Economics of BitcoinBrian Fabian Crain

@crainbf

Inside Bitcoins Berlin March 5, 2015

Why?

Rethinking Bitcoin

Security = Economics

How much does it cost? How much can you make?

Bitcoin Market Capitalization

Cost of 51% Attack

Value of Mining Hardware

Colored Coins

Counterparty

Factom (Property Rights)

Bitcoin

1. Shorting Bitcoin 2. Kamikaze Pool 3. Block Halving

Shorting Bitcoin

1.Take big short position on bitcoin

2.Attack network to collapse prize of bitcoin

Kamikaze Pool

1.Mine empty blocks, disregard blocks of other miners

2.Pay 10x per share to miners

Undermining Confidence

Mine with Kamikaze PoolDo Not Mine With Kamikaze

Pool

Attack Succeeds

Attack Fails

Block Halving 2016

Collapse in Revenues

Pre-Halving

Post-Halving

Block Reward $1,000 $500

Transaction Fees $500 $500

Operating Costs $1,200 $1,200

Net Profit $300 -$200

Success & Fragility

One Shot?

Blockchain Eternity

Credit

Alex Mizrahi, Jonathan Levin, Callum Macdonald, Martin Köppelmann, Vitalik Buterin, Robert Sams, Daniel Gallancy, Tim Swanson, Meni Rosenfeld, Sebastien Couture & others

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@crainbf epicenterbitcoin.com brian@epicenterbitcoin.com