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Study Argues Chinese Mining Centralization Poses Threat to Bitcoin Network
A joint study conducted by Princeton University and Florida International University has found three-quarters of Bitcoin mining is based in China and warned of the potential risks that could result from the significant geographical centralization of the mining network.
_**Also Read: **Worst Cryptocurrencies of 2018 Have Left Some Heavy Bagholders _
Researchers Argue China is the “Most Powerful Adversary to Bitcoin”
The study, titled “The Looming Threat of China: An Analysis of Chinese Influence on Bitcoin,” seeks to “explore how China threatens the security, stability, and viability of Bitcoin through its dominant position in the Bitcoin ecosystem, political and economic control over domestic activity, and control over its domestic Internet infrastructure.”
The study opens by describing China as comprising “One of the most powerful potential adversaries” to bitcoin, adding that the country “has expressed adversarial positions regarding the cryptocurrency and demonstrated powerful capabilities to influence it.”
The researchers estimate that “74% of the hash power on the Bitcoin network is in Chinese-managed mining pools,” and seek to explore the ways in which this centralization of mining power can be leveraged by the Chinese government to attack the Bitcoin network.
Mining Pool Owners Beholden to Will of Chinese Government
The paper asserts that “Mining pools managed by individuals in China have constituted over half of the total network hash power since 2015,” adding that “As of June 2018, over 80% of Bitcoin mining is performed by six mining pools” – with “five of those six pools are managed by individuals or organizations located in China.”
Although “Pool miners cannot be directly controlled by China,” the study emphasizes that the operators of said pools “are subject to Chinese authorities” through being located in China. As such, the report argues that “because managers are responsible for assigning mining jobs and propagating completed blocks, they control the inputs and outputs of their miners, allowing Chinese authorities indirect control over that hash power.”
Study Argues Geographical Centralization of Mining Risks 51% Attack
The paper argues that the heavy centralization of mining activities within China may pose a threat of a 51% attack, stating that “the Chinese government exerts strong, centralized control over economic and financial activity and also operates extensive surveillance and censorship regimes over the domestic Internet.”
While said “capabilities do not grant them direct command of all of the hash power in Chinese-managed pools,” the paper asserts that the Chinese government possesses “a variety of tools at their disposal to influence those pools and Bitcoin in general. They have deployed multiple rounds of restrictive regulations that have upended global and domestic Bitcoin markets.”
The report concludes that “China has mature capabilities and strong motives for performing a variety of attacks against Bitcoin,” arguing that ideological opposition of cryptocurrency to the centralization of the Chinese could provide the motivation for an attack against the network, as could the growing integration of Bitcoin into the global economy and resulting possibility of “exert[ing] influence in a foreign country where Bitcoin is in use.”
What is your response to the study’s assertions that the centralization of mining within China could allow the Chinese government to attack the Bitcoin network? Share your thoughts in the comments section below!
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The post Study Argues Chinese Mining Centralization Poses Threat to Bitcoin Network appeared first on Bitcoin News.
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