How Is the “Cost to Attack” Typically Calculated for a PoW Cryptocurrency?
The "cost to attack" is typically calculated by determining the amount of hashrate required to achieve 51% of the network's total hashrate. This required hashrate is then multiplied by the current market rental price of that hashrate over a specific time period (e.g. one hour or one day).
This calculation provides the economic cost to launch a successful double-spending attack. The total hashrate of the network is the primary variable influencing this cost.
Glossar
Options Contract
Mechanism ⎊ An options contract within cryptocurrency markets represents a financial derivative granting the holder the right, but not the obligation, to buy or sell an underlying crypto asset at a predetermined price ⎊ the strike price ⎊ on or before a specified date, the expiration date.
Economic Cost
Assessment ⎊ Economic Cost in the context of crypto networks refers to the real-world resources expended to maintain the ledger's operation, most notably the energy consumption in Proof-of-Work systems or the opportunity cost of staked capital in Proof-of-Stake systems.
Market Rental Price
Yield ⎊ The market rental price, within cryptocurrency derivatives and options trading, represents the implied cost of holding an asset or derivative contract, expressed as an annualized percentage.
Hashrate
Definition ⎊ Hashrate represents the total computational power per second that a miner or the entire network dedicates to solving cryptographic puzzles in a Proof of Work blockchain.