By allowing you to double spend, it reduces confidence in coins you buy to zero, which reduces the value of all coins to zero. You still have your coins, but they aren't worth anything.
Which is exactly why no one would spend the crazy amounts of money it takes to execute a 51% attack. It would be like self-immolation. Billions of dollars in equipment and energy and you'd have 51% of a worthless network. In practice, you would have to control much more than 51% of the network, because you'd have to catch up to the 49% that are still hashing away.
Unless they are a government, shorted bitcoins, or own a massive stake in a competitor etc.
PS: Remember the value of Bitcoin is limited as a function of the cost of that 51% attack. If the price increases by 10x the transaction fees need to also increase by 10x or Bitcoin becomes less secure.
This idea comes back many times... but I don't see a reason why government would want to short bitcoins or disturb the market to get their hands in it.
1. They have BEP printing press; instead of stealing or brute forcing into bitcoin and then selling the loot for $, the might as well ask Bernanke to print few thousands more sheets of 100 dollar bills (of course not legally but i'm sure there is some overprint like in any business).
2. screwing people out of bitcoins would mean screwing US citizens as well. Why would any part of government do that just to upset Congress and get themselves in front of bunch of congresspeople for grilling? Doesn't make sense.
Government is unrelated to shorting, Governments may chose to destroy Bitcoin for the same reason the may ban it. Basically, currency controls etc.
Someone shorting Bitcoin on the other hand has an economic incentive to destroy it. The cost benefit of doing so scales with the size of their short vs the current hashing power. But, a malware writer may have access to a 51% attack briefly without owning any equipment.
> Which is exactly why no one would spend the crazy amounts of money it takes to execute a 51% attack.
There was a recent paper shared here on an article about new type of currency or exchange system. Although I don't understand details, it explained that since 51% of coins are already mined by just a few pools, if these pools orchestrate together, then can break the chain. But unsure how true this is (cannot find the post anymore, sorry)
Just like why no one would spend $100s of billions on wars that just perpetuate violence.. surely there's no incentive or gain they'd have by causing such disruption.
This is false, you just have to wait for more confirmations. And if miners are censoring transactions there will be a fork where you can use your coins.
Technically, a 51% attack would allow one to confirm non-standard transactions and pretty much do anything. Granted, this would immediately be apparent to any of the other 49% of nodes and cause a fork, but still...
Whats the point of that ? A miner can confirm non-standard transactions right now when he mines a block but no one would accept it. Point of 51% attack is to surreptitiously double spend and nothing else.
