"There will only ever be 21 million Bitcoins."
"How can you be sure?"
"Because it's written into the code."
"What if they change it?"
I get this question often.
This idea that the Bitcoin code cannot be changed stumps people.
It's just code, right? Can't they just go in and edit it?
And the beauty of this question is it's often a turning point for many people. Because the reason the code cannot be changed is the very essence of why a blockchain exists.
The question that's really being asked here is, what happens if there is a 51% attack?
Why can't some rich person just buy up a bunch of computing power, take over 51% of the chain and then do whatever they want?
The reality is yes, 51% attacks are possible, but they are very difficult, even on small altcoins, and in the end aren't actually profitable.
And the second reality, in 2023, a 51% on the Bitcoin blockchain just isn't realistic. Perhaps in theory it could happen, if someone had unlimited time and resources, but it would achieve literally nothing, and in many ways would make Bitcoin even stronger.
Let's break this down step-by-step.
The first thing to do a 51% attack is you need to computing power.
The amount of computing power to obtain 51% of the mining power is enormous.
This requires certain hardware - special ASIC mining chips built specifically for mining Bitcoin, which is what all mining farms use.
Billions of dollars worth would be required.
This is already nearly impossible. There is a massive shortage of ASICs on the market, and ordering enough that could take over 51% of the hashrate would spike demand so heavily that everyone would notice, would create an even bigger shortage, and would take so long to deliver that by the time they are delivered Bitcoin would have grown and you would probably need to order even more.
But let's say they somehow magically are able to acquire billions of dollars of ASIC miners overnight.
What do they do now?
They need to power them. So now they need to construct the world's biggest mining farm, complete with cooling, reliable electricity supply and the technical staff to actually put this together. Meaning - they can't exactly keep this a secret.
But let's say they magically manage to do that overnight as well.
Now they turn on the miners, take over 51% of the chain.
Wonderful. They now have consensus. Let's say they change the code to adjust the maximum supply from 21 million to 31 million coins, and they send 10 million coins to their own wallet.
It's over, right? Bitcoin's been hacked?
Here's the wonderful thing about Bitcoin. When a miner takes over 51% of the chain and changes the code, and the other 49% don't change their code, those 49% don't disappear. They create what is known as a fork.
Think of it like hiking with 100 friends and you come to a fork in the road. 51 want to go left, but 49 want to go right. So what happens? Exactly that. 51 people will go left, and 49 will go right.
The people that go right don't magically disappear. They simply continue on a different path.
That's exactly what happens on a blockchain. At the point of the 51% attack, let's say it's on block 5,000, the hacker will create a block #5,001 that looks different to the block #5001 for every other miner.
The Bitcoin blockchain will now be forked into two chains, like so:
And even though the hacker has 51% of the mining power, he doesn't have 51% of the miners. 99% of people mining Bitcoin are still on the old chain.
So what has this hacker achieved?
Well, he's spent billions of dollars, and probably many years, putting together an elaborate and powerful mining operation. He's taken over 51% of the hash-rate. And what is he left with?
A Bitcoin fork which nobody wants to use and is completely worthless. It will also be costing him millions of dollars every 10 minutes to maintain, so he'll probably turn his mining rigs off. And now he's left with a bunch of ASIC miners which will probably be outdated in twelve months.
What a great way to spend billions of dollars! Not.
Now, would an event like this create some disruption?
Will Bitcoin price crash?
But here's what won't happen:
Bitcoin won't die.
Once everyone has figured out what happened, people will simply continue along the 49% chain (which after one or two blocks will become the 100% chain again), everything will go back to normal, everyone will laugh at the hacker that thought he could pull off a 51% attack Bitcoin, and even after all that, Bitcoin didn't miss a single block.
And here's the best part. The only thing this hacker would have achieved is proving to the world once again that Bitcoin can't be hacked.
51% attacks are irrational
The main reason 51% attacks don't happen is because they don't make sense.
As we've seen above, they cost billions of dollars in equipment and resources, and you don't actually achieve anything.
So if there's a party with billions of dollars in computing power available, what do you think they will do?
- Try a 51% attack so they can create a worthless Bitcoin fork, or;
- Mine some Bitcoin and make some money?
It is infinitely more profitable for them to add all their resources to mining Bitcoin, which in turn will make Bitcoin even stronger, and the Bitcoin they receive as rewards will become even more valuable.
This is all the aspects of the Bitcoin blockchain at work - the incentive (mining) system works, the decentralisation so no one party controls the code works, and the proof-of-work that makes these attacks almost impossible in the first place works.
Bitcoin forks all the time!
What people don't realise is this happens to Bitcoin all the time.
Someone out there thinks they can create a "better" Bitcoin, so they change the code and start off on their own chain, then try to convince everyone else to join them.
The most famous Bitcoin fork was in 2017. Tree of the major mining pools tried to suggest an increase in block sizes. The community refused. So these miners did it anyway and the forked chain was called BCH, or Bitcoin Cash.
Bitcoin Cash had a decent user base at the very beginning, but it never came close to superseding Bitcoin. Nowadays, Bitcoin Cash is irrelevant, and hardly used.
The same goes for Bitcoin Diamond, Bitcoin Gold and hundreds of other Bitcoin forks that have appeared over the years.
Will a fork emerge in the future that takes the majority of users?
But again, Bitcoin won't disappear. It will continue on making, just like it always has.
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