In 2008, an anonymous entrepreneur with a pseudonym Senoshi Nakamo created the bitcoin as a decentralised system for digital payments between end-users. Ten years and many jumps in the price of encryption, it seems that it has passed the time check. But is it really so decentralised and resistant to attacks?
A new analysis of scientists from the Princeton University reveals that the fate of bitcoin is largely hosted by a great force: China.
The analysis identifies a number of potential attacks and turmoil which China can do against the currency. Scientists say the country has the means and motivation to carry out such moves and that it already affects the bitcoin network in some ways.
The reason for this is the following: the bitcoin system attaches to so-called miners who use a large amount of computer capacities to process transactions and create new bitcoins. According to current data, up to 74 percent of this computing power is concentrated in China. This theoretically allows Chinese miners collectors to collectively gather over 50 percent +1 of the capacities and in practice to establish control over the entire network. The practicality and success of such an attack are still contradictory, the scientists recognise.
They argue that, through the mechanisms for monitoring and control of Internet traffic, China can influence the bitcoin network.
“The power of the technical capacity to control the Internet at home, that China has, can weaken the positions of bitcoin, even when it is not deliberate,” the scientists are writing.
According to the analysis, bitcoin contradicts ideologically to the centralised governing. The main advantage of the digital currency is that it does not rely on a central element to function. This ability will change dramatically if a single player is able to interfere with the bitcoin network.
That, of course, can’t be so simple. China does not directly control the extraction of bitcoin over its territory.
Moreover, there is also the question of motivation – why woud Beijing disturb the balance in the delicate area of crypto-currencies?
China was the first country to ban bitcoin and other crypto-currencies as a payment method, an action based on the idea that they are unstable and dangerous.
