@tiCeR, thanks for a great post.
I think your point about ETH investors also owning BTC is a very good one. User @HeRetiK also brought up this point earlier:
At the heart of the attack scenario you describe is the assumption that Bitcoin and Ethereum investors are mutually exclusive groups with purely adversarial incentives.
I don't think that's the case.
While most investors will be more exposed to one coin than the other, I'm pretty certain that almost everyone in crypto has a stake in both coins, especially whales. Accordingly I don't think any one side would have much of an incentive to strike the other, even assuming that an attack in either direction were feasible.
I'm first of all afraid that I don't personally have much insight into whether ETH whales are also BTC whales, and vice versa. But I do think that this is indeed quite likely.
My reply to @HeRetiK was, however, that if it is really true that a Goldfinger attack would only require a fraction of the Ethereum investors, namely something like 2%6%, in order to for the attackers to start to break even in terms of costs and gains, then it could potentially be possible without these whales (of course assuming that these don't own it all).
And what's more, if there really is this potential to grow your crypto assets by something like 100% or more in this rival Goldfinger attack, then it might happen that some investors who have previously invested in both cryptocurrencies at the same time will start to trade a portion of their BTC for ETH, either because they fantasize about joining the attack, or just as a precaution if others want to do so.
But of course, at this point, this is all still just speculation.
To your point about a negative effect on ETH as a result of Bitcoin being attacked, I personally think this is one of the best arguments against the danger of a rival Goldfinger attack I have heard so far, and it is certainly a point that has been voiced by many users on this thread.
Historically it seems that the value of ETH follows the fluctuations of BTC. So a successful attack
would thus require the Ethereum investors to first make an efficient campaign to communicate to the public that this attack vector only really affects PoW blockchains, like Bitcoin, and not really PoS blockchains in practice.
Now, I agree that the Ethereum and Bitcoin communities might be quite friendly at this point in time. But that doesn't mean that the Ethereum community don't already try to highlight all potential advantages of PoS over PoW to the public. And I personally find it quite unlikely that they wouldn't at some point also try to point out this potential "rival Goldfinger" threat, if the theory holds up. If nothing else, then at least in order to try to make the public feel more positively about PoS in relation to PoW.
I think that an operation of that magnitude wouldn't come to fruition without some very important players in the market noticing and taking the opportunity to stop it. The suppliers aren't only producing ASICs for the sake of mining. But if some of the suppliers (there aren't that many) are approached with an order of that size, I doubt they wouldn't get suspicious. Actually I believe that the suppliers might be well connected with the mining industry. They would ask someone who knows someone who knows someone... If it turns out that there seems to be a group ordering a record breaking, unreal number of ASIC devices, the warning would already be out.
I think you are right, but I do wonder: What can they even really do to stop customers from buying their ASICs? Even if the suppliers deny these costumers, what prevents the latter from just acquiring those ASICs through middlemen? Could they perhaps make their customers sign a contract not to participate in a 51% attack, or to sell them on to other buyers who will?
Well, since the attackers can just use a whole array of middlemen in principle, and since they can also in principle make it so that their mined blocks in an attack can't be traced back to them in the first place, it seems quite unlikely that such contracts would work, at least to me. What is your opinion on this?
Further, if selfish miners get bribed, what is the chance that all of them would agree to perhaps destroy the entire industry as a whole? Then the big miners are mining pools. What is the legal situation when the allegation of bribery would ever come to the surface and a mining pool operator would be convicted for attacking the network in the worst interest of its users (those who provide the hash power)? It would be obvious if one of those pools attacks the network, but if it happens without the consent of its users, wouldn't there be legal consequences?
I am not sure how it would work, but convincing a pool that operates mining facilities and pools hash power on behalf of its users would probably not agree to getting bribed. But without the pools, an attack that involves bribery wouldn't get the attackers very far.
I definitely think that it would indeed be very much illegal for them to change the protocol and make an attack without consent of the users. So if such mining farms are to participate in an attack, they would have to make it a choice for the individual user whether that user wants to join in the attack or not. (And they would also have to update their contract such that the participating users will also be owed their part of the spoils/rewards.)
What if someone from the attacking group blackmails the attackers after they signed contracts with ASIC suppliers? Once the production went on for 12 months, one of the attackers could go rogue and blackmail his own group, threatening to make those plans public.
Here's the thing, though: I don't really see why they would need to keep it a secret. I could be wrong, of course; I'm by no means an expert on legal matters. I just go by what I have read in this blog post:
https://sites.duke.edu/thefinregblog/2022/12/28/legal-liability-of-a-51-goldfinger-cryptocurrency-attack, which argues that a 51% attack might not even be illegal, in the sense that it might not prosecutable in a court of law. (I definitely think that this is worth discussing more, however.)
If that is indeed the case, then it seems that the more rumors there are about the build-up of the attack, the better it would actually be for the ETH investors, as it might just make BTC investors migrate preemptively, which would only make the cost go down, in theory. (This is of course assuming that they can indeed communicate successfully to the public that PoS is still safe, and that they can thereby convince some of the now uncertain BTC investors to migrate to ETH instead).
However I look at it, I don't know how such a huge operation could be pulled off. I know we are discussing theoretical scenarios, but this is really too much theory for me.
Ha, yeah, it's all quite theoretical at this point. But your inputs are valuable.
