Edan Yago is CEO and founder of Epiphyte, a start-up effecting a FX fund settlement on the bitcoin chain for financial institutions.
In this article of opinion, Yago discusses one of the biggest theoretical attacks against bitcoin, and why he believes that a future software change fits his definition. Follow Edan Yago on Twitter
In Bitcoin's Necronomicon of possible attacks and weaknesses, one reigns supreme – the attack of 51%.
If there is a fear that played in the minds of people as an end – of – day scenario for Bitcoin, that 's it. Attackers who hold more than 50% of the hash power could prevent transactions from confirming and even canceling certain transactions. They could compromise the whole project.
The design of Bitcoin and its system of economic incentives were put in place specifically to combat the destructive potential of an attack at 51%. And it worked. The 51% attack remained hypothetical. Until now.
According to indications, a 51% coordinated attack will begin on or around November 16th. It is then that a consortium of minors representing substantially more than 50% of the network's hash power and an allied group of blockchain startups will seek to increase block size.
This will require a difficult range, which, although controversial, is a legitimate desire. In itself, it is not an attack.
Where it does not go
However, the consortium's effort has evolved beyond a mere fork. It is being developed not just as an effort to cram the chain, but to do so in ways that deliberately prevent the continued existence of the status quo chain.
More specifically, the concerned developers refused to introduce a protection against replay.
The 2x fork will create a situation where the transactions made on a fork, can be "replayed" on the second fork. Indeed, users will have funds on both blockchains, but any transaction they make on a blockchain could result in a loss of funds on the other blockchain.
Replay protection is a fairly easy method to implement to protect users from this risk. Network attacks are actions taken with the intention of disrupting the normal operation of the protocol. The change of 2x, devoid of replay protection, causes a massive disruption. It's by design.
Without replay protection in place, a minority channel is less likely to survive.
Question of Reasons
The preferred outcome for the consortium is that the status quo chain ceases to exist, which its transactions fail to confirm.
This is the literal definition of a 51% attack. If it's a bit weird to call a consortium attack, it's because that's the case. The consortium includes a lot of true Bitcoin supporters, acting in what they believe to be in good faith. They do not want to attack bitcoin.
However, without protection from repetition, their efforts are like an autoimmune disease, become too zealous and perverted.
Thus, Bitcoin finally arrives at the mother of all attacks. It is a decisive moment. The worst results are indeed bad.
Transactions could stop, faith in the system could be lost, bitcoin and, by extension, the entire blockchain world could prove much more vulnerable to attack than we do. 39; expected.
We will overcome
However, there is also another possible result, even more likely.
Bitcoin could prove to be resilient to the consortium's attack and come out beaten but uninterrupted. In doing so, bitcoin will have proven itself even for its biggest enemy.
It is hard to exaggerate how important this will be to the perceived reliability of bitcoin. Bitcoin has always been haunted by the risk that its rules are dictated by special interest groups or hostile parties sponsored by the state.
This risk never completely disappears, but instead of the risk being a hypothetical scarecrow, it will become a much more prosaic thing: a risk managed successfully.
The 51% attack is the level of the bitcoin boss. I do not think it's an exaggeration to say that we are now at the end of the beginning. If we succeed in overcoming this challenge, bitcoin will no longer be just an experience, it will be a fact.
But do not wait for less drama – we are now entering Bitcoin's adolescence.
HODL tight, things will become hairy.
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