Censorship, disruption of consensus and bitcoin destabilization - easy for China
A new report by scientists from Princeton and Florida universities suggests that the growing influence of China on key bitcoin infrastructure gives the Chinese government substantial power over the main cryptocurrency and even the ability to destroy it.
Bitcoin was designed to avoid any form of centralized control. The core infrastructure of this cryptocurrency gives participants a strong set of incentives that support the health and stability of the ecosystem. Bitcoin is almost ten years old, and there has not yet been any serious (and even more, any successful) attack on it, which gives reason to believe that it is well protected. However, researchers argue that the reasons for anxiety are still there.
They point to the changing nature of Bitcoin mining. Initially, it could be done using conventional computers, but the requirements for computing power increased, which led to the creation of specialized expensive devices. The report describes how this led to an increase in the consolidation of miners in China:
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.If bitcoin mining was concentrated in a country with an open economy and a predictable regulatory policy, there would be less cause for concern. However, the Chinese government plays a much larger role in managing its economy compared to Western countries and is more ideologically motivated. The authorities of the Middle Kingdom control the access of their citizens to the Internet and information, as well as possess powerful tools that force the population to obey state dictation.
Potential attacks
Researchers identify four areas of activity through which the Chinese government could influence bitcoin:- interference with the competitive environment of miners;
- undermining the consensus and destabilization of Bitcoin;
- deanonymization;
- censorship.
For example, China’s ability to commit a double-spend attack is due to its full control over the country's internal Internet architecture. Performing the double-spend attack with less hashing power is possible by manipulating the rates at which information is exchanged between mining pools. For example, an attacker can send a transaction to two pools, but dramatically slow the speed of the second, allowing the first to deny or cancel the second transaction.
China has been aware of Bitcoin for quite some time. Many ways to use cryptocurrency are contrary to the goals of the Chinese government. For example, Bitcoin and its “colleagues” help citizens evade control over their money. Earlier, the Chinese government took tough measures against the country's cryptocurrency market. However, the current increase in the hash capacity in the Middle Kingdom gives rise to new concerns, since the ability of the Chinese government to control the leading cryptocurrency is growing in general.
Posted from my blog with SteemPress : https://coinatory.com/2018/10/11/censorship-disruption-of-consensus-and-bitcoin-destabilization-easy-for-china/