Gain 51% - Lose it all

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This came up in a comment thread yesterday where the question was asked "How can you protect a blockchain from a 51% attack?" thread with the starting assumption being, you can't.

Now, perhaps from a technical perspective there will always be the possibility, but I don't think that it is a major threat and over time, the threat will reduce even further due to the core nature of the blockchains. I don't know all the considerations on Hive, but the general idea of a 51% attack is that there is a majority of minors/stake that will force a blockchain to change behavior. We saw this on Steem when Steemit Inc and a great deal of stake was sold, the exchanges were "tricked" into powering up and the consensus mechanisms were hijacked.

While this could technically happen again, it is much harder to do on Hive now as there are checks and balances in place (or on their way in the next hardfork), making it not only less likely, but also more expensive. While I think Justin Sun agreed to 8 million (paid 4), that was at a low in the markets. If for example he wanted to do it at the high, the value of that same amount of STEEM was around half a billion dollars. Convincing one person to sell however is easier than convincing the hundreds or thousands to gather enough now. Yes, it is possible, but more unlikely.

Not only that, do you think that Justin Sun would be willing to go at it again? I doubt it. This little exercise for him was incredibly expensive in many ways, including socially. He wanted to buy a community, the community forked, he is left with not much of what he wanted, while the community that he drove away set up shop quickly and continued on with relatively little fuss, considering the upheaval.

This isn't like buying a company, it is fundamentally different because of the ability to copy the model and start operations without losing the network of the community. I think will increasingly "protect" the blockchains from attack because the value of the blockchain is the user base, those who leverage it. Even if they might not want to, if they can shut shop and reopen the next day, the cost to relocate is far lower than the cost of attack.

In the past for example if one country attacked another, it was generally over some kind of natural resources. However, if the resource is the skill of the people, attacking them will lose the "hearts and minds" and there will be very little of value left as the thing that made it attractive to attack, will be degraded by the attack to the point that it is no longer worth it. Natural resources are natural resources, people are dynamic.

So while it might look like an attractive option to attack a network, the ability for the community to "pick up sticks" and move onto another field takes away the attraction and while this creates a lot of volatility in the early days, those that try to rule by force will find it increasingly expensive as not only will the community move, but the exchanges will likely follow the community and as was the case with Hive, give listings and possibly, remove listings of the attacked chain. The only real benefit to attack a chain is to destroy it for some reason, but it would be a very expensive process, especially if the chain is actually worth something.

Again, forking to a new blockchain isn't an ideal solution, but it is like an organic protection mechanism that makes attack expensive - you can do it, but you are going to pay through the nose one way or another. I haven't been keeping up with the applications left on Steem, but what is there? Are serious developers still wanting to invest themselves into a centralized blockchain when there are other blockchains that do not have a centralized tyrant at the helm?

The other thing that should happen over time is that the chance of a majority attack lessens with decentralization of resources - as more participants would need to be convinced in order to join the attack as there would be no "single source" of resources that could be gained. For example on Hive, the new Hardfork will put in a process to prevent a midnight attack on the blockchain from a large power up, as there will be a "no consensus voting for 30 days" clause written into the code. Over time, all blockchains will learn from the past of others and from startup, be better protected from attack.

But as said, I think the largest protection mechanism is the community itself, as they are the ones that not only use, but also develop the blockchains. The "natural resources" of the blockchain are the transactions they create, the applications they build, the content they supply, the network they expand and they only have value from usage. If an attack puts a halt to value adding usage, the blockchain has no value and will wither and die from disuse eventually.

While there might be attempts in the early days to attack blockchains, the more adoption that happens, the less likely an attack becomes due to expense to attack. Higher token prices will make it expensive and then once attacked, the price of that bought token will also likely reduce if the community decides to abandon the chain. Not only this, if an attack did happen at the higher price, with such a low startup cost, essentially the attacker would be funding the move.

Imagine if instead of Ned, Justin Sun had to convince the Steem community to sell him the 60-odd million STEEM necessary, where we he get it? Yes, it was available on the exchanges from mostly the ninja miners, but he would have to buy it a piece at a time, driving the price upward. Buying at an average of 11 cents or whatever it was from Ned wouldn't be possible if having to buy from thousands of people.

If someone wanted to collect 50 million HIVE over the next year, what do you think the average would be? And then, if they wanted to use that to take over the network, do you think that they would want to risk losing large pieces that make the network valuable to begin with? It might be great attack to use a nuke to nullify the enemy, but not if you want to live in that space after.

And, unlike land mass, digital real estate is endless and can be copy-pasted an infinite number of times. What this means is that because the digital landscape is infinite, the scarce resource becomes the community that utilizes it - Lose the community, lose the war.

It is possible that there will be more attempts in the future on this and other blockchains, but the toll exacted on those who try will get to the point that it will be far cheaper to copy-paste a blockchain and convince the community to move to it, rather than attack what is anyway going to move if attacked.

Nothing is foolproof, but being a fool can be a costly undertaking.

Taraz
[ Gen1: Hive ]



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22 comments
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Justin Sun's attempt was a one off try, because Ned agreed to sell at a bargain and all at once. I love the 30 day vote delay, and the exchanges learned a REALLY valuable lesson about powering up customer owned coin.

I had been a small part of the 'Nuclear Option' discussion in the far distant past of Steem. It was probably that discussion that let the consensus know that there was the option to just go. It all worked out, and I'd like to think that it is a lot like a dog and a porcupine. Once is generally enough to teach a dog that lesson.

It isn't impossible to imagine a 51% attack, but generally speaking the people that are willing to put up the money for that sort of undertaking understand how risky it is and can find better ways to make bank.

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Yep, I think at least JS would be little shy to dive into the same situation again, but maybe with a big enough ego.

but generally speaking the people that are willing to put up the money for that sort of undertaking understand how risky it is and can find better ways to make bank.

Yep. I think that the steem situation was unique because there was almost a complete lack of understanding of what Steem actually was to begin with.

I am not a big fan of the nuclear option, but then if that is what is required, it is what is required.

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That's right. Our foolishness almost always becomes our main expense. In general, everything is possible in the world of cryptocurrencies, even an increase from $ 3,000 to $ 20,000 with a subsequent decline to $ 4,000

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or from 300 to 3000, or 3 to 300 :)

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The main thing is not to forget what happens and vice versa :)

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We live in a world of short memories

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I only have rudimentary knowledge but I believe you are speaking about two different things.

With the mined blockchains (Bitcoin, Ethereum, et al) the “miners” process the transactions. For a 51% attack to work a malicious agent would have to “capture” that percentage of processors and as the number of processors grows it becomes less likely because it would be expensive to set up thousands of computers to achieve that.

Whereas, on Steemit, the number of processors (witnesses) were limited to 100 and only the top thirty processed the transactions on a regular basis. So it was easy for Sun to buy the “secret stash of Steem” from Ned and convince the exchanges to stake and vote for his witnesses to make the coup complete. Now as I said I don’t have the deep knowledge, but it seems Sun was able to do it because he needed fewer processors to control. I hope the same cannot happen here. After all, he is a multimillionaire and I feel he could just buy enough Hive to vote his witnesses in again.

And as an aside, while working over on the Steemit side to move Steem to Hive I do notice it is not as seamless as it was before Sun. I don’t want to say it’s glitchy but it does seem to be slower sometimes.

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It is about the idea of it, I had a disclaimer at the start about the technical, but figured it wasn't needed so deleted it.

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I hope the same cannot happen here. After all, he is a multimillionaire and I feel he could just buy enough Hive to vote his witnesses in again.

Not really. That "secret stash" (a large part of the ninja mine that was the first 250M STEEM printed) no longer exists as it once did, it isn't floating free in someone's wallet. On top of this, a large powerup doesn't go unnoticed and there will soon be a 30 day break between powering up and being able to consensus vote. For Sun to buy enough HIVE, he would have to buy directly off exchanges or do backdoor deals with multiple users, most of who wouldn't be so interested to sell at anywhere near a low price. Buying off the exchanges will drive the price up even more, meaning that those with large stakes will require an even higher price to sell a significant amount too - it becomes very expensive, very fast - then there is the "lessons learned" consideration, where buying the network doesn't mean keeping the value of the network.

I actually think that capturing Bitcoin (while expensive) might be "easier" as the mining pools are so few and so large that it would be less people to convince - although of course, there is a lot more at stake value-wise there too.

So as I said in the other comment, I am talking about this from a general blockchain level, not from the specifics of individual blockchains. A 51% attack just means a majority stake takeover, in the same way a hostile takeover of a company can be engineered. the specifics change, but the general idea is the same enough to work with.

I don't visit Steemit at all now.

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Thanks for clearing some things up for me. I was worried a little, but now I am confident I can put more into Hive to boost my stake. I am winding down in the Steem platform and swapping it to Hive.

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No worries. I was in a rush on the first comment but made a note to come back and add a little after :)

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The guy tried, he thought he could rule Steem following the same rules regular companies use when they run a hostile takeover. But he didn't count on a fork. He didn't count on the community leaving the old project to create a new one.

To me, this whole story is impressive. It clearly shows how the blockchain economy is way different than a centralized economy. It is not just about creating value and distributing it on a much democratic way, it is governing from the ownership of the user base. This is the real disruption.

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The guy tried, he thought he could rule Steem following the same rules regular companies use when they run a hostile takeover.

I wonder if he was aware of what he was buying or just ignorant of the possibility.

It is not just about creating value and distributing it on a much democratic way, it is governing from the ownership of the user base. This is the real disruption.

Exactly. Ownership. People will defend what they own, even if others do not see the value in it.

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And, unlike land mass, digital real estate is endless and can be copy-pasted an infinite number of times. What this means is that because the digital landscape is infinite, the scarce resource becomes the community that utilizes it - Lose the community, lose the war.

Also chains are learning more and more each day about how to manage a variety of options/purposes for the chain. A solid chain has to have a solid foundation, and that foundation needs to be able to support all the various factions.

Blurt was a fork of steem also, I watched a little of it's development, Zapata is/may be a fork of the steem chain in connection with Blurt so far very little movement. Will they work as block chains and survive and grow, perhaps.

The individuals behind the Hive fork seem to have had a pretty decent idea of several aspects of what steem community was about. They understood what was building the steem community and some of the directions it was taking.

Digital Real estate, may be easy to move, the community however, like any buyer, will look for the view, location, atmosphere, and a lot of other things before uprooting itself. The fastest way to lose a community is to turn their location in to a slum, followed by taxing them out via fees and other cost.

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A solid chain has to have a solid foundation, and that foundation needs to be able to support all the various factions.

Yeah, even when they aren't getting along.

I haven't paid attention to Blurt at all. Haven't looked at Steem for a while either.

Digital Real estate, may be easy to move, the community however, like any buyer, will look for the view, location, atmosphere, and a lot of other things before uprooting itself.

Yes. A healthy ecosystem breeds a connected community.

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Thank you for taking the time to write about this issue, you are give your readers what they want.

if crypto in general want to take on the worlds financial system we need very robust blockchain’s.

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Thanks for bringing it up. I like the idea of posts sparking conversations, conversations driving posts. It makes it far less random and I think is better for developing community.

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