My understanding of cryptocurrencies is that with the "51% attack" you can fake transactions and stop anybody from making any transactions. If any crypto currency actually threatens Government backed currencies then what would stop a company like the NSA from using their resources from attacking the currency? They have to have enough money and enough computing power if they are collecting all this data and are backed by the United States Government.
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1Why do you think this is a trust issue?– David SchwartzCommented Apr 29, 2014 at 4:20
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2A correction: even an attacker who controls 100% of the network's hashing ability cannot fake transactions. That would require breaking ECDSA. They may, however, be able to prevent new transactions from confirming, and invalidate past transactions.– Nate EldredgeCommented Apr 29, 2014 at 4:28
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@David if I cant trust that a crypto-currency wont be bought out by a corporation to control then why would i get any?– 51attacknsaCommented Apr 29, 2014 at 4:30
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1The NSA can't force anyone to listen to them. They can say whatever they want, but the Bitcoin community will only listen if it's in their interest to do so. If there ever were a real 51% attack on Bitcoin, the design would be changed in a few days. You just have to trust the community to react sensibly, as they did during the blockchain split.– David SchwartzCommented Apr 29, 2014 at 5:50
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1@DavidSchwartz Altough I agree with you, you can't marginalize the effect a 51% attack would have on the trustworthiness (and thus the value) of Bitcoin. "the design would be changed in a few days" How exactly?– JoriCommented Apr 29, 2014 at 16:08
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1 Answer
As mentioned in comments, the 51% attack doesn't let you fake transactions. You just take control of what gets in the blockchain from the moment the attack is realized.
As to realizing the attack, the current Bitcoin hashing power is about 60,000TH/s.
Right now, the more efficient mining rigs cost at least $2,000/TH/s. So just getting all that mining power would cost the NSA, or any similarly powerful actor, about $120M. That's assuming that so many miners can actually be sourced which is highly doubtful at the current production volume.
Then you'd have to factor in all the procurement, the time it takes to setup operations of that scale and the mind-boggling electricity bill. So it's probably a 2-3 years project with a half-billion dollars price attached.
And then what would be the NSA's motive? The dollar is doing just fine right now and the US government can control Bitcoin just as well is they want to do so.
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1That's also assuming that one of the producers of these rigs would sell one huge lot to the government... keep in mind that these companies greatly benefit from having Bitcoin survive. Commented Apr 30, 2014 at 0:51