The problem with a constant security factor in PoW is that — once Bitcoin reaches the market cap that maximalists expect it to reach — it would require a lot of electricity. (This includes cooling, which is often overlooked.)
Intuition tells me that the security factor is probably OK to decrease somewhat with increasing market cap, given that there would be fewer and fewer actors who could put up the capital required for a 51%— even if it was only a small fraction of the total future BTC cap. (However, once BTC cap exceeds the reserve currency, the (few) remaining actor(s) might perceive a much higher urgency to get rid of the “problem” and have a high “willingness to pay”.)
Has anyone ever estimated what the current “security factor” in the traditional fiat world equates to? We would have to account for all expenses required to defend the status quo. This would include, for example, wages of regulators and law enforcement officers, externalities of discretionary monetary policy, corruption, CapEx for tanks, stealth bombers, nuclear warheads, etc. Let’s do a blog post?
