miners are being paid out-of-band, with fiat, to fill blocks with jpegs.

if they were paying for their transactions with Bitcoin, it is the case that they would eventually run out of money to fund their activity.

as fiat can be printed infinetly, there are no limitations on how long they can sustain this attack.

what is the difference between a State actor attacking the network by paying mining pools to mine empty blocks, vs a State actor attacking the network by paying mining pools to fill blocks full of jpegs?

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Just to clarify - the fraud would be out-of-band miner payment?