Are Double-Spend Attacks Less Likely in High-Hashrate Blockchains?
A recent study by the Bank of Canada analyzed proof-of-work blockchain models, finding out whether hashrate would affect the probability of a blockchain suffering a double-spend attack. The organization’s conclusion was simple: It’s unrealistic to expect such an attack to succeed in a network with a high hashrate.
Although the Bank of Canada’s conclusion comes as a result of sound mathematical proofs and a formulaic approach, there may still be some unanswered questions with regard to whether it would ever be financially feasible for a malicious actor to suddenly execute a double-spend attack on any particular network.
As we read through the study’s mathematical formulas that helped it arrive at its conclusion, we can clearly see a pattern that could most easily be explained in the context of a game. Miners that want a reward have to “win” it by confirming a block.
This requires a certain amount of hashing power. One individual mining rig has such a small capacity to affect the hashrate of all but the smallest coins in existence, so a malicious miner could only hope to execute a 51% attack by controlling the hashrate through other means.
The “road to glory” in terms of hashrate involves owning a mining center, or a mining pool that groups individuals mining from several devices that collectively reap the rewards of a “solved” hash. This practice increases the chances of “winning” the game at any point.
According to the study, an actor would be disincentivized from attempting to manipulate a blockchain simply by encountering more mining power in another party’s hands.
As a result of this, bigger blockchains like Bitcoin’s are less permeable to these kinds of attacks because the costs one has to suffer in order to control the hashrate quickly outpace the rewards one could anticipate from a double-spend attack.
“From an economic point of view, this requires that a dishonest miner has deep pockets and is risk neutral. These assumptions tend to be unrealistic and, in practice, users have little economic incentives to launch such an attack, especially when the computational investment by other miners is large,” the study said.
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