August 12, 2020
A famous developer blogged this week that The Chinese state does not present a long-term threat to Bitcoin
China does not threaten Bitcoin
Jameson Lopp, the creator of Casa Wallet and a Bitcoin contributor, said Chinese miners are not a threat to Bitcoin. His post came amongst long-established fears of domination by companies in the Far Eastern nation, who grasp over 70% of Bitcoin’s global hash rate.
As of 2015, when Bitcoin mining was commercialized, critics have specified the probabilities of a China-led outbreak against the Bitcoin network are high. The country’s inexpensive energy, an abundance of employment, and a cold climate in certain regions have made it a hotbed for mining.
On the other hand, Lopp says a government-led attack is out-of-bounds. “I suspect it would be nearly impossible for the state to start seizing control of mining facilities without the news leaking to the rest of the world,” he stated.
Although there are thousands of such farms, Lopp noted only ten add to over 70% of Bitcoin’s hash power. While it presents a more natural attack vector, it makes it easier for the government to target.
Still, even doing that is not upfront. Lopp said converting mining pools is “incredibly easy” for miners and independent units — such as the Twitter bot below — continuously observe and relay suspicious activity.
“It’s practically guaranteed that within a matter of minutes, an alert would be sounded and miners would start looking into taking action against malicious actors. At the time of writing, we even have Twitter bots that put out alerts about any orphaned blocks.”
Lopp noted, “It’s hard to imagine a scenario” in which a national actor would be able to quickly and furtively seize plenty of hashpower to implement an ongoing attack that lasts more than a few hours.
However, one “worst-case” scenario would be national actors grasping all the physical paraphernalia owned by mining groups, could result in China only mining empty blocks and orphaning other blocks that did enclose transactions, essentially halting all transaction confirmations on the network.
China’s natural-resource based economy has escorted it in an encouraging environment for miners to flourish. Recognized firms like Bitmain and even startups like Lubian.com make millions of dollars each month from conserving the Bitcoin network.
But government doubts have increased in recent times, particularly as the legal noose around cryptocurrencies has tensed. Earlier this year, China ordered all miners in the second-largest mining region to close, an assertion that put 9% of the network at jeopardy.