Bitcoin is protected from the "51% attack"

The Central Bank of Canada (BOC) released a report this month claiming that a theoretically possible 51% attack does not threaten the world's most popular cryptocurrency.

Jonathan Chiu of the BOC's Fund Management and Banking Department and Torsten Koppl, an economist at Queen's University, contributed to the Central Bank of Canada report. Mr. Chiu and Mr. Kopple reached this conclusion based on a traditional formula familiar to the Bitcoin community, namely that the right incentives are aligned with proof of work.

The Bank of Canada, as the country's central bank, sets the country's monetary policy, according to its charter, making safe and sound financial decisions. As the only legal body capable of issuing government documents, it not only governs Canada's fiscal policy, but also acts as a lender of last resort for private banks.

The report published online states, “In the case of cryptocurrency, the rewards are offered as share premiums. This income causes inflation, which imposes an indirect cost on users in the form of an inflation tax. However, there are also direct costs associated with investments in computing power (mainly energy), which uses up most of the emission revenue. Traditional currency does not lose issue income, but generates income for the issuer. In the case of a modern central bank, this results in rising profits that exceed transaction costs, which can be used to offset other distortionary taxes used by the government," which is acceptable to the central bank.

In a section called "Double Spending as a Threat," the authors say that they "consider secret mining to be an exponential race for each update against a group of honest miners. To double spend, the user must win the race a certain number of times in a row, but keep their result secret.

“This is not entirely accurate when considering the PoW (Proof-of-Work) consensus algorithm used in blockchain technology. These users can catch up by generating x number of blocks faster than all other miners. Therefore, secret mining is truly a dirty game towards honest miners who calculate one block at a time.. This is due to the so-called “51% attack” problem. Miners who control more than half of the hashrate, in theory, eventually lose power against double-spending."

From an economic perspective, double-spending requires "that the rogue miner has a controlling stake and is risk neutral. These assumptions are generally unrealistic, and in practice there is little economic incentive for users to launch such an attack, especially when large miners' capital investments are large," the Bank argues. Canada.

According to news.bitcoin.com