1. Price goes down
2. Miners become disincentivized to mine
3. Some miners shut off machinery
4. Network mining difficulty adjusts to new equilibrium
Same action occurs in the opposite direction when the price rises
2. Miners become disincentivized to mine
3. Some miners shut off machinery
4. Network mining difficulty adjusts to new equilibrium
Same action occurs in the opposite direction when the price rises
My impression was that this was mostly just a problem in theory, and would not be triggered by the sort of decline in prices we're seeing in recent days. I assume the same is true for Ethereum?
Either way the party carrying out the attack is unlikely to be able to benefit from it, especially if a prerequisite of the viability of the attack is the network already being incredibly week.
a) Short all of PoW cryptocurrencies
b) Carry Out 51% attack
c) Profit.
ii) Nation States can easily carry out this.
a) Carry Out 51%.
b) Shut the assholes who parrot, "Hurr Durr Crypto is better than fiat" once for all
At this point, it is only the will that is not there, not the capability
Wouldn't this leave the network extremely vulnerable to 51% attacks though? If the recovery mode is that miners keep mining in the hopes of being the last man standing so that they can control the chain afterwards, then...
Nevermind, just answered my own question. Multiple miners are likely to keep mining in the hopes of being the last one standing and being able to 51% Bitcoin, which will keep mining competitive and get you to the block difficulty adjustment even if it's momentarily unprofitable.
Now the value of bitcoin drops precipitously - let's say they wake up one day and the block reward is worth $3. Let's say they all shut off their machines. Dave wakes up and sees no one is mining bitcoin, and thinks "I can be the last one standing". He now has to spend $300 * 10 = $3000 (in the worst case where the drop is right after the last adjustment) to mine ten blocks, for which he receives $30 worth of rewards.
But how does this help him? If the difficulty adjusts downward, Alice, Bob and Carol can all just start mining again. It's not like they're permanently locked out of the system because they turned off their mining rigs. So Dave has spent net $2970 for...what exactly? The ability to run a 51% attack and double spend to recoup his cost? To run the double-spend, he has to re-mine a second side chain at the way-too-high difficulty! I'm skeptical that this is an attractive proposition for Dave.
Even if this did occur to Bitcoin, the community and miners would likely work together to put out a hardfork that adjusts difficulty downward to start the chain.