Catastrophe Scenario on Bitcoin Network

[cakir]

All we know Chinese Miners have total 56% mining power[1] publicly. (There's 26% that we don't know who have it).
What if Chinese government decides to cut their internet connection from outside of the world? (You know such thing can be done, eg: north korea [2]) Or maybe an earthquake can cut their internet from backbone (maybe not all of it but most of it).
And as result of these scenarios ~50% of miners in China will still mine bitcoins in a local internet like a huge LAN. And rest of the world will mine in another bigger LAN but there'll be no connection between them.  Of course there'll be 2 different major forks.

After 1 month everything went normal. So there're 2 major forks of bitcoin network. How will we decide? Which one is legit chain? Both of them looks legit.

Possible solutions:
- Major mining farms should use secondary internet connection such as satellite connection. Which can be blocked by governments. But it's not affected (or minimally affected) by natural catastrophes.
That's why I support jgarzik's "bitcoin satellite project" [3]. Even if governments ban satellite connections which is provided by gov controlled ISP's; Personal satellite internet dishes can connect bitcoin satellites. There's a catch here, jgarzik's satellites will provide only blockchain (to distribute accepted blocks) they're not gonna be used for broadcasting block candidates.

[1] https://blockchain.info/pools (antpool: 20, f2pool: 19, bw.com: 11, btcchina pool:6; total: 56%)
[2] http://en.wikipedia.org/wiki/Internet_in_North_Korea
[3] https://bitcointalk.org/index.php?topic=334701.0

[1714656882]

1714656882

[NyeFe]

I doubt the Chinese government would even imagine about "cut their internet connection from outside of the world' I can't even think of a way to describe how its economic impact and how the ripple effect would impact (temporary stagnate) the amazing state of their country.

[MicroGuy]

No worries.

If this situation were to arise, I think the lead devs (Hearn and Gavin) would just release an emergency patch to get everyone back on the "right" fork!

[SpanishSoldier]

First of all, it is a very hypothetical situation. China, so far, has not shown any such behaviour towards bitcoin businesses. I asked eric@haobtc regarding the bitcoin scenario in China. Here is what he said...

Fixed deposits with 12% interest per annum is very good if this is a fiat investment product at an established bank. For bitcoin, this seems very risky especially the minimum amount is 10btc. I check OP's profile on the internet. He has worked with a few well known companies, but HaoBTC is not very well known outside China. If investor deposits 10btc, he will only get 0.1btc after a month. 30 days is a long time to entrust someone with 10btc.

You misunderstood "fixed term" - you can make withdrawal ANYTIME as long as you are wiling to forgo the interest of the last month.

No, I did not misunderstand "fixed term". Read the example at the end of my post, I used 1 month and 0.1btc interest. Allow withdrawals anytime do not affect risk/reward assessments.

12% is just as risky as 8%, as long as we are around, we will honor our obligations. Risk is everywhere. Don't sell your house for 12% p.a or something even better.

I like this statement

Many time we hear about regulatory problems in China regarding bitcoin. As you are operating from China, can you please enlighten us regarding the current situation ? Is there any remotest possibility in future that authorities force your business to go down with customer's fund ?

Yes, we are based in China.
All governments like secrecy, the Chinese government is no exception. We are not privy to what the top leaders and central bankers think of Bitcoin and BTC businesses. But China has some BTC businesses, and some of them are quite large and doing all right. This leads some to argue that China is one of the most BTC-friendly countries. Also, a lot of Chinese fintech startups started operating in a legally grey area, only to be recognized by the government much later - one example is P2P lending, one sector that achieved exponential growth in the past few years. Years ago, when I made my first loan on a P2P site, I did wonder if it was legal and the government didn't take a clear stance until very recently.
So my two cents is that as much as the government hates a nation-scale speculative bubble, so as long as Bitcoin stays small, it doesn't have time for it.

Even if it happens, in normal logic, two chains will compete when they connect with each other and the faster will win. The other chain will become orphan. Simple.

[cakir]

PLEASE don't post that "china can't/won't ban/cut off internet connection".

No worries.

If this situation were to arise, I think the lead devs (Hearn and Gavin) would just release an emergency patch to get everyone back on the "right" fork!

That's what I worry about: "right" fork
Let's say 4% of unknown 26% HR coming from China. That means china has 60% of network and rest of the world has 40%.
How will Hearn and Gavin decide which one is "right" fork?

[tvbcof]

PLEASE don't post that "china can't/won't ban/cut off internet connection".

No worries.

If this situation were to arise, I think the lead devs (Hearn and Gavin) would just release an emergency patch to get everyone back on the "right" fork!

That's what I worry about: "right" fork
Let's say 4% of unknown 26% HR coming from China. That means china has 60% of network and rest of the world has 40%.
How will Hearn and Gavin decide which one is "right" fork?

There are things you don't need to know right now.  Just push the 'upgrade' button on your MultiBitch client and everything will be fine.

[johnyj]

PLEASE don't post that "china can't/won't ban/cut off internet connection".

No worries.

If this situation were to arise, I think the lead devs (Hearn and Gavin) would just release an emergency patch to get everyone back on the "right" fork!

That's what I worry about: "right" fork
Let's say 4% of unknown 26% HR coming from China. That means china has 60% of network and rest of the world has 40%.
How will Hearn and Gavin decide which one is "right" fork?

There are things you don't need to know right now.  Just push the 'upgrade' button on your MultiBitch client and everything will be fine.

If bitcoin is controlled by a few programmers or a group of mining farms, then it is even worse than 12 FOMC members in FED. Bitcoin should be easy to understand for everyone, no conspiracy and hidden secrets. No one in the world can use personal power to affect gold's property, so should bitcoin. Gavin is just following the early hints of Satoshi, nothing more

[Bit_Happy]

All we know Chinese Miners have total 56% mining power[1] publicly. (There's 26% that we don't know who have it).
What if Chinese government decides to cut their internet connection from outside of the world? (You know such thing can be done, eg: north korea [2]) Or maybe an earthquake can cut their internet from backbone (maybe not all of it but most of it).
And as result of these scenarios ~50% of miners in China will still mine bitcoins in a local internet like a huge LAN. And rest of the world will mine in another bigger LAN but there'll be no connection between them.  Of course there'll be 2 different major forks.

After 1 month everything went normal. So there're 2 major forks of bitcoin network. How will we decide? Which one is legit chain? Both of them looks legit.

Possible solutions:
- Major mining farms should use secondary internet connection such as satellite connection. Which can be blocked by governments. But it's not affected (or minimally affected) by natural catastrophes.
That's why I support jgarzik's "bitcoin satellite project" [3]. Even if governments ban satellite connections which is provided by gov controlled ISP's; Personal satellite internet dishes can connect bitcoin satellites. There's a catch here, jgarzik's satellites will provide only blockchain (to distribute accepted blocks) they're not gonna be used for broadcasting block candidates.

[1] https://blockchain.info/pools (antpool: 20, f2pool: 19, bw.com: 11, btcchina pool:6; total: 56%)
[2] http://en.wikipedia.org/wiki/Internet_in_North_Korea
[3] https://bitcointalk.org/index.php?topic=334701.0

Did you come up with a topic that has never been discussed before?
There would be "be 2 different major forks", since they are both "legit" could they be merged somehow?

[tvbcof]

PLEASE don't post that "china can't/won't ban/cut off internet connection".

No worries.

If this situation were to arise, I think the lead devs (Hearn and Gavin) would just release an emergency patch to get everyone back on the "right" fork!

That's what I worry about: "right" fork
Let's say 4% of unknown 26% HR coming from China. That means china has 60% of network and rest of the world has 40%.

How will Hearn and Gavin decide which one is "right" fork?

There are things you don't need to know right now.  Just push the 'upgrade' button on your MultiBitch client and everything will be fine.

If bitcoin is controlled by a few programmers or a group of mining farms, then it is even worse than 12 FOMC members in FED. Bitcoin should be easy to understand for everyone, no conspiracy and hidden secrets. No one in the world can use personal power to affect gold's property, so should bitcoin. Gavin is just following the early hints of Satoshi, nothing more

Bitcoin is actually quite simple.  It can and should be understood fairly well on several different discipline levels by anyone who chooses to putter around with it.

I find it interesting that of the core developers only a few seem confident to state with full assurance exactly what Satoshi would be thinking and doing at this phase in the game.  Many people (myself included) have had various philosophical shifts in certain areas and made some adjustments as things have evolved over the last few years and assume that anyone, Satoshi(s) included, could have done likewise.

I can think of at least three hypothesis why someone might state with assurance exactly what Satoshi would do.

 1)  They are in contact with him.

 2) They somehow know he no longer walks among the living and won't be back to clown them.

 3) They are desperate and it's worth the risk of an in-person clowning to further a goal.

[Gleb Gamow]

No worries.

If this situation were to arise, I think the lead devs (Hearn and Gavin) would just release an emergency patch to get everyone back on the "right" fork!

With the emergency patch incorporating the increased block size they've been championing so that when China comes back online the network will be able to handle the load when the chopsticks rejoin the knife and the spoon that'd be on the "right" fork.

[NorrisK]

The big mining corporations and pools are most probably constantly in contact with eachother to make sure something like this doesnt impact their revenue. Its a big gamble for both sides to just stubbornly mine both chains.

[S4VV4S]

All we know Chinese Miners have total 56% mining power[1] publicly. (There's 26% that we don't know who have it).
What if Chinese government decides to cut their internet connection from outside of the world? (You know such thing can be done, eg: north korea [2]) Or maybe an earthquake can cut their internet from backbone (maybe not all of it but most of it).
And as result of these scenarios ~50% of miners in China will still mine bitcoins in a local internet like a huge LAN. And rest of the world will mine in another bigger LAN but there'll be no connection between them.  Of course there'll be 2 different major forks.

After 1 month everything went normal. So there're 2 major forks of bitcoin network. How will we decide? Which one is legit chain? Both of them looks legit.

Possible solutions:
- Major mining farms should use secondary internet connection such as satellite connection. Which can be blocked by governments. But it's not affected (or minimally affected) by natural catastrophes.
That's why I support jgarzik's "bitcoin satellite project" [3]. Even if governments ban satellite connections which is provided by gov controlled ISP's; Personal satellite internet dishes can connect bitcoin satellites. There's a catch here, jgarzik's satellites will provide only blockchain (to distribute accepted blocks) they're not gonna be used for broadcasting block candidates.

[1] https://blockchain.info/pools (antpool: 20, f2pool: 19, bw.com: 11, btcchina pool:6; total: 56%)
[2] http://en.wikipedia.org/wiki/Internet_in_North_Korea
[3] https://bitcointalk.org/index.php?topic=334701.0

You pose a very interesting question, and I think there are many things we need to consider in order to come up with a solution to this.
Some are the duration of the power down and the transactions - in both chains.
Also, if the Chinese mining operations know about it, will they continue to mine?

If they do, ultimately (and as expected) the Chinese chain will have the longest chain and will win once connection to the rest of the world has been established.

[Nagle]

All we know Chinese Miners have total 56% mining power[1] publicly. (There's 26% that we don't know who have it).
What if Chinese government decides to cut their internet connection from outside of the world?

The Great Firewall of China could disconnect Bitcoin easily. All they have to do is block the seed hosts, block port 8333, and recognize Bitcoin connections inside of unencrypted TCP connections.  A few rules in the firewall is all it would take.

[Kprawn]

For this reason, people should start to run nodes. I have a friend with a ISP & Internet Caffee who is running 30 nodes. We should approach all of the merchants who adopted Bitcoin, and try to get them to run a node from their business.

Some sort of innovation is needed to have a seamless intergration of a node into everyday appliances. {Upgrade photocopiers with bigger harddrives}

If they could do that with mining with lightbulbs, they can implement nodes into other devices too.     

Who will create the first node on a printer or photocopier? {They use photocopiers in Point of sale operations, don't they} 

[Amph]

so this would leat to two legit fork that would remain operative like they are two big nodes that work separately, so nothing will happen in the end, from china, miners can still sell their coin on exchange, because they will be accepted

the only problem would be that the network, would issue two full block and two full reward...

so a total of 42M coin would exist in the end

one thing is that the china fork, could dump only on their exchange, so it's like they have created their own china bitcoin(but with the same bitcoin price), and we can still dump on the normal bitcoin, so the more legit fork should still be our fork...

First of all, it is a very hypothetical situation. China, so far, has not shown any such behaviour towards bitcoin businesses. I asked eric@haobtc regarding the bitcoin scenario in China. Here is what he said...

Fixed deposits with 12% interest per annum is very good if this is a fiat investment product at an established bank. For bitcoin, this seems very risky especially the minimum amount is 10btc. I check OP's profile on the internet. He has worked with a few well known companies, but HaoBTC is not very well known outside China. If investor deposits 10btc, he will only get 0.1btc after a month. 30 days is a long time to entrust someone with 10btc.

You misunderstood "fixed term" - you can make withdrawal ANYTIME as long as you are wiling to forgo the interest of the last month.

No, I did not misunderstand "fixed term". Read the example at the end of my post, I used 1 month and 0.1btc interest. Allow withdrawals anytime do not affect risk/reward assessments.

12% is just as risky as 8%, as long as we are around, we will honor our obligations. Risk is everywhere. Don't sell your house for 12% p.a or something even better.

I like this statement

Many time we hear about regulatory problems in China regarding bitcoin. As you are operating from China, can you please enlighten us regarding the current situation ? Is there any remotest possibility in future that authorities force your business to go down with customer's fund ?

Yes, we are based in China.
All governments like secrecy, the Chinese government is no exception. We are not privy to what the top leaders and central bankers think of Bitcoin and BTC businesses. But China has some BTC businesses, and some of them are quite large and doing all right. This leads some to argue that China is one of the most BTC-friendly countries. Also, a lot of Chinese fintech startups started operating in a legally grey area, only to be recognized by the government much later - one example is P2P lending, one sector that achieved exponential growth in the past few years. Years ago, when I made my first loan on a P2P site, I did wonder if it was legal and the government didn't take a clear stance until very recently.
So my two cents is that as much as the government hates a nation-scale speculative bubble, so as long as Bitcoin stays small, it doesn't have time for it.

Even if it happens, in normal logic, two chains will compete when they connect with each other and the faster will win. The other chain will become orphan. Simple.

the problem is that there is no connection, thus two 100% legit chains will be created, and miners can dump their coins from any of those chains, not to mention that they will mine two full block, and when you reconecct, what coins will be orphaned?

[NUFCrichard]

It would essentially make a bitcoin china and a RoW Bitcoin. 
I would assume that the admins would make the RoW Bitcoin the default, but the other fork could continue on in China, but with the price decreasing hugely.

It does sound like it would be a nightmare for Bitcoin and it is also quite plausible too.  I personally wouldn't rule out America doing the same thing at some point!

[cryptojumper]

Why would China do such things? If they control major operations in Bitcoin, any disturbance like separate blockchains, 51% attack etc would only damage the price and development. That is against interests of a major power like China.

[NUFCrichard]

Why would China do such things? If they control major operations in Bitcoin, any disturbance like separate blockchains, 51% attack etc would only damage the price and development. That is against interests of a major power like China.

Currency controls? 
They are happy to stop people using the internet freely in other situations, they also heavily regulate the Remini/Yuan, so why wouldn't they decide to regulate a currency that is based on the internet?

History would suggest that they would set up their own equivilent that they can better regulate, but who knows.  It is unlikely to happen, but could.