Coin Metrics Confirms Bitcoin and Ethereum's Security Against Major Attacks

The security of leading cryptocurrencies like Bitcoin and Ethereum remains a paramount concern for investors, developers, and enthusiasts alike.

by Faruk Imamovic
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Coin Metrics Confirms Bitcoin and Ethereum's Security Against Major Attacks
© Getty Images/Dan Kitwood

The security of leading cryptocurrencies like Bitcoin and Ethereum remains a paramount concern for investors, developers, and enthusiasts alike. Recent research from Coin Metrics has shed light on the resilience of these networks against potential 51% attacks, providing reassurance about their robustness against such threats.

Understanding the Impervious Nature of BTC and ETH

The notion of a 51% attack has long haunted the cryptocurrency community. This type of attack, which involves gaining majority control of a network's mining hash rate or staked crypto, poses a theoretical risk of allowing attackers to alter blockchain transactions.

Such actions could, in theory, undermine the integrity of the network by preventing new transactions from being confirmed or enabling double-spending.

However, Coin Metrics' comprehensive study, conducted by researchers Lucas Nuzzi, Kyle Waters, and Matias Andrade, concludes that the feasibility of such attacks on Bitcoin and Ethereum by nation-state actors or any other entity is now virtually non-existent.

The prohibitive cost and operational challenges of sustaining such an attack make it an unviable strategy for undermining these blockchains.

The Cost of an Attack: A Financial Deterrent

The research introduces a critical metric, the "Total Cost to Attack" (TCA), to quantify the financial outlay required to launch a successful 51% attack on these networks.

Their findings reveal that neither Bitcoin nor Ethereum presents a profitable target for such nefarious activities. The report highlights a hypothetical scenario where an attacker could potentially profit $1 billion from a $40 billion attack, yielding a meager 2.5% return on investment.

This slim margin, coupled with the astronomical initial outlay, effectively deters potential attackers.

For Bitcoin, the sheer volume of ASIC mining rigs needed for a 51% attack — estimated at 7 million units, costing around $20 billion — surpasses the available market supply, further complicating any such attempts.

Even if an attacker were capable of manufacturing their own rigs, the cost would remain prohibitively high.

Ethereum and the Myth of the 34% Attack

The report also addresses concerns surrounding Ethereum, particularly the fear of a 34% attack stemming from the concentration of staking power among liquid staking derivative (LSD) providers like LidoDAO.

Coin Metrics' analysis dispels these fears, illustrating that orchestrating such an attack would not only be exorbitantly costly but also logistically impractical due to Ethereum's churn limit, which prevents immediate deployment of staked assets.

Nic Carter, a partner at Castle Island Ventures, lauded the Coin Metrics report for its empirical rigor and significant contribution to understanding blockchain security. Carter emphasized the novelty and importance of this research, marking it as a critical addition to the literature on cryptocurrency security.

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