[2018-10-10] Princeton Research Claims China Motivated to “Kill” Bitcoin, .....

[cybersofts]

Princeton Research Claims China Motivated to “Kill” Bitcoin, Selfish Miners Governing 74 Percent of Network





A research study published on Oct. 5 claimed growing Chinese influence over the Bitcoin protocol is a “looming threat” to the $114 billion network. The paper alleged that China presents a problem to the security, stability, viability of the pioneer cryptocurrency.


The Case Against China

According to the paper, which was published by Florida International University and Princeton University, China has strong motives and a regulatory and technologically “mature” capability to launch an attack against the Bitcoin network, owing to the former’s strict economic control rules over the global internet infrastructure. The country is aware of the significant increase in Bitcoin’s value and economic utility, and the implication of disrupting such a vast network.

The paper begins its conjecture by calling out the dominance of Chinese businesses mining Bitcoin, making the protocol “heavily centralized.” Researchers allege that six mining pools control mining–with five located in China–and together, they make up 80 percent of the Bitcoin’s hashing power.

Bitcoin primarily faces a threat from the evil “51 percent attack,” which if executed, could result in the creation of fraudulent side-chains containing transactions that never took place. With much of the hashing power pooled by the Chinese, miners can influence what happens on the Bitcoin network, and perhaps, even spoof transactions to China’s benefits.


Chinese Mining Situation “Unsettling”

The research pointed out the five mining pools in China comprise 74 percent of Bitcoin hash power, an evidently “unsettling” situation. Given the country’s harsh policies, control over the network could mean censorship and other damaging attacks.

Blocks mined in China are in proximity to a large share of hash power, meaning validations and consensus are reached faster than blocks elsewhere. In addition, as the managers of mining units can control the inputs of outputs of their rigs, the hashing power is indirectly in control of strict Chinese authorities, who are authorized by law to influence a corporation’s business decisions.

The point mentioned above implies that the Chinese government can wholly-assume control of regional hashing power, giving them an advantage in selecting specific blocks for the ledger, which is essential for 51 percent-styled attacks.


Source: https://cryptoslate.com/princeton-research-claims-china-motivated-to-kill-bitcoin-selfish-miners-governing-74-percent-of-network/

[squatter]

Bitcoin primarily faces a threat from the evil “51 percent attack,” which if executed, could result in the creation of fraudulent side-chains containing transactions that never took place.

Huh?

The research pointed out the five mining pools in China comprise 74 percent of Bitcoin hash power, an evidently “unsettling” situation. Given the country’s harsh policies, control over the network could mean censorship and other damaging attacks.

Censorship, unreliable confirmations -- not the end of the world. They couldn't steal funds without a successful hard fork and that won't happen. And it costs a lot of money to keep attacking the network. Electricity, new hardware, etc. For what gains? I'm not sure...

It's also not known how much of these pools' hashpower is from miners overseas or miners otherwise unaffected by the Chinese authorities in this theoretical attack. Miners can freely point their hashpower elsewhere if their pools are attacking the network.

[Leyss]

Constantly wrote that in China they are going to completely ban the use of cryptocurrency, a special program has been developed for this. That the miner prohibits the use of electricity for mining Bitcoin and therefore partly the miners have already moved to Canada, Belarus and other countries where it is convenient to extract Bitcoin. And then suddenly the information that in China, despite these restrictions, from 74 to 80 percent of bitcoins are mined. What are these hard limitations, if in spite of them, bitcoin mining.

[mazdafunsun]

I have been reading mixed nformation about China  and crypto and their mining. Some of the artcles state that there was a hige crackdown on miners and there is no minig going on there.

But in general i think that China is interested of killing BTC, they dont ned their capital flowing from their native currency else where.

[d5000]

Bitcoin primarily faces a threat from the evil “51 percent attack,” which if executed, could result in the creation of fraudulent side-chains containing transactions that never took place.

Huh?

I also stumbled upon that sentence. I think the author is referring to the "attack chains" (containing double spends) an attacker mines aiming to replace the current consensus chain with it.

I agree that the problem of "pools" located in China, alone, isn't really a big threat, as hashrate could change to an alternative, non-Chinese pool. But the centralization of the mining hardware by Bitmain could be a problem - remember Antbleed? In a "destructive" attack scenario, the Chinese government could take over the Bitmain servers and block hashrate not coming from miners participating in the attack.

However, there's a relatively easy fix that already was discussed in 2017: the "nuclear option" - a hardfork changing the algorithm to one not dominated by Bitmain ASICs. So the attack could lead to some turbulences (and cheap coins) but would be very far from really "disrupting" the network.

[Slow death]

China has always had a gloomy political regime, it is enough to see the interpol presidential case that was detained in China and the Chinese government did not bother to at least report to the world about such a prison, now think, a government that does this kind of thing, it means that they can ban bitcoin, ICOs, miners and anything they want, they are not afraid of anyone, they do not respect their own people.

[squatter]

Bitcoin primarily faces a threat from the evil “51 percent attack,” which if executed, could result in the creation of fraudulent side-chains containing transactions that never took place.

Huh?

I also stumbled upon that sentence. I think the author is referring to the "attack chains" (containing double spends) an attacker mines aiming to replace the current consensus chain with it.

I agree that the problem of "pools" located in China, alone, isn't really a big threat, as hashrate could change to an alternative, non-Chinese pool. But the centralization of the mining hardware by Bitmain could be a problem - remember Antbleed? In a "destructive" attack scenario, the Chinese government could take over the Bitmain servers and block hashrate not coming from miners participating in the attack.

However, there's a relatively easy fix that already was discussed in 2017: the "nuclear option" - a hardfork changing the algorithm to one not dominated by Bitmain ASICs. So the attack could lead to some turbulences (and cheap coins) but would be very far from really "disrupting" the network.

Yup, I've always been more concerned about Bitmain's position than about mining pools. When I see people celebrating the efficiency of competitors' miners hitting the market, I assume they don't realize that no competitors compare to Bitmain's scale. Not even close. And Bitmain continues to sacrifice short-term profitability to squeeze other producers' margins in an effort to consolidate market share. I think a lot of people are underestimating their dominance in the market.

I'd forgotten all about Antbleed, thanks for the reminder. An emergency hard fork like that certainly sounds disruptive, though, as miners are the whole basis of the economy. The fork would probably be quite insecure compared to the old chain. I also wonder what kind of damage this kind of attack would do to the market's long term faith in Bitcoin, since it goes to the heart of the viability of honest mining when external political/geopolitical matters are at play.

[audaciousbeing]

The real issue is what will they do about it? Carrying out researches then publishing of papers here is just pointing fingers and also emphasising what we already know. Anyone knows that from the beginning of time, China has been against bitcoin and at every period of time in the past,there was always one report or the other saying things about the ban coming from China.

With 74% of mining pools controlled by China, we will only be deceiving ourselves if we think China is done with bitcoin. The reason why it seems they don't care at this time is the general calmness in the entire market. When this period is over, I expect some moves. So, instead of Princeton focusing of what China is doing, they should be talking about what United States is not doing that could rub off on other countries and dilute the enormous influence China still possesses.

[1BTC EQUALS 1CAR]

I'm not surprised because China does not want product they did not create or make. A lot of you here should know that Google is banned there and they use Baidu. Twitter and Facebook is also banned and its counterpart on China is Wechat. So therefore I conclude that China are on the process of making their own bitcoin so that is why they are persistent to kill it.

[hatshepsut93]

Censorship, unreliable confirmations -- not the end of the world. They couldn't steal funds without a successful hard fork and that won't happen. And it costs a lot of money to keep attacking the network. Electricity, new hardware, etc. For what gains? I'm not sure...

It's also not known how much of these pools' hashpower is from miners overseas or miners otherwise unaffected by the Chinese authorities in this theoretical attack. Miners can freely point their hashpower elsewhere if their pools are attacking the network.

They can attack it for the sake of showing that it is vulnerable, hoping that it will decrease trust in Bitcoin's protocol. If the community will call their bluff and will keep believing in Bitcoin, than the attack will fail because of huge costs, but if they can make people abandon Bitcoin, they will win. A lot of people in Bitcoin community don't understand how Bitcoin works, so if there will be a successful 51% attack, they will be assuming all sorts of things, like "Bitcoin got hacked" or "attackers can do whatever they want with the blockchain", so the panic might be huge.

[Kakmakr]

Read through the whole thing and I cannot see what the political gain would be to do this? You destroy the technology, using massive amounts of money and that for what gain? The 51% attack gives short term double spending power, but the sustained attack will diminish the economical gain.

I also think there are a lot of hashing power that are not under the control of the Chinese government and that should be enough to stop most of these attempts. 

[d5000]

Read through the whole thing and I cannot see what the political gain would be to do this? You destroy the technology, using massive amounts of money and that for what gain? The 51% attack gives short term double spending power, but the sustained attack will diminish the economical gain.

Chinese officials have stated several times that they are concerned about the potentials of cryptocurrencies as a medium of payment they cannot control. The Chinese government is eager to control most aspects in life of their citizens. Mostly they're concerned about evading of taxes and international commerce regulations.

If executed well and with LOTS of money and/or hashrate, they could even design the attack in a way it is cheap or even yields them a profit. They only had to short enough Bitcoin in the right moment. However, as even in a dictatorship there are some legal and ethical rules involving the State's activities, I believe it could be difficult to hide the required short-selling activities, maybe they could create fake enterprises for that purpose.

If they succeeded in attacking Bitcoin, they could claim that they can shut down any cryptocurrency. That includes Proof of Stake coins - in this case, they simply had to buy substantial parts of the currency and then launch an attack exploiting the Nothing at stake problem.

[squatter]

If executed well and with LOTS of money and/or hashrate, they could even design the attack in a way it is cheap or even yields them a profit. They only had to short enough Bitcoin in the right moment. However, as even in a dictatorship there are some legal and ethical rules involving the State's activities, I believe it could be difficult to hide the required short-selling activities, maybe they could create fake enterprises for that purpose.

If they succeeded in attacking Bitcoin, they could claim that they can shut down any cryptocurrency.

I still don't understand what a "successful attack" entails here, though. I don't see how the above establishes a lasting or permanent attack on Bitcoin. It just temporarily offsets the cost -- how effectively, we don't know.

And it requires the Chinese government to flood offshore exchanges distributed around the world with money -- some which are tightly regulated by their governments -- in order to short sell. Also, since so many exchanges don't offer margin, they would have to borrow massive amounts of bitcoins on the OTC market to short sell on those exchanges. I say, good luck to the Chinese government there!

They'd be taking on immense counterparty risk. That the attack was state-sponsored by China would also probably be obvious in hindsight, which could strain relations with other governments. All for what? This would be a short term attack. They'd need to close shorts by buying back bitcoins -- that's not a sustainable position considering that maintaining the attack is quite expensive. I don't see how they can "shut down" anything.

I also think if the attack were sustained for long enough -- unlikely -- that SHA-256 miners could be bricked by a hard fork. How the market would react to that is anyone's guess, but if there is demand for the forked coin, China would have a difficult time claiming that they can shut down any cryptocurrency.

Governments would probably be wise not to show their powerlessness by their failure to shut down anything.

[cryptofonia]

China also dump Bitcoin in its official report https://cryptofonia.pro/news/china-delivers-sixth-cryptocurrencies-report/