Experts: China May Destroy Bitcoin
October 16, 2018
Researchers from Princeton University and Florida International University have published a report saying that gross impact China makes over Bitcoin infrastructure allows the country government to manipulate the currency or destroy it even.
Initially Bitcoin was developed as a currency independent from any centralized control with infrastructure encouraging net members to maintain the environment stability. But as the experts say, this view of BTC has gradually become outdated as complicated mining caused miner consolidation:
“Bitcoin mining has become heavily centralized due to advances in specialized hardware that render commodity hardware obsolete. As a result, miners have congregated into mining pools: consortia of miners who work together and share profits. As of June 2018, over 80% of Bitcoin mining is performed by six mining pools and five of those six pools are managed by individuals or organizations located in China.”
The researchers suppose that if mining took place in countries with more open economics, there would be less reasons to concern. As they put it, with its mighty mechanisms of state ideology the Chinese government plays the key role in managing economic activities within the country.
The authors of the report have given four scenarios the Chinese authorities may resort to in order to strengthen their influence on Bitcoin:
- dismissing competing miners;
- destabilizing BTC;
- de-anonymizing network users;
- imposing censorship.
The experts note that these ways of fighting Bitcoin may have ideological or commercial reasons and opportunities for technological realization. They believe, that due to almost total governmental control over China internet infrastructure, it is no problem to make double spend attack at BTC net with low hashing power. With instruments to manage data transfer rate hackers can direct a transaction to two pools at the same time having thus slowed down one of them.