Study: China can destroy bitcoin
A group of scientists from Princeton University and Florida international University Ben Kaiser, Mireya Jurado and Alex Ledger published a study entitled “the Looming threat of China: analysis of Chinese influence on bitcoin”.
It says that the Chinese government currently has sufficient tools and resources to significantly change or even destroy the first cryptocurrency. The researchers note that one of the key factors that the government had the ability to significantly affect the first cryptocurrency — significant concentrations of miners and the computing power in the PRC.
“Mining bitcoin has become highly centralized due to the development of specialized devices. As a result, the miners began to band together in large pools: consortia working together and distributing the profits. As at June 2018, more than 80% of mining capacity is represented by six pools, five of which are controlled by persons or organizations in China”, — the document says.
The researchers also point out that if this concentration of resources has taken place in the country with an open economy, predictable legislation and a clear policy, it would not cause serious fears. However, the PRC government plays a significant role in managing the economy, compared with Western countries, and largely motivated by ideology.
“The Chinese government controls access to information and the Internet for their citizens, having powerful tools able to force to obey the dictates of the state”, — the authors of the study.
The document also lists four main categories of methods by which the Chinese authorities could potentially affect bitcoin:
sabotage competing miners
the undermining of the consensus (destabilization)
“The motivation for potential attacks can be both ideological and financial”, — the researchers note.
As an example, the authors of the material cited the possibility of China to organize an attack double-spend by control of the internal infrastructure of the Internet. By manipulating tariffs to different pools, they can pass the hash attack with less computational power. An attacker could send a transaction in two pools, but if by artificial means to significantly slow down the speed of one of them, the other can easily get ahead of him and to cancel the second transaction.
We will remind, earlier about the fact that bitcoin is actually controlled by China said Ripple CEO brad Garlinghouse.
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