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To me the situation of a '51% miner' is much like a government printing money - when they do, they get to finance their budget deficits as they get to spend the money first (when prices haven't changed yet). However, when that money gets into the system and people realize there's more money in the system, it leads to inflation that reduces the value of the currency (much like the reduction in the price of BTC). What stops a selfish miner with 51% mining power from double-spending like crazy in the short term before the price of BTC has had time to react, then pull out of BTC altogether? Then there would be no loss of wealth that the whitepaper says disincentivizes greedy attackers?

Thanks for your response in advance!

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  • The minting of bitcoins is constant and a 51% miner can't change the supply of it and cause inflation. Changing the supply can only be done by developers, resulting in a chain split, which wouldn't be called Bitcoin (unless it gains the support of various companies and users)

  • You can't just mine loads of coins, double spend them and cash out. To spent the reward of a block, its miner has to wait 100 blocks (144 blocks = 1 day) If you're double-spending coins that aren't newly minted, you can do that, but economics says while you own 51% of the network, you would be devoting lots of hashpower (=electricity) and would earn lots of block reward, so you wouldn't want to forget to cash out the block reward. On the other hand, to cash out the block reward, you'll wait 100 blocks, by when the price of bitcoins will drop, and you'll be at a massive loss. In addition, if you have that much of a hashpower you'd want to continue mining for a long time. That means even more loss due to the change in the value of bitcoins.

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  • For your second point, the miner does not need to use newly minted coins. They can use coins they have in reserve, or collude with another party that does, and then double-spend their coins. – Pieter Wuille Feb 29 at 6:28
  • Yes, I need to emphasize that miners wouldn't collude with double spenders because even if the double spent amount is huge, and miners are offered a portion of it, the miners wouldn't want to risk their investments. – MCCCS Feb 29 at 12:39

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