Thread by @alexsunnarborg

1/ On Cryptocurrency *Security* Maximalism

2/ Blockchains are security systems.

Systems securing new forms of money and apps.

When comparing blockchains, we should focus on relative security.

3/ Bitcoin improved upon all previous digital cash systems by solving the infamous double-spend problem.

By ‘using PoW to make changes to the ledger difficult’, Satoshi eliminated trust and introduced an external cost for any would-be attacker.

(quote: hackernoon.com/peter-todd-on-…)

4/ PoW security follows price.

As the price of BTC increases, the value of the block reward increases.

As potential rev incs, more hash rate comes online chasing profit.

As the price falls, some mining biz models fall into the red, and more hash moves offline to save costs.

5/ The higher the hash rate of a cryptocurrency network, the more expensive to 51% attack (buying & running enough miners).

6/ PoS security also follows price.

The higher the price, the more expensive to 51% attack the network (buying & staking enough tokens).

7/ The lower the value of a cryptocurrency network, the cheaper to attack.

8/ Even if acquiring the miners or tokens for a 51% attack is impractical (liquidity, etc.), the existing miners and token holders on lower value networks should be cheaper to corrupt in a coordinated bribery attack.

9/ Blockchain security follows blockchain value.

Low value chains should not be used w large amts of wealth or valuable apps.

Billions of $ should not be secured on a system that I can break w millions of $.

The value of any wealth stored should be compared to the attack cost.

10/ For prototyping & experimenting, the speed, fees, & features available in different blockchains may seem alluring.

For ‘low value use cases’, perhaps the security model is less important.

11/ In storing large sums of wealth however, security & trust is critical.

12/ If I was playing a coin flipping dapp, I would have a relatively lackadaisical attitude if I was betting < $1.

If I was going to bet > $1m tho, I would be extremely conscious of risk.

The chain’s security model, the dapps code, the miners, etc. are all threats to my wager.

13/ Thus, in the end, if 1 chain becomes the most secure by far, y would the majority of wealth & valuable apps not be secured by it?

How big does the gap between the #1 & #2 chain’s cost to attack need to b before it becomes silly / irresponsible to use anything but the leader?

14/ As less secure networks continue to get attacked, the relative safety of the more secure networks will be more emphasized.

I actually wish more small & insecure networks were attacked to accelerate this awareness.

15/ As more users buy into more secure chains, their buying pressure will push up the price.

The increased price will lead to increased security.

From there, eventually usage, liquidity, & network efforts will compound on each other.

16/ These most valuable & secure chains should then be used to secure the most wealth & valuable dapps.

17/ Less valuable blockchains with the same security model of their more expensive counterparts will become less & less used as the gap in security grows.

Sidechains, layer 2 systems, etc. will make the ‘differentiating features’ of alternate chains less & less relevant.

18/ If there was just 1 security model, a winner take ~ all scenario would likely emerge.

1 most valuable & thus secure chain would accumulate ~ all wealth & valuable apps.

19/ Today however we see multiple different security models securing blockchains.

The cost & method of attacking chains with different security models is ≠.

The most valuable chain may not necessarily be the most expensive to attack.

20/ A PoS chain could be more expensive to 51% attack than an equally valued PoW chain.

A less valuable chain secured by both PoW & PoS could be much more expensive to 51% attack than a more valuable chain secured by 1 or the other.

21/ So in the end, what will be the distribution of value & security across blockchains?

22/ Will we see just 1 main security model in the end & a winner take ~ all scenario with 1 most valuable & thus secure chain?

Or will we see several security models & at least somewhat valuable chains?

23/ Will we for example have 1 leading PoW chain & 1 leading PoS chain?

Will we have 1 leading hybrid PoW & PoS chain that dwarfs the security of either?

24/ Could we even have 1 leading chain with a more centralized security model?

Perhaps this chain could host more ‘low value use cases’ where decentralization is not as important as something like speed or fees (for ex. a gambling dapp with a very low bet limit).

25/ How do you think the end game of value & security will look across blockchains?