When one actor has a money printer they can use the permissionless, decentralized nature of the bitcoin network as a weapon. It's a vulnerability they can exploit.
As long as governments debase the currency to carry out this attack, they are also continuously creating more reasons for variations of Bitcoin to exist.
This is something the Fed does all the time, this is exactly how they distort the economy to set interest rates and bond yields. They have been 51% attacking the bond markets for decades, and all the bond shorts who thought "they can't possibly keep printing at this rate" lost their shirts.
I disagree with the 2nd part too, the idea that the Fed does anything tech related with a higher level of competency than the private sector has not been proven to me.
The idea that a centralized closed network that's severely hampered by operating restrictions can beat a well designed adaptable open network in the long run is a joke.
Funding is far less of an issue for an attacker who has a printing press, and it's the relative level of funding that matters. In order to defend against a 51% attack the defender must be able to spend more resources than the attacker. It's the "who can afford to lose more money game", where one side can just print as much money as they need while the other side has to earn every dollar. Are you really betting on the workin' man here? I wouldn't.
> attacking any single network does nothing to limit that demand
Demonstrating that they can afford a 51% attack on any blockchain they want to attack will affect the price of all crypto. Investors will need to discount that risk. This will surely affect demand.
> The idea that a centralized closed network that's severely hampered by operating restrictions can beat a well designed adaptable open network in the long run is a joke.
Nobody is claiming that the Fed's intention is to compete with bitcoin. They only need to attack it and destroy it. Remember, they want people to be stuck using their fiat currency, they don't want to make a competing type of sound money.
And no, they can't destroy something that can be forked and updated an infinite number of times. Not sure why you don't understand that its trivially easy to copy Bitcoin and build an alt. As long as that is the case, Bitcoin cannot be defeated.
If the current POW mechanism is repeatedly attacked and defeated it will adapt or projects will move to another consensus method. This is an arms race that CBs cannot win and they will burn a lot of money in process of losing, which is a beautiful thing.
Realize a successful 51% attack is just the beginning of the war, not the end of it.
*All the arguments you put forth so far are defeated by this simple flip of a consensus mechanism switch.
I think you're right; the war will go on for awhile. But I'm convinced by https://news.ycombinator.com/item?id=28028542 that in the end, if anything bests fiat, it will be gold.
Barring some new technological breakthrough, it seems to me that bitcoin has no value in a fiat world, and no value proposition in a sound money world. It's a noble dead end.
How long can the fed fight a few hundred million (soon to be few billion) people?
In the war of attrition, this small group of people with incentives that are not aligned with the majority of the humans on this planet will lose, it's just a matter of time.
I expect Bitcoin will destroy/neuter most central banks in your lifetime.
Is your claim here that the Fed cannot afford to buy the 51% attack? Keep in mind that they printed about 6 trillion dollars last year.
If the Fed can buy a 51% attack then they will be successful. They will demonstrate beyond a doubt that an entity with the power to print fiat can always take down a decentralized, permissionless network by exploiting those very features.
The same way sovereigns have since the dawn of time--divide and conquer. In the 20th century they discovered the secret, international socialism.
Give millions of people stimmys and enhanced unemployment checks. Destroy the savings of responsible, productive people so they can't afford to take risks without the promise of government bailouts. Make the people dependent on the state in every way.
Deficit spending and the money printer is the only way to fund all of these social programs the people are addicted to. Do you really believe that these millions of people hate the central banks who fund the welfare state?
They are winning. Their power increases every day, and it never decreases. They are ruthless, and I think it's reasonable to expect that they will not think twice about nuking bitcoin from orbit with a 51% attack, and print as many billions as they need to succeed.
The fiat standard may be imploding, but the central banks are definitely winning. The Weimar hyperinflation, for example, did not destroy the Reichsbank; it empowered it. When the currency collapsed they did not replace it with sound money, they replaced it with new fiat of a different color with less zeroes on it. It's the same with all the other hyperinflations we've seen in the past century. The mantra of "this time is different" makes a pretty bold claim and requires some evidence to back it up.