Now that bitcoin (BTC) is establishing itself as an alternative store of value, there is increasing concern that governments may one day be inspired to try to take it down.
Members of the Bitcoin community have recently been brainstorming scenarios involving potential government offensives against the common crypto-asset, ranging from misinformation-based tactics to bans and even classic 51 percent assaults.
However, industry sources have told Cryptonews.com that they believe the risk of a significant state attack on the Bitcoin network is remote.
Even if the government (or two) is inspired to target the common crypto-asset, experts claim that its decentralized nature might shield it from serious repercussions, allowing it to circumvent bans and continue to operate even after an attempted 51% assault.
‘Classic’ 51 percent of the attack
At the beginning of August, Bitcoin developer Matt Odell asked his Twitter followers to imagine a possible way a state actor could strike BTC.
There were three key forms of answers to the question. Prominent crypto analyst and blogger Galgitron responded by posting a link to the 2019 blog post where he explained his theories on how China could “successfully attack bitcoin with a 51 percent attack.”
He argued that the Chinese government could force China’s mining pools to launch a 51% offensive.
Although this is technically possible, the majority of industry leaders and analysts agree it is extremely unlikely.
Jay Hao, CEO of OKEx, says
“I think that Bitcoin has now reached the stage and level of computation that it is almost difficult for any nation-state to get down. But more than that, there’s just no reason to do it.”
Jay Hao’s key point is that the Bitcoin network might easily survive any 51 percent assault.
The Manager of OKEx adds,
“What will they be able to do after forking the chain? Bitcoin miners are not going to move to the new chain; they’re just going to continue to mine the old chain. The offenders will also be identified and will have significant foreign implications because of all the big players already involved in the Bitcoin ecosystem.”
Bans, regulations, and over-compliance
The 51 percent assault seems distant, considering the possible repercussions involved. However, one common answer to Odell’s query – including a suggestion by Odell himself – includes a mixture of regulations, laws, and behavior that would enforce a prohibitively high degree of enforcement (i.e., Know Your Customer [KYC]).
Others believe that regulatory and legal action against bitcoin is far more likely than major technological attacks.
Jiang Zhuoer, CEO of BTC.TOP China-based mining pool and B.TOP Joint Mining Site, opines,
“I assume that if a nation-state tried to ‘take down’ bitcoin, it would do so utilizing laws instead of a PoW [proof-of-work] attack.”
That said, according to Jay Hao, such laws could only (somewhat) restrict the number of people using bitcoin.
“There is also no way that countries will prohibit citizens from possessing content that is censor-resistant and beyond any government’s reach. Governments can (and have) prevented bitcoin from doing so. But that doesn’t deter people from using it. It does make it more complicated for them, but it’s practically impossible to ban bitcoin.”
Risks of disinformation
The third most popular response to Odell’s thread revolved around misinformation: governments could aim to undermine Bitcoin’s reputation while also attempting to sow uncertainty and discord within the cryptocurrency community.
Everything like this is going on. Governments – and the people who manage them – have long been speaking out against bitcoin, stressing (or exaggerating) its negative aspects while underplaying its strengths.
Even with this semi-regular stream of criticism, further systemic and serious misinformation is impossible, mainly because it is unlikely to succeed.
For one, several states are gradually becoming less immune to bitcoin, despite the community’s constant fears. This is the view of Tim Rainey, CFO of Greenidge Generation, New York-based mining services provider.
Rainey is telling Cryptonews.com,
“We agree that the time when big states withstood bitcoin is now behind us, and we are now at a point where regulators are seeing the potential benefits of bitcoin and other blockchains and are working either to incorporate them into current regulatory systems or to develop new regulations for them.”
In reality, some might claim that the information war is already, in essence, underway and has been waged against bitcoin by many corporate media so far – with little apparent impact on the token’s development.
This is partly because crypto has its own thriving media market, offering more specialized analysis and commentary to balance conventional skepticism.
Bitcoin is likely to become more immune to attacks in the future, both physically and socially, politically, and economically.
Hao states that,
“Core Bitcoin developers are working all the time to make the network more resistant to any such attack. Recently, they released the new Asmap program to thwart a nation-state attack, although it’s not a foolproof fix yet.
Similarly, mining concentrations are steadily decreasing from China, from 75% in Q3 2019 to 65% in Q2 of FY2020, according to data from the University of Cambridge.
Dmitrii Ushakov, CCO of Russia-based mining services provider BitRiver, says,
“To minimize the risk of an effective state attack, Bitcoin hash rate should be more uniformly spread around the world in various national jurisdictions. We at BitRiver have been working towards that since 2017.
And as more people buy into Bitcoin, more governments will be hesitant to strike it – for fear of disrupting financial interests, if nothing else.”
That concludes Jay Hao,
“Bitcoin’s been rising so much. It now has several stakeholders, from retail investors and speculators to giant mining activities, major tech firms, conventional payment companies, banks, and institutional investors.”