MoneroResearch.info

WIKINDX Resources

Budish, E. (2022). The economic limits of bitcoin and anonymous, decentralized trust on the blockchain. Unpublished manuscript. 
Added by: Rucknium (7/1/22, 4:19 PM)   
Resource type: Manuscript
BibTeX citation key: Budish2022
View all bibliographic details
Categories: Monero-focused
Creators: Budish
Views: 123/443
Attachments   Economic-Limits-Bitcoin-Blockchain.pdf [5/123] URLs   https://faculty.ch ... oin-Blockchain.pdf
Abstract
Satoshi Nakamoto invented a new form of trust. This paper presents a three equation argument that Nakamoto’s new form of trust, while undeniably ingenious, is extremely expensive: the recurring, “flow” payments to the anonymous, decentralized compute power that maintains the trust must be large relative to the one-off, “stock” benefits of attacking the trust. This result also implies that the cost of securing the trust grows linearly with the potential value of attack — e.g., securing against a $1bn attack is 1000 times more expensive than securing against a $1m attack. Thus, if Bitcoin is to become significantly more economically useful than it is today, then the cost of maintaining Bitcoin must grow commensurately as well for it to remain trustworthy. A way out of this flow-stock argument is if both (i) the compute power used to maintain the trust is non-repurposable (as has been true for Bitcoin since mid-2013), and (ii) a successful attack would cause the economic value of the trust to collapse. However, vulnerability to economic collapse is itself a serious problem, and the model points to specific collapse scenarios. The analysis thus suggests a “pick your poison” economic critique of Bitcoin and its novel form of trust.
  
WIKINDX 6.5.0 | Total resources: 111 | Username: -- | Bibliography: WIKINDX Master Bibliography | Style: American Psychological Association (APA)