Study: China is able to destroy bitcoin

[Mazda3]

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: An Analysis of Chinese Influence on Bitcoin."

It says that the Chinese government currently has sufficient tools and resources to substantially change or even destroy the first cryptocurrency. The researchers note that one of the key factors that made it possible for the government to significantly influence the first cryptocurrency is a significant concentration of miners and computing power in China.

“Bitcoin mining has become extremely centralized due to the development of specialized devices. As a result, miners began to merge into large pools: consortia working together and distributing profits. As of June 2018, more than 80% of the mining capacity is in six pools, five of which are managed by individuals or organizations located in China, ”the document says.

The researchers also note that if such a concentration of resources occurred in a country with an open economy, predictable legislation and transparent policies, this would not cause serious concerns. However, the PRC government plays a significant role in managing the economy, compared with Western countries, and is largely motivated by ideology.

“The government of the People’s Republic of China controls access to information and the Internet for its citizens, possessing powerful tools that can make people obey state dictates,” the authors note.

The document also lists four main categories of methods by which the PRC authorities can potentially influence Bitcoin:

• sabotage competing miners
• disruption of consensus (destabilization)
• deanonymization
• censorship.

"The motives for potential attacks can be both ideological and financial," the researchers emphasize.

As an example, the authors of the material cited the ability of the PRC to organize a double spending attack by monitoring the internal infrastructure of the Internet. By manipulating the rates for different pools, they can conduct a hash attack with less computational power. An attacker can send a transaction to two pools, but if artificially significantly slowing down the speed of one of them, then the other can easily outperform it and cancel the second transaction.
A source: https://arxiv.org/pdf/1810.02466.pdf

[David]

This reminds me of back in 2013 when China illegalised BTC trading (or something BTC related) when BTC had only recently hit $1k and we saw crashes to almost $500. It's a scary level of control they have on the market thought I'm not sure if the extent of this dominance is as much today.

https://www.bbc.co.uk/news/technology-25233224 -  article from December 5th 2013

 

 

- Price chart of BTC from Sept 2013 to the start of the next year showing the extent of the December crash.

 

[Kate]

1 hour ago, Mazda3 said:

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: An Analysis of Chinese Influence on Bitcoin."

It says that the Chinese government currently has sufficient tools and resources to substantially change or even destroy the first cryptocurrency. The researchers note that one of the key factors that made it possible for the government to significantly influence the first cryptocurrency is a significant concentration of miners and computing power in China.

“Bitcoin mining has become extremely centralized due to the development of specialized devices. As a result, miners began to merge into large pools: consortia working together and distributing profits. As of June 2018, more than 80% of the mining capacity is in six pools, five of which are managed by individuals or organizations located in China, ”the document says.

The researchers also note that if such a concentration of resources occurred in a country with an open economy, predictable legislation and transparent policies, this would not cause serious concerns. However, the PRC government plays a significant role in managing the economy, compared with Western countries, and is largely motivated by ideology.

“The government of the People’s Republic of China controls access to information and the Internet for its citizens, possessing powerful tools that can make people obey state dictates,” the authors note.

The document also lists four main categories of methods by which the PRC authorities can potentially influence Bitcoin:

• sabotage competing miners
• disruption of consensus (destabilization)
• deanonymization
• censorship.

"The motives for potential attacks can be both ideological and financial," the researchers emphasize.

As an example, the authors of the material cited the ability of the PRC to organize a double spending attack by monitoring the internal infrastructure of the Internet. By manipulating the rates for different pools, they can conduct a hash attack with less computational power. An attacker can send a transaction to two pools, but if artificially significantly slowing down the speed of one of them, then the other can easily outperform it and cancel the second transaction.
A source: https://arxiv.org/pdf/1810.02466.pdf

Well that is fucking bad I hate when someone has supreme control on a crypto coin

[Etude]

Hmm this does sounds like a tilted advantage for just one country, in this case China to be able to have such extreme influence over that many areas of Bitcoin.