Cryptocurrencies in the Crossfire: Are Bitcoin and Ethereum Safe?

Cryptocurrencies in the Crossfire: Are Bitcoin and Ethereum Safe?

The debate about the security of cryptocurrencies, especially Bitcoin and Ethereum, is gaining momentum. A key question is the vulnerability of these networks to 51% attacks, in which an attacker gains control of more than half of the network. Bitcoin, which is based on the Proof-of-Work (PoW) model, could potentially be more vulnerable to such low-cost attacks due to its structure. In contrast, Ethereum has switched to Proof-of-Stake (PoS), which has fundamentally changed the network's security architecture. Loud it-boltwise.de There are already over $44.8 billion staked in Ethereum, making a 51% attack financially unattractive.

For attackers, this would mean having to acquire large amounts of Ether, while also having to accept the risks of loss of value and potential sanctions. Estimates for the cost of a 51% attack on Bitcoin range from $8 billion to $10 billion. There are also concerns about the long-term security of Bitcoin, particularly with regard to declining miner rewards and the challenges facing Ethereum in the areas of scalability and data availability.

Research on 51% attacks

A recently published study by Coin Metrics looks at the vulnerability of both cryptocurrencies. A 51% attack theoretically allows an attacker to manipulate the blockchain and prevent or reverse transactions. The February 15, 2024 report concludes that there are no economically viable options for nations to continuously conduct such an attack. Authors Lucas Nuzzi, Kyle Waters, and Matias Andrade use a metric called “Total Cost to Attack” (TCA) to quantify the cost of an attack and conclude that there are no profitable ways to attack Bitcoin or Ethereum like this cointelegraph.com reported.

A 51% attack on Bitcoin would require the purchase of around 7 million ASIC mining rigs, at an estimated cost of around $20 billion. Given that there are not enough ASIC rigs on the market, a successful attack is unlikely. Even if an attacker could make their own rigs, the cost would also be over $20 billion.

The situation with Ethereum

On Ethereum, there are concerns about a possible 34% attack by Lido validators, but these are considered exaggerated. Such an attack would cost an estimated $34 billion and take at least 6 months. The attacker would have to manage over 200 nodes and spend $1 million on AWS services alone. Nic Carter of Castle Island Ventures praises Coin Metrics' empirically based research and highlights that the analysis of attack risks for both networks provides valuable insights.

Overall, the discussion about security and the future of Bitcoin and Ethereum remains highly relevant. Experts like Justin Drake of the Ethereum Foundation emphasize the differences between the security models of the two networks. He sees Ethereum as a comprehensive infrastructure platform that could meet the needs of an international decentralized financial system, while Bitcoin continues to face challenges in establishing itself as a superior monetary asset.