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Inspired by this question ("Could bitcoin be destroyed by an entity cornering the market?") and the top comment on this answer to this question ("How much would it cost to execute a 51% attack?").

The United States government hates currencies competing with its own, so it may at some point have great motivation to destroy bitcoin.

Answers to the first question show that the government couldn't destroy bitcoin by cornering the market. Answers to the second question show that it would be very expensive for an individual to sustain a 51% attack.

However, the top comment on the referenced answer reads:

A related point is: why bother mounting such an attack? If you were indeed successful and started building your own block chain, then confidence in Bitcoin would plummet and investors would sell out their positions (assuming their positions could be sold out). The price would drop through the floor and the value of your exploit would be reduced to nothing.

Given the upvotes on this comment, many appear to agree that a sustained 51% would plummet bitcoin values. This would lead to extreme distrust, and possible collapse, of the system.

But $16.35M + $84k / day is likely spare change for some branches of the U.S. government. If the U.S. sustained a 51% attack almost indefinitely, would this destroy bitcoin? For them, the value of their exploit would hardly "be reduced to nothing", instead it could possibly save their inflationary currency.

One might even say the 51% attack investment would pay itself off with the amount of inflationary income they could generate given the downfall of bitcoin.

This same scenario may apply to any wealthy organization. One could bet on bitcoin falling and then apply this attack for profit. The IMF or a different government could have reason to attack Bitcoin.

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One of the questions you linked to has the wrong chosen answer— Bitcoin can also be destroyed by a sufficiently deep pocketed attacker which corners sufficient marketshare of coins to enable causing debilitating volatility. Probably won't require any where near majority share to create volatility. I added my claim at that question.

Yes Bitcoin can also be destroyed if an attacker cornered sufficient Proof-of-Work to disrupt the system. Even if developers release new protocols after the attack, there will be chaos as to which fork to trust and reputation will be shattered.

Might not even require 51%, as the minority share attacker could cause many transactions to be randomly delayed, which is also potentially debilitating to a currency.

As the prior answer points out, one the keys to hardening a P2P currency is to make the Proof-of-Work more difficult to corner. But that alone is not sufficient, as the volatility of the value is another attack vector. I am contemplating solutions to harden against both classes of vulnerabilities.

Bitcoin might even be attackable simply by talking and enumerating the flaws in it. We could see a crash at any time if enough people become concerned. So public opinion is another attack vector.

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Edit: I no longer think this answer is true.

The blockchain wouldn't cease to exist if an evil organization got a majority of hashpower. Thus, your questions would be better stated as, "If an evil organization that wanted to destroy bitcoin got a majority of hashpower, would bitcoin become less useful?"

Yes, and we'd have to switch to an alternate scheme for checking blocks.

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And as BTC represent the potential for a seachange historical event in respect to money and therefore politics, wars, culture, etc, the powers that control trillions in concentrated wealth in all asset classes, acquired by controlling money printing are threatened.

Best start prepariing for what would seem an eventuality.

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If such an event occurred it would likely be recoverable from a technical standpoint, it's basically a matter of reverting to the pre-attack block chain. A tiny microcosm happened recently: http://bitcoin.org/may15.html

The larger effect would be the market reaction and this would largely be a function of the grace of the recovery.

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    You ignore the possibility of using (even minority) mining control to delay transactions. See my answer. There is no recover because nothing has forked, as it is allowed in the current protocol. Your microcosm is a fork due to bug in protocol where the majority of miners cooperate to upgrade. If a majority mining control causes a fork, then getting the minority of miners to upgrade won't fix anything— must upgrade millions of owner's clients too. This will be chaos. Thus your answer is factually incorrect in every angle and I will downvoted it as soon as I have 125 rep (if I remember).
    – Shelby Moore III
    Mar 23, 2013 at 19:09
  • It seems to escape you that the q is simply "can bitcoin be destroyed by the cpu majority?" Of course there is a point of recovery, its simply what the marketplace decides the place in time is to create a retroactive fork, the point at which transactions afterwards are effectively declared counterfeit.
    – bit cromwell
    Mar 24, 2013 at 14:43
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    If minority control can delay transactions, then majority certainly can, thus you're incorrect to claim I didn't address the q. You characterize as "recovery" (with example quickly resolved microcosm) a complete reset of the market after it has to collect and settle itself for an unknown period of chaos. I describe that as near total failure (since time is money) or if you prefer "indeterminate duration bank holiday".
    – Shelby Moore III
    Mar 24, 2013 at 17:59

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