> The more valuable the collective Bitcoins are, the more energy you need to spend defending it against 51% attacks.
I wonder how afraid one actually needs to be of 51% attacks. How would the attacker profit from a 51% attack? They might double-spend, or rewrite known history somehow, or decide to only include certain transactions in their blocks and leave other transactions stranded. In each of these cases, it would be clear to everyone that Bitcoin has been broken, and that it has lost its usefulness and the properties it became famous for. The attacker might then control a large amount of Bitcoin, but having lost everyone's trust in it, that large amount of Bitcoin would be worthless. It's not in any attacker's interest to actually break the system, since they would need a gigantic initial investment and get no return on it. (Except if it were very cheap and the attacker's motivation would really be to destroy Bitcoin.)
I don't think we need to fool ourselves that miners are in it to "protect" the network. They're in it to make money.
Interesting point, thanks. I wonder how one would settle a short if the network effectively ceases to exist, or at least ceases to exist as a single, well-defined chain that everybody can agree on. If you short the New York stock exchange, then blow up the building, do you win? :-)
If you short bitcoin-based ETFs on NYSE and Bitcoin subsequently tanks the value of the ETF goes to zero and you walk away with your proceeds from the original sale and with no obligation to give the original ETF back. There is no counter-party risk in a short sale for the seller.
Keynes said "The markets can remain irrational longer than you can remain solvent". Trying to short Bitcoin seems like a great way of becoming more anecdata for this.
I wonder how afraid one actually needs to be of 51% attacks. How would the attacker profit from a 51% attack? They might double-spend, or rewrite known history somehow, or decide to only include certain transactions in their blocks and leave other transactions stranded. In each of these cases, it would be clear to everyone that Bitcoin has been broken, and that it has lost its usefulness and the properties it became famous for. The attacker might then control a large amount of Bitcoin, but having lost everyone's trust in it, that large amount of Bitcoin would be worthless. It's not in any attacker's interest to actually break the system, since they would need a gigantic initial investment and get no return on it. (Except if it were very cheap and the attacker's motivation would really be to destroy Bitcoin.)
I don't think we need to fool ourselves that miners are in it to "protect" the network. They're in it to make money.