> if you want 51% to the network to be able to do abusive things, you have to risk devaluing your enormous PoS investment by destroying trust in the Ethereum network.
I have a hypothetical scenario I'm curious about. Let's say the Bitcoin network becomes so valuable that a huge chunk of the world economy depends on it, believing that it can't be manipulated. Most people would rather play nice with this than sabotage the network, but since the whole point of this consensus mechanism is assuming the worst case, let's say there's an entity (it could be a terrorist group or a nation) whose interest is to mess this up regardless of how much money they lose as a consequence.
This is an unlikely event but I think it's possible in some special cases that we can't foresee at the moment (just like nobody could predict that people will come up with ASICS for mining, or like people would form a pool to mine things) The only condition required is:
1. Get a hold of enough money to terrorize the network
2. Be at a position where you indirectly can gain more by losing all your money that's worth 51% of the network.
In this case, this entity can decide to attack the network without any consequences due to the pseudonymous nature of the blockchain. People will see this happen in daylight but won't be able to easily figure out who this was if this was based on proof of stake, because all you need to do this is to secure your fund in the bitcoin network.
However if Bitcoin was using proof of work, you will have to buy whole bunch of mining rigs (or build them yourself in some secret bunker) which is much more traceable than if you simply used money for this terrorism.
I'm not making up some convoluted scenario just to troll, I'm genuinely curious how this will work out and hope to be proven wrong because I also want to live in a world where proof of stake works.
I think what would happen in your scenario is this:
1. The terrorists use their 51% stake to interfere with the network.
2. People begin to notice that their transactions aren't going through as expected.
3. Some panic and try to pull out.
4. The price drops due to the rising supply.
5. The resulting feedback loop causes a crash.
6. The uncooperative nodes are identified.
7. The blockchain is forked to revoke the stake of those nodes.
8. Business continues as usual.
The only way I see the terrorists cause any long term damage is if they buy when the price is lowest and then repeat their attack. (Assuming balances aren't reset to pre-crash levels.) If it happens often enough, that would certainly erode the trust people place in the currency. On the other hand, if balances aren't reset, the second crash would be much less severe, since nobody will want to lose money selling when the price is down.
Essentially, no proof-of-X scheme can ensure that malicious interference doesn't happen, but it can make it costly enough that it happens only rarely. Then the occasional event can be handled manually (see also the DAO hack).
Interesting, as no technology is perfect, and people come up with clever hacking schemes for desktop computers till this day, I think the more valuable the network becomes, the more frequent this type of attack will be.
Do you think they will keep forking whenever major events like this happen? I worry that a couple of these attacks will be enough to drain all the trust from the network. Ethereum may have saved itself once by forking but a lot of people think this is not sustainable and think a couple more of these and people will leave.
DDoS'ing mining power would be more effective. You don't need to outcompete miners, just ensure they are slowed in their ability to push blocks to the network.
I'm not talking about effectiveness. I also think it's more effective to attack PoW than PoS, but my point is there may be cases where the attacker's top priority is not effectiveness.
Traceability is one such example, but there can be many other cases. Proof of work is pretty straight forward because the vulnerabilities are mostly technical issues, whereas proof of stake I think can have a lot of social vulnerabilities.
I bring this up because I feel like every discussion about blockchain security seems to mention "effectiveness" but the world is not perfect and there are plenty of cases where certain parties act in unintuitive manners.
I have a hypothetical scenario I'm curious about. Let's say the Bitcoin network becomes so valuable that a huge chunk of the world economy depends on it, believing that it can't be manipulated. Most people would rather play nice with this than sabotage the network, but since the whole point of this consensus mechanism is assuming the worst case, let's say there's an entity (it could be a terrorist group or a nation) whose interest is to mess this up regardless of how much money they lose as a consequence.
This is an unlikely event but I think it's possible in some special cases that we can't foresee at the moment (just like nobody could predict that people will come up with ASICS for mining, or like people would form a pool to mine things) The only condition required is:
1. Get a hold of enough money to terrorize the network
2. Be at a position where you indirectly can gain more by losing all your money that's worth 51% of the network.
In this case, this entity can decide to attack the network without any consequences due to the pseudonymous nature of the blockchain. People will see this happen in daylight but won't be able to easily figure out who this was if this was based on proof of stake, because all you need to do this is to secure your fund in the bitcoin network.
However if Bitcoin was using proof of work, you will have to buy whole bunch of mining rigs (or build them yourself in some secret bunker) which is much more traceable than if you simply used money for this terrorism.
I'm not making up some convoluted scenario just to troll, I'm genuinely curious how this will work out and hope to be proven wrong because I also want to live in a world where proof of stake works.