Complementary technical analysis on the 51% attack security issues for POW and POS

POS is more resilient to the 51% attack than POW, because:

1. POS has a higher attack threshold.

POS chains generally have a staking rate of 30% (e.g. BNB), so a 51% attack would require 15% of the total supply. However, it requires much less amount of mining machines when it comes to 51% attack on POW. We can do some specific math:

ETH has a market cap of $132.1B, so 15% market cap = $19.8B.

BTC has a total market cap of $377.5B and 205.43E hashrate, assuming one S19 95T miner values $2400 (manufacturing cost would be lower, about $1000 ~ $1500 per unit), at the mining facility, 1kw load = $80, 1 unit S19 plus 3.25kw mining facility cost = $2650. Therefore, 50% of hashrate of the network = 1.08 million units of S19, that’s $2.8 B or 0.6% of the BTC total market value.

That is, it takes 15% of the total market cap to attack ETH of POS, while it only takes 0.76% of the total market cap to attack BTC of POW.

15% of ETH Total Market Cap vs 0.76% of BTC Total Market Cap

15% of ETH Total Market Cap vs 0.76% of BTC Total Market Cap

15% of ETH Total Market Cap vs 0.76% of BTC Total Market Cap

Important thins cannot be underscored too much.

In the future, BTC’s hashrate/market cap ratio will get lower and lower as it halves. BTC faces a de facto 51% threat of attack.

2. Tokens initiated the POS attacks can be marked out and then voided, while you cannot mark the mining machines starting the POW attacks.

Suppose an organization does take 15% of the coins and launch a 51% attack at a 30% collateral rate, what would happen? The ETH holder would be overjoyed because the community can initiate a hard fork and directly void these 15% coins (and roll back the attack transactions if necessary).

One 51% attack makes ETH deflate by 15%, which is a great thing for the holders [laughing but not saying].

In contrast, it is impossible to mark miners that participated in the POW attack, the miners can immediately change the mining address to continue the attack if you hard fork mining address, or even change address after completing each attack block. In fact, historically there are a large number of small POW coins that were subject of 51% attack and they were all dead.

3. POS is more energy efficient and environmentally friendly than POW, and this advantage is more easily accepted in the politically correct European and American mainstream public.

On the other hand, the main advantage of POW consists of its huge advertising effect (massive physical mining + newbies enter the industry by mining this best way).

However, given that ETH now has an overwhelming advantage over BTC, so there are benefits to continuing advertising via PoW(a large number of ETH newcomers get to know ETH by mining through their home mining experience), and the impact would be small if that advertising stops now.

You may say I’m crazy, what are the overwhelming advantage of ETH over BTC?

That’s because you are not looking at the fundamentals.

Consider ETH and BTC as companies.

Then count the profits (fee income) of these two companies.

Guess how many times more profitable ETH is than BTC in the last 1 year? [Laughing but not saying]

(Converting the transaction fee to U.S. dollars at coin price of the day)

==========Q&A=========

Q1: Purchase more than half the network’s hashrate, then you’ll see what might happen. Every time when you purchase hardware, the costs multiply, let alone the high demand of electricity. Under that circumstance, unless you build a nuclear plant dedicated to mining, otherwise, one nuclear plant, even the largest one in the world can’t meet such high demands.

A: ①Why do you choose to buy the miners in stock? Order new miners from manufacturers directly, which are cheap but good. You can buy as many as you want. While manufacturers are producing the miners, you can build the data-centers and mount your miners. Perfect!

②The cost of data-centers have been taken into account(about $75/ 1kw of the construction), so why do you gather the miners in one place? It doesn’t need a lot of data-centers to scatter 1.08 million S19 units, 3.5 million kw around the country.

③Even if gathered together, the Baihetan Hydropower Station on Jinsha River contains 14 million kw, among which only 4 million kw can support 51% of the attack.

Q2: Regardless of POS or POW, the most economical way is network hijacking.

A: If you want to apply 51% to attack BTC for long term, it is necessary to directly control the miner(the mining machine) as miners will run(encryption) when hijacked. But coins can never be made or commandeered like mining machines.

Q3: How many people holds the ETH ledger? The ledger is the real constraint.

A: I have denied the rumor in the article《BTC or ETH, which is more likely to be wiped out by the US government? (Part A)》on March 9, 2022, that the maximum capacity of ETH’s Full node wallet is 578G. The archive node is the largest because it caches all the intermediate states for queries. If all of the archive nodes are gone, they can be re-run with 578G data.

The wallet size of ETH is slightly larger than BTC (578G vs 456G). ETH node hardware requires a mid-range PC while BTC node hardware requires a low-range PC. The number of ETH nodes is smaller than BTC’s (6369 vs 15013), but still in the same order of magnitude. When faced with blocking, either they all live or they all die. It is impossible that one is dead and the other survives.

Q: Since POW is an open system, I suggest buying miners instead of coins. Whoever controls the most hashpower dominates the network, while for POS, whoever holds most tokens has more power, the token monopoly would refuse to sell coins to impede the later comers.

A: ①What a joke! Have you ever seen someone failed to buy coins from the exchange? No matter how much money there is to buy coins, it only turns out the rise of coin price.

②When do the miners become dominant in POW? Don’t you forget the New York consensus of capacity increases for the Bitcoin system debate and the 80% hashrate support.

Q: POS can gather more than 15% of the coins for a short time, as long as a verificator node gives better conditions than other nodes in a short time, then it has the conditions to do evil with very low cost.

A: ①It sounds like that a mining pool can’t gather more than 50% of hashrate in a short time, if it gives a better condition that other pools(such as 10% higher transaction fee share).

②51% attack of the verification node will lead to coins being voided, so POS holders may not take the chance.

③51% attack on the mining pool will not lead to the mining machine locked, so miners do not bother. They go wherever the earnings are high (if they don’t go, others will go too), and their mining machine will be damaged after the 51% attack as well, so in this dilemma, rational miners know that they must go to the node even if the mining pool will suffer a 51% attack.

Q: Our MLM model is fine and won’t collapse.

A: Well, what pyramid scheme has a net income of $10 billion per year in transaction fees? Even if you regard ETH as a casino, would a casino with $10 billion annual profits collapse?

Q: But… it is still falling in the weekly k-line?

A: It’s normal since we are now in a bear run. Come back the end of this year post ETH 2.0 merge and see.

👉Join us on telegram.

About B.TOP

B.TOP, the world’s first joint mining platform, lowers the entry barrier to cryptocurrency mining for anybody anywhere in the world by providing a one-stop solution for enthusiasts and professionals, both retail and institutional, to mine cryptocurrencies from the comfort of their homes or offices. B.TOP purchases the mining machines from the manufacturers install them in its industrial-scale data centres across the world, maintains some of the highest uptimes and charges no extra fee from its users until they have broken even. B.TOP is a wholly-owned subsidiary of BTC.TOP.

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