Bitcoin is a cryptographic currency that has continued to grow in popularity since it first came on the scene about a decade ago. It is a decentralised network where people can make payments anonymously using digital bitcoins. It is this anonymizing factor and the decentralised nature of the service that makes people support it. For those who wish to put an end to Bitcoin once and for all, this is a big stumbling block.
Bitcoin is valued at around $70 billion and is rushing towards the point where it is going to be impossible to shut down. The fact that even its users don’t know how to stop the service shows what a mountain task it will be for anyone looking to do so.
Who could attack Bitcoin Seriously?
As mentioned before, Bitcoin’s current valuation stands at $70 billion, and the service sees trading worth $1 billion on a daily basis. To mount a serious threat to the cryptocurrency, around half of that amount would be required (we will show the valuation of attack requirements in later sections). That sort of money could be invested either by global banks like JP Morgan Chase or HSBC. Even these would need to pool their resources and come up with a feasible explanation to their stakeholders.
Apart from banks, the obvious suspects are governments. Setting aside this sum is no big ask for any major government of the world. The funds can always be gathered from the tax payers’ money.
How Bitcoin’s Value can be Shattered
There are a few ways that organizations could seriously reduce the value of Bitcoins which could make shutting down the service much simpler.
Attack Miners and Nodes
The Bitcoin network is not run by a single, centralized organization. It is a pool of individuals, groups, and organizations that keep it running through devices like laptops, phones, etc. Another form of participating in this running and maintenance operation is to become a Bitcoin miner. Miners use computer chips to convert electricity into bitcoins. It’s like getting paid for their effort to keep the service running.
To seriously harm the service, these nodes and miners could be attacked. But there are a few problems with this. Firstly, nodes and miners aren’t always clearly visible. While there isn’t any need for them to hide as of now, they can easily do so if an organization sets out to attack them. VPNs and Tor can come to their aid. Even if some of the nodes and their operators are destroyed, it will only help others in their job, since their task would become more profitable.
Mine Empty Bitcoins
Attacking miners and node operators is not simple and not very feasible, as highlighted above. However, one could attack the system from within. This is where Bitcoin’s anonymous and decentralised nature could be leveraged and used against it. Since anyone who adheres to the software’s guidelines is allowed to become a miner, one could easily join this pool. This can help reduce Bitcoin transactions significantly.
Bitcoins are created when miners confirm transactions and put them in blocks. These blocks are stacked together to form chains. However, there’s nothing stopping someone from mining empty blocks, meaning not filling the blocks with transactions. Since the Bitcoin network relies on these blockchains for future transactions, the operation could be really damaged using this method on a large scale.
To get away with this, the length of these fraudulent blockchains has to be more than chains of honest miners. Bitcoin accepts the longest chains, so if the organization attacking it has the capacity to invest 50% of the total hashing power require by Bitcoin, then this could become a real weapon.
Illegalize Bitcoins
This is an option to consider, although it is unlikely to yield promising results for any prolonged period. There are places where Bitcoin is illegal. But that doesn’t mean that people in that country don’t use Bitcoins. As is the nature with illegalizing of a service, its usage and lucrativeness invariably proliferate. The task of mining bitcoins becomes much more profitable, which pushes people to plunge into the world of cybercrime to earn good money. Besides, the anonymous nature of Bitcoin makes it difficult for anyone to track down users and operators as it is. If they use VPNs or Tor, which they probably use already, then it’s near impossible to track people using Bitcoin even if it is made illegal.
Method to Destroy Bitcoin
Now that you know how the Bitcoin network can be damaged, take a look at how this can be put to effect.
Purchase Miners
Bitcoin network’s total hashing power currently stands at 5.7 X10^12 hashes per second. Combining this with the hashing ability of modern miners like the Antminer S9, one can estimate that there are 400,000 Antminer S9s currently operational in the market, with their total cost being about $450 million.
Now, to seriously hamper Bitcoin’s operation, at least 50% of the hashing power is required. To get this amount of computing power, the entire world’s computing power is needed.
The greater the number of miners, the more difficult it gets to mine bitcoins, and the value of bitcoins begins to stagnate. The rise in this difficulty will directly result in the fall in profitability of mining bitcoins. So, miners will be discouraged, allowing the attacking organization to gain 50% control of the total computing power sooner.
If things go according to plan, the organization can also build miners of its own and sell them for less than what is available in the market. Taking all this into consideration, an investment of around $400 million is required to get the attack rolling.
Operate all miners
The second step in the attack is to operate all the miners. Now, the power consumption of an Antminer S9 is 1372 W. This makes the total consumption of 400,000 Antminer S9s to be 548,800 kW. The power consumption for Bitcoin stands around 550 MW, which is not an enormous amount by any means. This amount of power is not difficult to source on the open market. If you go with the cheapest rates available, the cost for this comes out at around $190 million a year. This is the power you will need to keep Bitcoin blocks empty.
How can this attack be thwarted?
Should an organization really set out to attack the Bitcoin network in this fashion, the Bitcoin community can also make its move to ensure its continued operation. For starters, it could simply include the rule that Bitcoin blocks have to be filled with transactions. This will tackle the problem, of empty blocks. But attacking organizations could instead switch to filling the blocks with fake and pointless transactions just to keep themselves in the network.
The other thing the Bitcoin community can do is change the proof-of-work algorithm altogether. This is a serious move that will require substantial funding on Bitcoin’s behalf since all the present miners and their Bitcoins would become useless. This will cause problems for the attacking organization, but also for existing users. Obviously, new miners will have to fill in for those who will get victimized by this step, and some funding will be required by Bitcoin to keep the service running. But if their rivals have to spend $500 million to attack them, then they would need to spend some money of their own to thwart their attempts as well.
The attack against Bitcoin will require considerable effort and investment from anyone who makes that decision. Such is the nature of the service that it is difficult to bring down. However, should a government really decide to lock horns with it, the Bitcoin network could be in jeopardy. However, with a few tricks of their own, they can ensure continued operation.
Now that we’re here to discuss Bitcoin, have you checked out the best VPNs to use with Bitcoin?
