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Home Cryptocurrency news Bitcoin

Report: China Has “Capabilities” and “Strong Motive” to Destroy Bitcoin

Tony Spilotro by Tony Spilotro
2 years ago
in Bitcoin, Cryptocurrency Technology
Reading Time: 3min read
Cryptocurrency
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It’s commonly known that cryptocurrency mining farms located in China have a stronghold over the Bitcoin ecosystem. However, a scathing new report suggests that China’s increasing influence over the leading cryptocurrency by market cap may be putting the Bitcoin network at severe risk.

China’s Control Over the King of Crypto

A new report entitled The Looming Threat of China: An Analysis of Chinese Influence on Bitcoin from a group of researchers hailing from Princeton University and Florida International University, takes a terrifying deep dive into China’s increasing control over the Bitcoin network and the risks associated with the country’s firm grasp.

The researchers “singled out” China, calling it the “most powerful potential adversary to Bitcoin.” It also warned of a “variety of salient motives for attacking the system and a number of mature capabilities” that China uniquely possesses, which are a threat to Bitcoin’s integrity and future as a world currency.

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The paper points out how “heavily centralized” Bitcoin mining has become, with “over 80 percent of Bitcoin mining” being performed by a total of six mining pools – five of which have base operations associated with China. Combined, the Chinese mining pools control 74% of Bitcoin’s hashpower.

Only 51% control over the network’s hashpower is required for a “51-percent attack” – a situation where miners are able to modify transactions on the otherwise inalterable ledger.

The report also looks at how China’s social policy, in particular, China’s Great Firewall, could be giving Chinese miners preferential treatment in deciding which blocks to mine. Chinese miners are using the priority to their advantage and are mining empty blocks in an attempt to move the miner up the queue and increase mining returns. However, the mining of empty blocks has a detrimental effect on the speed of Bitcoin’s network.

China Could Destroy Bitcoin to Make an Ideological Statement

Slowing down the network is the least of investors problems when it comes to China’s control over Bitcoin’s hashpower. The researchers identified 19 different types of attacks that the Chinese mining pools are currently capable of. One such attack, called a Goldfinger attack, researchers say could destroy Bitcoin.

“The most likely scenario is a death spiral in which China can credibly threaten a Goldfinger attack and rational miners will be scared off, thus destroying Bitcoin,” the report reads.

But why would China be motivated to destroy Bitcoin? Researchers conclude that Bitcoin is in “ideological opposition” to China’s communist policy, and could “weaken or destroy it” to make a statement. “Virtually any violation of Bitcoin’s security suffices to achieve this goal as long as it is highly visible,” the researchers added.

China Could Weaponize Bitcoin to Attack Enemy Economies

The paper ends with a chilling example of how China could use their influence to weaponize Bitcoin. Many foreign economies look to cryptocurrencies like Bitcoin as a safe haven due to the lack of financial infrastructure in their country, or due to the way their governments control traditional fiat currencies.

The report says that China may seek to attack Bitcoin as a way to indirectly attack an enemy country and destabilize its already fragile economy.

“To exert influence in a foreign country where Bitcoin is in use, China may aim to weaken or even totally destroy Bitcoin. This could be done by targeting specific users or miners for attack or by generally weakening consensus to increase volatility to a breaking point,” the report warned.

Featured image from Shutterstock.
Tags: 51 percent attackbitcoinbitcoin miningchinaminers
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Tony Spilotro

Tony Spilotro

I'm Tony Spilotro. Behind the pseudonym, I'm a digital media executive and global remote work leader with a decade of content experience and excellent. Here, I explore my newfound passions pertaining to privacy, finance, economics, politics, cryptography, property rights, and other libertarian-esque views. I am a Bitcoin evangelist, maximalist, and educator whenever I can be, helping to spread its message of freedom from government control, monetary policy mismanagement, and passing the buck - literally – to future generations. My journey from a curious retail crypto investor to a serious Bitcoin advocate, trader, and technical analyst is an unusual one, but life-changing nonetheless and has become less about money and more about a long-overdue revolution. While a firm believer in the laws governing math and science, I am profoundly fascinated by the impact of astrology and astronomy including moon and solar cycles and planetary alignment and their ability to influence and potentially predict markets. It hasn't yet clicked for me as to how to put anything to use, but I consider it my current rabbit hole I can't yet dig out of. My perspective of growing up alongside the internet, the dot com era, the Great Recession, and roots in video games collecting coins and rare items caused Bitcoin to immediately make sense to me. Through all of these lenses, I seek to produce content that is educational and entertaining, and I thank you sincerely for taking the time to read what I have to say. Please follow me on Twitter and feel free to drop me a line if you would like to work together.

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