Bitcoin Forum

Lets say - China closes bitcoin traffic to outside world, inside china bitcoin would still work (I think?)
and lets say it keeps closed for 2 months and then reopens. What would be the consequences ?

People can double spend bitcoins that received before the split: once in China, once in the rest of the world. When the 2 sub-networks merge, only the transaction in the stronger sub-network (i.e. higher hashing power) will be considered as valid.

However, it is hardly possible to segregate the network for 2 months. People can transmit blocks with alternative protocol, such as email, https, ssh which are extremely difficult to censor without completely shutting down the internet.

Even the overseas internet connection is completely shut down in China, the blockchain can be smuggled across the border using an USB drive.

Thanks for a good answer :)

Can someone confirm or correct me, if I understood correctly what would happen with all the "normal" transactions (i.e. no double-spend) in this hypothetical case:

As far as I understood it:

After the netorks merge again, the longer blockchain will be considered as the valid one, all clients which used the shorter one, will do a internal reorganisation (and validate and adopt the longer block-chain) and all non-conflicting (not double spend) transactions from the now orphaned shorter blockchain will be floating again and will be included in the next blocks of the longer chain.

Is this correct? :)

Note that after the merge any transaction which builds upon one of the newly invalidated double spends will be invalid too. All block rewards are gone too, and any transaction spending them likewise, and any transactions building on them etc.

This is even more serious than you make it sound, and I guess it would kill bitcoin for users of the smaller chain. They might insist on hard forking perpetuating the split with  their own custom client or turn away completely. I don't think there is a sane way to reconcile the 2 user bases.

This would make it difficult for Chinese miners. However, the Chinese user base would probably still be able to use bitcoin normally. Transmitting transactions would be super easy, considering it's just a <1KB packet of data, and visiting block explorer websites (such as blockchain.info or any alternative that can be built in a day) wouldn't be a problem either for seeing what's going on with the blockchain without actually needing the whole blockchain.

If it did happen, then Chinese users would be strongly recommended to increase their "confirmed" delay for more than 6.

Smuggling the block chain headers would be pretty trivial.  Clients should be designed to give a big warning if the block header chain is much longer than the one where they can get actual blocks.  The effect would be that all the Chinese clients would show that the chain is unsynced.

Also, on re-merge, the Chinese government might simply define their fork as the official Chinese fork and ban use of the non-Chinese fork.  This would be accomplishable by blacklisting the single block on the main chain after the fork happened.

The value of Chinese bitcoins would drop, but Chinese merchants might be more willing to accept them, since they are now officially sanctioned.

Am I missing something? How do you blacklist a block? How do you sanction a fork? How does the chinese government block p2p?

I mean the government wouldn't have to make much of a change to the client.  They could use the standard client with 1 extra line of code to do the blacklisting.

Merchants in China might decide that it is better to use the officially sanctioned chain, as they are much less likely to be hassled.

Lets be honest, bitcoin (right now) isn't for those that are clueless about the computer/internet. If they did block bitcoin, those already using it are probably smart enough to find the chain elsewhere.

Don't forget most ASICs are produced in China. If China controls >51% of hashing power, a remerge will become a disaster for the rest of the world

No:

Why would merchants decide that? If they want to offer digital services to the rest of the world, they'd be better off just using bitcoin.

You're assuming that if the chinese government decides to make a competing bitcoin by forking the blockchain, they may gain traction. I think that's plain stupid because if it's an exact copy of bitcoin minus the global currency part, it simply won't compete and there's nothing the chinese government can do about it.

I'm not sure that if the chinese gvt cuts the link between internet and chinanet, it would still want trades to happen with the rest of the world

Idt it would have much a consequence on bitcoin economy

I doubt the Chinese would separate chinanet entirely. The consequences could theoretically be catastrophic for them, and with such power comes responsibility. They would need very very good reason to implement such drastic moves.

I highly doubt it too

If China controls >51% power, the Chinese chain will become the main chain anyway

Not if the rest of the world blacklists their chain

If the rest of the world tries to blacklist the longer Chinese chain after remerge, I'm sure the Chinese miners (who own >51% power) will fight back with a 51% attack to the shorter "main chain".

Epic times ahead then ;D

If they use their 51+% to attack Bitcoin they will have few hash power left for their chinese fork
Miners from the rest of the world could then attack the chinese fork