, and they have an incentive for the blockchain to be trustworthy vs. running their own attacks and could adjust their own fees to maintain >51% control of miners across the lot of them. There's also a fallback recovery mechanism; for any attacker willing to invest $X in a 51% attack the remaining users only have to invest an additional $X*.04 to regain 51% control and make a hard fork that most miners would switch to. My guess is that faced with evidence of a double-spend most miners would switch to the hard fork to avoid losing the block rewards the attacker's chain stole from them. This relies on rapid detection of the attack and availability of a hard-fork client.