Quote from: newguy05 on January 09, 2014, 04:43:23 AM

Quote from: kalus on January 09, 2014, 04:07:45 AM

Quote from: kendog77 on January 08, 2014, 07:00:35 PM

Quote from: newguy05 on January 08, 2014, 04:35:57 PM

I was just looking at the bitcoin difficulty chart and realized how small this network really is despite the extreme difficulty increases over the last 2 years. Lets get to it:

1) Currently difficulty is at ~10,000 TH
2) Single 1 TH mining box cost ~$1000 to manufacture (reality is much less than 1k, but for easy calculation lets use $1k)
3) To destroy the bitcoin network you need to control 51% of the network.
4) To bring 10,000 TH (assume evildoer wants to be thorough) online it will cost: 10,000 * $1000 = $10million, add on another $10millon for R&D, $20million total.
5) Goldman saches makes ~$30million a day in NET revenue (same with most other banks)
6) It will cost a SINGLE bank HALF day's net revenue to wipe bitcoin out - less than their office supply budget.

We are just an ant...not even ant, a microscopic organism in the financial world. If bitcoin becomes too big or start hurting those bank's bottomline (transaction fees), all they need to do is sneeze and bitcoin is gone. And there is no regulation/anti-competitive laws to protect bitcoin, it is completely de-regulated at this point.

Heck it doesnt even have to be the banks, even a small hedge fund or single person with some cash can wipe out bitcoin in a single instance.

The other ironic thing is the market cap of bitcoin is around $12billion right now compared to the $20million to destroy it. It shows how far removed from reality everything is, i dont think people really thought this through. If bitcoin can be shorted, someone can just short it, then destroy the network for riskfree win.

The difficulty needs to increase by 1000X at the minimum ($10 billion) to provide some bare minimum security to bitcoin's network

Dont agree with what I said about the current state of bitcoin? then provide your reasons, i love to be proven wrong. But just cant find a fault in my numbers.

You're analysis is flawed and $20 million estimate is low for a number of reasons:

1.) In order for someone to pull this off, they would need $20 million worth of mining hardware today. If they start now, it will be months before they can bring the hardware online, at which time the difficulty will be much higher. In less than 5 days, the difficulty will go up another 25% so they will need $25 million worth of hardware.

2.) The analysis only covers the manufacturing and development costs, and ignores the cost of labor to set everything up, power, and facilities to run 10,000 TH. The ignored costs are not small.

3.) If someone really could bring 10,000 TH online today for $20,000,000, that setup would earn almost $3,000,000 in bitcoin per day. It doesn't make any sense for someone to spend $20,000,000 to destroy something that would earn them $3,000,000 per day.

4.) If Bitcoin is destroyed, I have little doubt that users will switch to a non SSA-256 coin like Litecoin. Some other crypto that doesn't contain the flaw would take over, so anyone trying to destroy crypto would end up playing whack-a-mole and waste millions of dollars.

5.) If the user was malicious, I suspect they would have millions of dollars worth of liability and end up getting sued into oblivion. Can you imagine how much negative publicity a company would get for even trying to destroy Bitcoin?

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There are actually some good responses to find fault in my logic, but the response you quoted is actually one of the worst (no offense to the poster), every single point is just flat out wrong.

Understand spending 20 or 50 million to bring 10-50k TH online is nothing in the real business world, we are not talking BFL or Avalon here. Lookup how much a single sp500 bank makes in revenue in a day, lookup how many hardware/chips apple/Foxconn/tsmc can dump out in a day. Did those BFL/Avalon scams really conditioned the community to think mass producing asic boxes is difficult?

Understand the corps don't give a shit about mining 3600 or whatever btc a day to make a few million $, lookup how much they make in transaction fees, wire fees, credit card fees. All will be gone if btc fulfill its intended purpose.

Also understand you can replace 1 currency network with another, but to actually have people trust and support the new network, is extremely difficult. See replace gold with copper analogy earlier.

Finally understand there is no liability, implied to otherwise. Btc is not legal tender under any country including us. There is no regulation nor law to prevent company or person to destroy it.

As I said only reason none bothered is because it is not popular enough to affect their bottom line yet. Difficulty needs to catch up - at minimum another 1000x increase before it becomes popular, otherwise there will be trouble.

I don't understand how you can say a bad actor would have no financial liability. I'm all for fair competition, but burning down your competitors house is not fair, legal competition.

Something analogous to this would be for credit card issuer A to hack into credit card issuer B's network to destroy it. Just because B has poor security does not give A the right to destroy it, and A would be liable for financial damages.

People sue for just about anything these days, and the bar is fairly low, so I have no doubt that the bad actor would face a lot of legal action by folks harmed by their actions. Also, the damage to the bad actors reputation may cause more financial harm than any lawsuit.