The leading cryptocurrencies may be immune to certain malicious attacks
It’s no longer possible for nation-states to eliminate the Bitcoin and Ethereum networks via 51% attacks due to the high costs demanded to do so, according to a recent research study by crypto intelligence firm Coin Metrics.
A 51% attack is when a malicious actor possesses more than 51% of a proof-of-work system’s mining hash rate or 51% of staked crypto in a proof-of-stake network. Attackers could theoretically use this capability to modify the blockchain, such as preventing new transactions from being confirmed or reversing transactions to double-spend tokens, which would decimate the network by deteriorating trust.
9 We also find no ways for a nation-state attacker to continuously run a 51% / 34% attack if the goal is to destroy these networks.
The possibility of retaliation techniques makes ideologically driven attacks costly at each retaliation round.
In the end, the network survives.
— Lucas Nuzzi (@LucasNuzzi) February 15, 2024
Coin Metrics researchers Kyle Waters, Lucas Nuzzi and Matias Andrade asserted in their February 15 report that there are no longer viable methods for a nation-state attacker to constantly run an attack given the high cost of operational and capital expenses to acquire 51% control. The report uses a metric called “Total Cost to Attack” (TCA) to determine the exact cost to attack a blockchain network.
“In none of the hypothesized attacks presented here [would the attacker] be able to profit by attacking Bitcoin or Ethereum,” states the report. “Consider that even in the most profitable double spend scenario presented, where the attacker could potentially make $1B after spending $40B, that would account for a 2.5% rate of return.”
Nic Carter, partner at Castle Island Ventures, heralded Coin Metric’s research as “enormously important.” He says that prior analyses had been largely unclear or theory-driven and that this research was the first time a rigid and practical analysis had been performed.
“This is analysis that has never been possible before. This is a very significant contribution to the literature, and one that I personally have been waiting for for a long time,” noted Carter.
