A bitcoin transaction is considered valid as long as it is in the longest uninterrupted chain of blocks. If the military could buy and run enough equipment to create blocks faster than all the rest of the miners around the world combined then they could mess with Bitcoin's fundamental consistency by making longer chains of blocks than the rest of the world. The only thing preventing this from already happening today is that it would cost an insane amount of money to be able to mine blocks faster than everyone else in the system combined
>The only thing preventing this from already happening today is that it would cost an insane amount of money to be able to mine blocks faster than everyone else in the system combined
The US Military budget is insanely large. The total value of Bitcoin is estimated at around $160 Billion[0]. The annual military budget is 750 Billion dollars. If there is the will, being the money would not be the issue preventing such an attack.
The military also has access to extreme computing resources that are not available to the general public. If the pentagon cared to develop their own ASICs they could easily dominate the network.
Not going to lie I don't think the military or the pentagon is that sophisticated to build their own ASICs. They'd just buy ASICs from one of the Chinese miners that has already perfected the game. The primary resource at the US disposal is ridiculous sums of cash, but we aren't exactly on top when it comes to expertise and manufacturing.
No. As long as you'd have more than 50% of hashrate you will win in the long run and you're free to reverse transactions and double spend as you choose.
So you're saying they just accept a block because it's in the longest chain and don't check for double-spends? I have a hard time believing that given that cost for checking should be extremely low relative to creating a valid block.
No, they do check for double-spends, but the transactions you reverse are now in the shorter chain and no longer exist in the history when you follow the longest chain.
Say for example you have these blocks:
b1 <- b2 <- b3
And you have a transaction t in b2 that you want to reverse. Then you build another chain starting with b1 like so:
b1 <- b2' <- b3' <- b4'
Where you double-spend t in b2'. The miners thinks that both b2 and b2' are valid. When they choose to switch from the b2 chain to the b2' chain, it will seem like all transactions in b2 and b3 just disappear (unless included in the other chain of course).
Yes it does. So you spend once in b2 and once in b2'.
Assuming 6 blocks of confirmation the attack is then:
1. Spend in b2, create blocks until b8.
2. Switch the chain to b2', spend again there and run with it until bX' > bX.
Assuming 6 blocks of confirmation and 51% hash power, you'll lose a lot of money in the process (it'll take ages until bX' > bX [1]) so it better be worth it. Also, you can probably estimate the risk of this happening via the transaction volume in the block. The higher, the more valuable a double spend would be.
[1] Assuming 6 blocks à 10 minutes and you achieving 51%/49% ~ 4% more hashpower, such an attack costs you 25h (150 blocks) so at the very least 150x3.75x51% ~ 286 BTC in opportunity cost plus equipment plus electricity plus the risk that someone switches on his new nodes and your 51% become only 50%.
The cost regarding your equipment will also be full purchase price because if you succeed, you ruin bitcoin and your equipment value becomes 0 with your attack.
Both are true. If you took over BTC you'd be inclined to keep it in tact else it's worthless currency-wise. But an entity can theoretically take over bitcoin to make it worthless.