Thread by @Tr0llyTr0llFace

Anyone who claims that Bitcoin can be a "global settlement layer" doesn't understand Bitcoin.
As is, Bitcoin can be "hacked" by someone who controls a lot of hashpower; by "hacked" I mean that person could cancel the transactions he wants, provided that they're not too old.

This is known as a "51% attack", and the principle is that you perform a big transaction (wire 10,000 BTC to an exchange, sell them & cash out), and use your own hashpower to build an alternative string of blocks, starting with the one containing the block with your transaction.

Once you've cashed out your transaction, you start propagating the blocks you've calculated in secret. If your string of blocks is longer than the string of blocks that has been produced organically by the network in the time it took you to cash out, your "hack" was successful.

This attack is near-impossible in practice:
1) it's very hard to accumulate that amount of hashpower: AntMiners are sold out until August, & it would take years to get the infrastructure going
2) if your attack is successful, the trust in the network will collapse along with $BTC

Point 2) is why everyone trusts the miners themselves won't turn against Bitcoin, or allow anyone to do so (by renting out their own hashpower, for example). If $BTC were to collapse, their infrastructure would become worthless, as the income it generates would disappear.

But what if Bitcoin somehow became this "global settlement layer", what if central banks & corporations decided to use it to settle their transactions?
That kind of framework can't be reneged upon overnight. That's why SWIFT has such a strong grip on international transfers.

Then, in the event of a 51% attack, Bitcoin wouldn't plunge, because central banks and corporations would have no alternative but to continue using it.
The only solution to avoid settlement pirates would be to increase the overall hashpower of the network by orders of magnitude.

Increase it by how much? Today, it would cost around $5 billion in mining rigs to produce the same hash rate as the Bitcoin network. SWIFT processes $300B per day, on average. If Bitcoin were to replace SWIFT, you'd expect a hack to be at least as costly as 1 day of transactions.

I'm only considering here the commercial benefits of a hack - not strategic value like in the event of war between two superpowers, when crippling your enemy's financial system without firing a single shot would be worth much, much more than some canceled transactions.

This was always a feature of Bitcoin: the cost of the network is also an insurance against "hacks". The network needs to cost a lot of money to prevent 51% attacks.
So if we wanted to use Bitcoin as a "global settlement layer", the network would need to cost x100 more than today.

Proof of Work relies of electricity burn to generate the network cost (and the insurance). Currently, Bitcoin uses around 0.5% of global electricity output. To use Bitcoin as a global settlements layer, it would need to use 50% of the world's electricity.
That's just stupid.