Lucas Nuzzi, Kyle Waters, and Matias Andrade have published a paper on the Social Science Research Network (SSRN) that presents a new method for determining the Total Cost to Attack (TCA) of Ethereum and Bitcoin. The thorough investigation challenges preconceived notions about blockchain vulnerability by illuminating the financial obstacles to 51% attacks.
Exposing the Cost of Compromise: An Extensive Analysis of Bitcoin and Ethereum Attacks
Lucas Nuzzi, the head of research and development at Coinmetrics, shared details of a new paper he co-wrote with Kyle Waters and Matias Andrade on Thursday. Nuzzi asked on social media, “How much does it cost to 51% attack Bitcoin and Ethereum? To find out, we simulated what an attack would look like. Our paper, Breaking BFT, was published today with some interesting results.”
An essential measure included in the report is the Total Cost to Attack (TCA) model, which adds all the capital and operating costs associated with carrying out a 51% attack or breaching the Byzantine Fault Tolerance (BFT). This metric provides a fresh perspective on how to evaluate the economic feasibility of such assaults and sheds light on Bitcoin and Ethereum’s robust security protocols.
The possibility that these blockchains could be compromised by nation-state adversaries is one of the many scenarios that the research carefully examines. The intricacies and expenses associated with examining a range of attack vectors in such detail highlight the networks’ resilience against possible attacks.
Nation states may become motivated to permanently disable these systems as open source, international substitutes for systems such as central bank digital currency (CBDCs), the report observes. But this raises a basic problem with 51% attacks, which is that it is very hard to make them permanent. The network can defend itself even in the event that attackers just mine blank blocks and launch continuous attacks.
The article explores the effects of decreasing block rewards on network security, among other scenarios. The results challenge conventional narratives in the cryptocurrency community by implying that network security may not be directly correlated with transaction fee revenue, contrary to popular opinion.
According to the report, “Declining subsidies have been a particularly salient concern in the context of Bitcoin’s perceived susceptibility to attacks and its long term security.” “The issue is that Bitcoin’s security depends on user fees taking the place of subsidies.” The authors add in their paper:
Such worries are justified by the tacit assumption that Bitcoin costs are correlated with security. The network is more secure the more fees miners are able to collect. Although this makes sense intuitively, we were surprised to discover that this was not a historically recorded pattern. This theory seems to be challenged by other factors that affect miners’ conduct.
The study also looks into the motivations of possible assailants, making a distinction between those who are motivated by ideology and those who are driven by greed. awareness the various risks to blockchain security and the financial impossibility of attacks for both parties requires an awareness of this disparity.
The implicit presumption that Bitcoin prices are connected to security justifies these concerns. The more money miners can make, the more secure the network is. Even while this makes intuitive sense, we were shocked to learn that this was not a trend that had been historically documented. Certain other elements that influence the behavior of miners seem to cast doubt on this notion.
The research also examines potential attackers’ motivations, distinguishing between those who are motivated by ideology and those who are driven by money. Understanding this discrepancy is necessary to be aware of the different threats to blockchain security and the financial impossibility of attacks for both parties.
Lastly, the study adds to the current discussion on the viability of Ethereum’s and Bitcoin’s deflationary monetary policies in the long run. Through an examination of miners’ speculative actions and how these affect network security, the authors present a nuanced perspective on how economic incentives support blockchain resilience
The results highlight the significance of ongoing study and adaptation in defending the cryptocurrency frontier against hostile threats as Bitcoin and Ethereum continue to develop. By questioning accepted knowledge, research usually clarifies the strength of these protocols against the threat of theoretical flaws and opens the door to more robust and commercially successful networks.
Regarding the research paper that estimates the real cost of attacking Ethereum and Bitcoin, what are your thoughts? Please feel free to express your ideas and opinions in the space provided for comments below.