Technically, Bitcoin is doom to fail
By: Shen Sheng
Tags: Bitcoin, Predictions, Mining

Today, Bitcoin worth almost $20,000 for each. Its delicacy architecture is epoch-making inventions. I still think its price might be able to reach $100,000 or possibly even 1 million dollar. But at the same time, as a former believer of Bitcoin and blockchain, I found that it is doom to fail.

Actually, all cryptocurrencies base on the power of work(PoW), which can be mined by hardware ASIC miners, are doom to fail.

A 51% attack is a potential attack on a blockchain network, where a single entity or organization can control the majority of the hash rate, potentially causing network disruption. In such a scenario, the attacker would have enough mining power to intentionally exclude or modify the ordering of transactions.

Cryptocurrency mining is a process in which transactions for various forms of cryptocurrency are verified and added to the blockchain digital ledger. The mining process itself involves competing with other crypto miners to solve complicated mathematical problems with cryptographic hash functions that are associated with a block containing the transaction data. By doing that, the mining process ensures the authenticity of information and updates the blockchain with the transaction. The mathematical requires a large amount of computer power to get the right answer, so miner gets rewards from the crypto network, which makes mining profitable, consequently, attract more miner to the network. In common practice, people measure the total computer power of the crypto miners by hash rate.

The current bitcoin network hash rate is about 132M TH(Trillion Hash) per second. A top of the line ASIC hardware miner can run at 73 TH/s. This means to initiate a 51% attack will require 1,000,000 units of such mining devices. It sounds impossible for a single entity to control such a large amount of devices, but is it?

The market price of such a miner is about 1,000 USD. Therefore, to formalize a 51% attack might require roughly 1 billion dollars. Well, you can see it’s hard, but not impossible now. Since there might be 10,000 billionaires in this world, it isn’t entirely out of risk.

The problem does not end here. 1,000 USD is the market price, but not the cost of making it. Hypothetically, if I’m planing a 51% attack, it will be much cheaper just to design and manufacture the ASIC miner by my own team, possibly use a 5nm chip. Let me tell you. I might just be able to cut the cost of each miner down to 100USD each. Therefore, the cost of an attack can be lower to 100–200 million dollars, which is much more affordable.

Furthermore, the price of Bitcoin fluctuates and volatile. In some extreme cases, it might drop below $3000 USD or to a certain point that mining farms will be forced to shut down miners in order to save the cost of electricity. Such an event will make a 51% attack even more feasible.

One may argue that no one would spend such a fortune just to dismantle the network. But in reality, one may just get the mining rewards before he or she decides an attack. It’s one stone with two birds. Nevertheless, if someone actually has the motivation is not the point here. The very fundamental of blockchain technology is about TRUST. If there is a risk of someone may attacking the network, the fundamental advantage of blockchain will be gone. The intrinsic value to support this system will vanish in no time.

Moreover, the attack can be lucrative, too. One can just short sell bitcoin before the attack, double, triple, or even tenfold the profits even if bitcoin’s price dropped to zero after the attack.

And frankly, it is respective in the way of becoming the one who dismantles the largest money hoax and ponzi scam in the world. Even the cause itself may be enough reason for someone wealthy enough to do it.

All the cryptocurrencies that can be mined by ASIC miners have the same problem that, at a certain point, the cost of forming a 51% attack is relatively low in comparison with the worth of cryptos.

By Murphy’s Law, “Anything that can possibly go wrong, does.” It’s just a matter of time Bitcoin goes wrong. Everyone is just playing with fire now.