Research Summary
The report presents a novel model for assessing the costs associated with breaching Byzantine fault tolerance (BFT) thresholds within the Bitcoin and Ethereum networks. The study introduces the Total Cost to Attack (TCA) metric, which quantifies the cost of breaching BFT in both Bitcoin and Ethereum. The report also distinguishes between profit-driven and ideologically-motivated attackers, emphasizing the improbability of attacks being profitable given the substantial costs involved.
Key Takeaways
Introduction of the Total Cost to Attack (TCA) Metric
- Novel Metric: The report introduces the Total Cost to Attack (TCA) metric, a tool for quantifying the cost associated with breaching Byzantine fault tolerance (BFT) thresholds within the Bitcoin and Ethereum networks. TCA is defined as the summation of Capital Expenditures (CapEx) and Operational Expenditures (OpEx) incurred over time by an attacker attempting to breach the BFT threshold.
Analysis of Potential Attackers
- Types of Attackers: The report distinguishes between profit-driven and ideologically-motivated attackers. While both types of attackers are subject to similar costs, their motivations and payoffs are fundamentally different, thus requiring separate consideration.
Application of TCA to Bitcoin
- Bitcoin’s TCA: The report applies the TCA model to Bitcoin, focusing on two main components: Operational Expenditures (OpEx) and Capital Expenditures (CapEx). The cost to attack Bitcoin ranges from $5B to $20B, varying in proportion to the elasticity of supply when acquiring ASICs by the attacker or, as an extreme scenario, manufacturing these themselves.
Application of TCA to Ethereum
- Ethereum’s TCA: The report applies the TCA model to Ethereum, considering both CapEx and OpEx. The report estimates that the total cost to execute a potential attack on the Ethereum network could be around $34 billion, a steep cost that serves as a testament to the security and resilience of the Ethereum network’s proof-of-stake consensus mechanism.
Security of Blockchain Networks
- High Security Costs: The report suggests that the security of the Bitcoin and Ethereum networks is underpinned by significant economic disincentives for potential attackers. With the TCA for Bitcoin ranging from $5B to $20B and Ethereum’s TCA around $34 billion, the costs to compromise these systems are prohibitively high.
Actionable Insights
- Understanding TCA: Stakeholders in the cryptocurrency industry should familiarize themselves with the Total Cost to Attack (TCA) metric as it provides a quantitative measure of blockchain network security.
- Assessing Network Security: Investors and network participants should consider the TCA when assessing the security of blockchain networks. High TCA values indicate robust security and resilience against potential attacks.
- Monitoring Market Dynamics: Market participants should monitor the elasticity of supply when acquiring ASICs, as it can significantly impact the cost of potential attacks on the Bitcoin network.
