FAQs Frequently Asked Questions
Crypto Report
Chinese dominate 80% of Bitcoin mining. Will they be able to take over mining as a result of this?
Q: Last weekend IBD published an article (Dec. 10, 2018 issue on page A20) regarding the Chinese domination of 80% of Bitcoin mining, essentially giving them control over that space. It seems this could have potentially dire implications from people with interests not aligned with our own.
In your next Crypto Report, hopefully you can incorporate what this could mean going forward. It was my understanding that the biggest advantage to Bitcoin/Blockchain technology was that it was basically autonomous and built to be immune to exactly this sort of issue (control by any one government, or any other group of people).
A: The media (and many crypto analysts) always get it wrong (as far back as 2012 from what I've observed). It matters not whether it's a country or group that dominate bitcoin mining. Each person is acting in their own selfish interest. Thus there is no possibility of gaining control over the space. It's akin to saying 98% of Chinese own BIDU so they can conspire to manipulate its price. It would never happen because each stock holder is acting in their own self interest. BTW, China has dominated bitcoin mining for much of the time since 2013 yet no such attack has been successful. We are now in January 2019 (the time of this edit).
Still, say such were propagated by a major government armed with black-ops hired hackers. Andreas Antonopoulos says the network would quickly react and implement countermeasures within a couple of hours. Hackers might be able to affect the next block or two, launching a double-spending attack by holding on to enough power to confirm the majority of transactions. However, this would take a huge amount of expense and effort and, should a big double spend be attempted, the data would likely appear on the block chain for all to see, thus the quick countermeasures. At the most extreme, bitcoin’s core code could be changed to destroy the attackers. Thus such attacks just wouldn’t be worth the risk on several levels. That said, bitcoin's core code has never been altered, unlike ethereum which has gone through a number of core changes.
Antonopoulus explains, "So unless we were all not paying attention — and trust me, we are, because GHash.io has now become a huge topic in this community — there’s nothing they can really do with that. You can’t run away with everyone’s coins just because you got 51%. All you can do is affect the next block. So you can affect the next block and create a double-spend. Big whoop."
Thus, the idea that a 51% attack is a threat to Bitcoin’s very existence is simply not true. It only allows an attacker to hijack the blockchain for a limited amount of time before the rest of the network — the real, genuine network — responds accordingly and neutralizes the threat.
If shutting off peer-to-peer decentralized systems were simple, the courts in the U.S. would not have had to spend so much taxpayer money to crush Pirates Bay and the hundreds of sites since then that have exchanged files illegally since 1995.
In your next Crypto Report, hopefully you can incorporate what this could mean going forward. It was my understanding that the biggest advantage to Bitcoin/Blockchain technology was that it was basically autonomous and built to be immune to exactly this sort of issue (control by any one government, or any other group of people).
A: The media (and many crypto analysts) always get it wrong (as far back as 2012 from what I've observed). It matters not whether it's a country or group that dominate bitcoin mining. Each person is acting in their own selfish interest. Thus there is no possibility of gaining control over the space. It's akin to saying 98% of Chinese own BIDU so they can conspire to manipulate its price. It would never happen because each stock holder is acting in their own self interest. BTW, China has dominated bitcoin mining for much of the time since 2013 yet no such attack has been successful. We are now in January 2019 (the time of this edit).
Still, say such were propagated by a major government armed with black-ops hired hackers. Andreas Antonopoulos says the network would quickly react and implement countermeasures within a couple of hours. Hackers might be able to affect the next block or two, launching a double-spending attack by holding on to enough power to confirm the majority of transactions. However, this would take a huge amount of expense and effort and, should a big double spend be attempted, the data would likely appear on the block chain for all to see, thus the quick countermeasures. At the most extreme, bitcoin’s core code could be changed to destroy the attackers. Thus such attacks just wouldn’t be worth the risk on several levels. That said, bitcoin's core code has never been altered, unlike ethereum which has gone through a number of core changes.
Antonopoulus explains, "So unless we were all not paying attention — and trust me, we are, because GHash.io has now become a huge topic in this community — there’s nothing they can really do with that. You can’t run away with everyone’s coins just because you got 51%. All you can do is affect the next block. So you can affect the next block and create a double-spend. Big whoop."
Thus, the idea that a 51% attack is a threat to Bitcoin’s very existence is simply not true. It only allows an attacker to hijack the blockchain for a limited amount of time before the rest of the network — the real, genuine network — responds accordingly and neutralizes the threat.
If shutting off peer-to-peer decentralized systems were simple, the courts in the U.S. would not have had to spend so much taxpayer money to crush Pirates Bay and the hundreds of sites since then that have exchanged files illegally since 1995.
| First published: | 20 Dec 2018 |
| Last updated: | 7 Jan 2019 |