Thread by @joekelly100

@balajis 4) Bitcoin can be attacked and shut down at any time by world governments, near-instantly, if they decide to. Gold can’t.

5) The difficulty and cost of mining gold on asteroids is far higher than shutting down Bitcoin.

@balajis The attack vector is game theoretic.

1. Ban Bitcoin commercially and describe in detail how and why it’s the tool of choice for violent criminal organisations, wealthy tax avoiders, child pornographers, scammers, ransomware operators, and other socially destructive actors.

@balajis 2. Announce a plan (completely out in the open) to attack the chain to destruction via mining—physically seizing mining ops, controlling supply chains, and manufacturing whatever else is necessary to get the job done.

@balajis 3. On-chain plan = sabotage attacks (deep reorgs, double-spends, etc.) followed by ultimately keeping the chain permanently contained and inoperable via reactive empty block reorgs.

@balajis 4. The *threat* of this attack—no matter its timeline—is what does all of the work across the entire system. I.e. The threat is clearly credible and has to be taken seriously, because it’s not that much money by world government standards. It’s a nuisance, sure, but it’s nothing.

@balajis 5. In other words, if the plan that gets announced will take 6 months to be implemented, everyone can see what the outcome is going to be 6 months from now, and the effect is instantaneous.

@balajis 6. If they say, “Current global expenditure on PoW for the whole blockchain is $10m per day. We’re going to have $20m per day up and running in 6 months, and $100m per day in 12 months if needed” you have to take that seriously and act accordingly, right now.

@balajis 7. So, based on the announcement alone, people will move to save themselves in the face of impending disaster out of financial self-interest (the first to do so gets out at the highest price).

@balajis 8. That forces the price down and creates a self-fulfilling prophecy (the lower the price, the cheaper it is to attack, and the less reason anyone has to try to oppose the attack, etc.) and the eventual real-world cost of the attack is low.

@balajis 9. At low price—effectively $0—the blockchain can be kept permanently frozen via reactive empty block reorg at nominal cost, held down by the threat that it can and will be sabotaged (again) the moment anyone tries to revive it (so it’d be a complete waste of your money to try).

@balajis 10. There are two critical asymmetries in the game theory of attack vs. defence of the chain that make the result of the attack inevitable.

@balajis 11. 1) The attacker only has to spend opportunistically, whereas the defence has to always spend at the attacker’s full capacity even if the attacker is doing nothing: if they fall below the attacker’s capacity, they’re toast because a sabotage is incoming.

@balajis 12. 2) The attacker’s end game is $0 and ultimately a sharp drop off in ongoing expenditure, whereas defenders have no such end game and no such drop off: they have to keep up their level of spending indefinitely.

@balajis 13. Short version: it’s not a good idea to make your overall system security model a spending competition that relies on Mexican Standoff disincentives towards attack whilst simultaneously declaring war on all world governments for whom the disincentive is nonexistent/reversed.

@balajis 14. Longer version: medium.com/coinmonks/how-…