How China Can Kill Bitcoin
Mar 26, 2019
I can almost hear you screaming, “Oh god! Here we go AGAIN! Will people please stop with this Bitcoin conspiracy FUD nonsense?? It’s been debunked a million times!!”
I know this will be hard for some of you to believe, but I can CLEARLY demonstrate (to a child) how China can successfully attack Bitcoin with a 51% attack at no cost. Yes I can. Yes I can. Yes I can. Do yourself a favor, stop repeating the dogmatic shit about Bitcoin’s immutability and just give this a read. I promise if you have an IQ over 40, you’ll understand and AGREE with me that it’s possible. I have had endless conversations with opponents to this concept so please read this to the end because I address everything conceivable that you might counter me with. So let’s get started.
Here are a couple attack types that seem to be often commingled. The commingling has caused a lot of confusion and has left many to a false sense of comfort. I’ll distinguish them here
Brute Force 51% Attack Type
A group of malicious people purchase or rent lots and lots of hashpower, either by repurposing existing hardware (e.g., taking away from mining other coins), or actually buying tons of latest gen mining equipment, or both. This seems cost prohibitive, but not nearly as much as you may think, particularly when juxtaposed against how much potential profit can be made. It is this attack that everyone believes I am talking about, but I am not. This is not the attack I am referring to in relation to China attacking Bitcoin. I repeat, THE GOVERNMENT OF CHINA WILL NOT USE THIS ATTACK TYPE.
Pool Commandeering 51% Attack Type
This is the one most people struggle with. Very simply, in order to perform a 51% attack, all that’s needed it to control more than half of the global hashrate. TODAY, in China, there are several mining pools representing up to 74% of the global Bitcoin hashrate. Said another way, the Chinese government has 74% of global Bitcoin hashrate within their jurisdiction (Some sources say as high as 81%). Even the top 4 Chinese mining pools alone represents more than 51% of the hashrate. It would be a simple matter for the Chinese government (PRC) to forcibly commandeer these top 4 mining pools (using their version of the FBI, which is the Ministry of State Security MSS) and order them to redirect their hashing to perform a 51% attack. The 51% attack would take 1 hour to complete, a double-spend would have been successful, and nobody would even know it happened until it was all over.
OK, I know you’re foaming at that mouth, ready to beat me to death with all your canned counterarguments. Keep reading, I promise, you’re not the first to throw a wall of regurgitated crap at me.
The very popular response has been to slap me with a couple Andreas M. Antonopoulos (@aantonop) videos. This first video shows just how poorly @aantonop understands what a mining pool attack means. He immediately starts talking about mining ‘farms’, and how difficult it would be to ‘pay’ the owner to ‘shut it down’.. Lol. WHAT?? Instead of answering the question about China performing a 51% attack, he instead answers the unasked question of, “can China STOP Bitcoin?”
First of all, the pool attack has NOTHING to do with mining FARMS, the attack is about mining POOLS, where all those miners concentrate their hashpower. Second of all, he’s talking about convincing them to shut the miners down, but he’s not getting that the pool attack REQUIRES them to keep providing hashpower! Clueless. And third, he suggests the PRC would have PAY the mining farm operators their salaries to stop mining?? Would the FBI pay to shut down anything? Ridiculous. Like moronic. At least he admits he’s ‘guessing’, but I'd expect much better than guessing from someone of supposed great influence.
He goes on with his mining farm explanation that Bitcoin is having a very significant economic impact in these distressed regions, glossing over the fact that Bitcoin is BANNED for anything other than holding. Can’t buy anything with it legally. Also, the perception of Bitcoin in China is that it’s for money-laundering, and there’s even talk about forcing the winding down of mining activity. And even just recently, it’s now illegal to operate an unlicensed Bitcoin node in China. Does it fucking sound like China is embracing Bitcoin?? They’ve been constantly chipping away at it and no signs of stopping.
His second video that people just love to send me, only addresses the Brute Force attack, and I agree with his response. Yes, I did say that, I agree with this video and @aantonop’s response entirely. It was perfect. Unfortunately, we’re not talking about the Brute Force attack, we’re talking about the COMPLETELY DIFFERENT Mining Pool attack. Please don’t think I don’t appreciate your efforts but please stop sending me this fucking video, it’s not the attack being described here, at all. Not even close.
Then there’s powerful luddite figureheads like Anthony Pompliano (@APompliano) that have sold their souls and just spout out constant Bitcoin HALLELUJAHS and vehemently deny or ignore any evidence contrary to the stability of their investors’ beloved Bitcoin. These people may have some financial prowess, but their technical acumen is like running full speed through a forest eyes-closed, blindfolded, at midnight on a moonless night. Clueless! (there’s that word again). When asked to rebut contrarian claims, we get… gobbledygook!.
I know, you’re so pissed off, you’ve got your arguments ready to fire. I’m ready, bring it, but before you get into this section, be sure you really really REALLY understand what a 51% attack is. I know a lot of you ‘think’ you understand it, and maybe you have some idea, but the devil is in the details, so if you’re not 100% confident on the concept, please read my primer on PoW mining
Here we go (Bold represents a whiny voice)
A 51% attack would be too cost prohibitive!
Yes, absolutely it would be very cost prohibitive, IF, we were talking about a BRUTE FORCE attack, which we are NOT. What we are talking about is a MINING POOL attack. This is a HUGE difference. The difference is that China isn’t attempting to create NEW hashing power, it’s instead attempting to steal EXISTING hashing power from the pools in its JURISDICTION. It wouldn’t cost anything because it’s not adding any new hashing power, it’s just repurposing the existing hash power.
A 51% attack would take too long! Miners would figure out what’s happening and change pools!
This is a strange myth, but it’s completely untrue. It only needs to execute for 1 hour for a double-spend to be successful and irreversible. At that point the damage is done. There is NO WAY for the miners to know that the pools they are connected to are stealing their hashpower.
From the point of view of the miner, the pool is still asking them to mine, but there’s no way for the mining equipment to know which blockchain it’s mining for. Sure, the person mining knows which blockchain they ‘want’ to contribute to, but they can’t easily tell that their hashrate is being stolen by the pool. Mining equipment itself doesn’t have any way to know because it’s just a simple hasher that follows the pool's orders, it’s not the same thing as a node that is aware of the blockchain, two very different aspects of Bitcoin. Pool miners don’t need to host a node to mine, and nodes don’t need to mine.
I know some of you believe that when an attack starts there must be ‘some’ indicator an attack is taking place, but this isn’t true at all. The only way to know that hashrate has been stolen is through statistics of the blockchain. Sure, the block times would take twice as long on average, but there’s so much variability in block times anyways, that it would take some time before that pattern would emerge reliably; much longer than an hour, and by which time the attack would be over.
I’ve also heard people mention that the mining ‘difficulty’ would adjust, but that only happens every 2 weeks, and as a consequence of the above point, so really, a one hour attack could never reveal itself quickly enough.
Why would miners want to hurt themselves by attacking Bitcoin?
Miners have ZERO to do with organizing the POOL attack. In fact, the miners are also ‘victims’ because they are oblivious to the fact that their hard-working hashrate is contributing to a double-spend instead of making money for them.
Why would China shut down its miners? And really, who cares? It would just mean the rest of the world continues mining. Pools don’t control the miners. You’d have to find all the miners computers to shut them down!
This is the same misunderstanding that @aantonop keeps spewing. While China does appear to want to shut down mining, that has ZERO to do with the POOL attack. The POOL attack NEEDS their miners to be able to 51% attack. The LAST thing China would want to do to do the pool attack is shut down their miners.
A lot of miners are in other countries than China!
Doesn’t matter, if their hashrate is going into Chinese pools, that hashing power is now within Chinese JURISDICTION, where it can be secretly circumvented without permission.
But that’s just not how Bitcoin mining pools work!
Clue. Less. Obviously you haven’t done your research. I told you to start here for a primer on PoW mining so you really get it before you open your mouth again and let more ass out.
Someone at these mining pools will blow the whistle and get the message out into the real world!
Really?? With an MSS soldier's gun to their head? In a country renowned for its human rights abuses? Yes it's that graphic (Tiananmen Square anyone?) . Try to remember this is only going to happen over the course of an hour or two. There won't be any time to react. The first moment that the world hears about the attack, will be shortly after the attack completes and the deep-chain block reorg hits the blockchain. It will be far too late to do anything about it at that point.
But the mining pool operators won't allow it. They will sue or get a court injunction or something!
You can keep your free-world ideals to yourself, China is a communist country led by very powerful people that can exercise their discretion in any way they see fit if they view Bitcoin as a threat, or possible weakness for an enemy. The mining pool operators will do exactly what they’re told or be fucking SHOT!
The attackers can be hunted down and brought to justice!
You mean China? You going to call the cops on China? Pay attention, this isn’t a bunch of isolated hackers trying to take down Bitcoin, this is the government of CHINA I’m talking about. I’m pretty sure they’ll be proud of destroying Bitcoin and will probably even put on a parade with tanks, dragons, and burning Merican effigies. Go get ‘em tiger.
Why would China want to do this? Why would they destroy their own wealth? It would destroy China! There’s no economic incentive to do so. It would hurt all their miners, making their ASICs worthless!
As mentioned in gory detail above, China currently bans bitcoin and is making gestures to reduce and eventually outlaw mining, and now they’re regulating even hosting a node. They are very concerned about Bitcoin’s money-laundering function and are INCREASINGLY HOSTILE towards it; they most certainly are not invested in it and would lose nothing if it was destroyed.
Also, China is not going to concern itself with the plight of unsanctioned domestic mining operations, or a few specialized chip manufacturers’ cash cow, if they feel they can significantly curtail massive money-laundering. Moreover, China is getting beat the hell up by a miserable trade war, so yes, it would be in their interest to blow the Bitcoin money-shot all over the American dream.
The attackers would need a lot of money to make the double-spend worth it!
This counterargument really only applies to the BRUTE FORCE type of attack, not the China POOL attack because obviously China isn’t going after a few million dollars. Even if China only double-spent ONE dollar (6.71 Yuan), the impact of the news that China CAN, WOULD, and DID double-spend Bitcoin will shake the crypto world to its core, disproving every anarchist’s fervent assertion that Bitcoin can’t be cracked. It’s all about the message, not the money. As if China gives a damn about profiting from shitty little Bitcoin. It’s a hiccup in the big picture.
Ok, so the attackers double-spend their money, how does that affect me? Most transactions and accounts will be safe, it won’t affect anyone but the attackers and their targeted victims. Plus, it only affects the blocks within the attack window!
Think you’re safe huh? Understand that the attack creates a side-chain of blocks. There’s ZERO incentive for China to include the main chain transactions in their side-chain. This means, when the attack is complete, each and every transaction that occurred ‘during’ the attack will be erased and put back into the queue (mempool) of payments, and depending on how long the attack was, could put those payments at the back of a very long line, locking up that money until the backlog clears.
Seems inconvenient yet harmless right? Nope. Requeued transactions also bear the incredible risk of an RBF attack (the entire attack being called a Purge attack), meaning that if someone sent you Bitcoins during the attack window and they noticed those payments were requeued because of a deep re-org (completed attack), they could quickly issue an RBF (Replace-by-Fee) to redirect that payment back to themselves and it'll disappear from your balance.
Sure, it is true that your inactive accounts are safe, and the only real risk is to transactions, but this affects you simply because you have no idea when an attack is happening. This means of course, that any Bitcoin transactions you are part of will most likely be reversed and requeued if those transactions occurred during the attack window, even if you’re not the intended victim! In fact, every single person IN THE WORLD that made a Bitcoin transaction during that 1-hour attack window will have their transactions reversed and requeued, leaving them wide open to redirection by the RBF attack! You will never know when an attack is occurring until it’s too late.
But why wouldn't China include main-chain transactions in their side-chain so the attack doesn't affect everyone?
Why would they?
Why wouldn't they?
Why would they?
It’s been 10 years without a single successful 51% attack! Stop spreading FUD!
Ya, there’s literally a million historical things I could mention that could exemplify the phrase, “everything is impossible until it isn’t”. That being said, this counterargument really only applies to a BRUTE FORCE attack, not the POOL attack. The POOL attack can happen right now! There’s ZERO technical obstacles to performing it. It would just take the will of the Chinese government to decide to do so. These are facts, not FUD. I know this information makes you angry, but I swear I couldn’t possibly care any less about your feelings, I really mean that. I would weep over accidentally blink-killing a mosquito that stung me in the eye before I felt a whisper of remorse for you hating me for pointing out this China problem. In fact, I’m going to sit here and just watch you suffer with my good eye. Mosquito, pity. You, nothing.
It’d be easy to correct the double-spent funds with a fork. Bitcoin will evolve to fix this, or fork to something that doesn’t allow this!
This is so wrong on so many levels. I know ETH is a fork of ETC that was created to reverse funds, but this was a very young Ethereum, and even then it was very difficult to pull this off. The sheer magnitude of Bitcoin today, makes such approaches technically infeasible; like trying to change the order of the cars in a train while it's at top speed. Not to mention that any coins stolen will have already been converted out to something else, so by changing history on the blockchain, you’re only changing who the victim was, and the perpetrator still keeps all the loot.
The other obvious flaw in this argument is the suggestion that Bitcoin can be fixed with a ‘fork’. A fork isn’t Bitcoin! Just like Bitcoin Cash, Bitcoin SV, Bitcoin Gold, etc., are all forks, but none of them are Bitcoin! I repeat: forks only fix the forks, not Bitcoin itself. The exposure to the 51% attack cannot be fixed in Bitcoin itself, simply because there's no soft-fork way to accomplish such a fundamental shift in design. Bitcoin is stuck with PoW forever.
But more importantly, this counterargument only really applies to the BRUTE FORCE attack, not necessarily CHINA’s pool attack. China may only want to destroy Bitcoin’s confidence, not actually steal anything. So just by performing at 51% attack and performing a deep-chain reorg, the message will be sent that China can destroy Bitcoin at any time. It doesn’t even matter if nothing is stolen.
Fiat gets attacked all the time! Big deal! We still use it!
Sure, but there’s all kinds of safeguards built into the system. With credit cards for example, when we get stolen from, we don’t have to pay for those charges. Uh, wait a minute, actually, yes we do, but that comes in the form of visa fees that are tacked onto every purchase we make (part of the price tag). So really, we get robbed every single time we use a credit card.
The reason people gravitate to Bitcoin is because it’s supposed to protect from theft, and if it doesn’t, then why not just stick with fiat? Moreover, when you get stolen from in money, generally you get your money back, either from the bank, or the credit card company, insurance, etc. But you don’t have any recourse to get Bitcoins back. So if given the choice of no risk of loss with fiat, or unknown risk with Bitcoin, I can’t see Bitcoin being a reasonable choice.
How many times do you think they can do this before a stop is put to it?
Do you really think you can stop China? Moreover, once the first attack occurs, that will begin a vicious cycle of:
- Loss of confidence
- People dumping to get out
- Price drops
- Miners drop off because they are losing money
- Lower hashrate means more exposure to double-spend
- Another double-spend occurs because it is easier now
Once that confidence bubble bursts, the entire house of cards is going to fall. There is no bottom either. It will sink to the point that represents completely useless. Speaking of worthless...
A double-spend on Bitcoin won’t hurt for long, look how well ETC bounced back from its double-spend. Bitcoin will survive, maybe with a lesser value.
This is actually making my point for me. ETC is already worthless because it’s the original unused fork of Ethereum. IF anything, it shows how far BTC could fall. Remember that Bitcoin’s only remaining virtue is immutability. A double-spend will show that Bitcoin isn’t immutable, and will expose that we have to trust China not to do it again. All the value of Bitcoin that is there due to immutability, will be lost, which is the vast majority of its value. It will probably sink to what ETC is worth with just a few remaining miners around the globe keeping the faith that someday somehow, Bitcoin will be back, and their millions of coins will once again be worth something.
Bitcoin can’t be destroyed, you ignant!
I love this one. Ok, ok OK!! You are right!! Nobody can ever stop the omnipotent Bitcoin! But let’s really be honest here. Nobody cares that you can’t stop miners around the world, what they care about is how much Bitcoin is worth, and if nobody has any faith in Bitcoin, it will be worth next to nothing, probably as much as useless ETC is worth. Are you going to be able to look me in the eyes and say Bitcoin wasn’t destroyed? Yes? Ok then, if that makes you feel better about your Santa Claus magic bag full of worthless Bitcoins. Maybe you can buy a pizza with them.
You’re entitled to your opinion, but my opinion is that Bitcoin will not be affected by this.
Where’s your facts to back that up? Where’s your evidence that what I’m describing is wrong? Where’s even a cogent argument on your part? I'm more than happy to entertain a conversation where you have facts that I haven't considered.
I’m not expressing an opinion so much as elucidating facts and deriving consequences. It’s research versus your blind-faith that it can’t happen. Which one do you think is more reliable?
But it’s very unlikely China would do this!
Does that even matter? I don’t think most people get into Bitcoin thinking that it’s ok to trust that China won’t destroy bitcoin. Moreover, things could change overnight (they’re in a trade war after all), and could become hostile and be looking for an easy target.
But Stratum Version 2 fixes this pool attack!
At this time, Stratum V2 is but a piece of paper with some software development happening to try to bring it to life. That said, there's no clear strategy to eliminate the hashjacking potential of a single actor, either by the participating pools or the job negotiators. The same point of trust/vulnerability exists where someone in a critical position can effectively direct the hashrate for nefarious purposes. Read from the top of this thread, and especially from the top of this thread.
All coins are exposed to this risk!
Most Proof of Work (PoW) coins suffer this risk, but not XRP. The 51% attack is based on mining, and XRP isn’t mined. It has complete immunity to this attack. Some would argue that it’s 80% for XRP, but that’s just a blind Sybil attack, which doesn’t work on XRP. It would be orders of magnitude more difficult to attack XRP. I colorfully explain how XRP is immune here.
Yeah well I'm just going to believe in Bitcoin anyway!
No, you are not allowed to do anything without my permission
You’re just biased because you’re shilling XRP! Why can’t all the coins just coexist and share in this revolution?
Why are you bringing me into this? Does that change any of the facts presented? If you’re about to drive off a cliff, does it make my warnings invalid because I’m an asshole? Sure, I can be an asshole, and you can be a moron, but none of that matters in the context of Bitcoin being exposed to a double spend, now does it? Stop lashing out at me, focus on the facts.
No matter what the reasons China may think of to justify destroying bitcoin, that’s a tangent to the real 1000-lb pissed-off, haven’t eaten a banana in a month, nuts-in-a-vice, gorilla in the room: and that is the fact that Bitcoin put us in a position where this type of attack ‘could’ happen. The fact that it is ‘possible’, is MUCH more important than whether it happens or not. Bitcoin was never supposed to allow this situation to occur because that’s what its primary function was supposed to be: decentralization; the inability of a single body to control the network.
But here we are, Bitcoin’s achilles tendon positioned under China’s scalpel. Nobody would buy bitcoins if they really understood that China could annihilate Bitcoin at will. It’s completely fucking irrelevant that it’s unlikely to happen. The entire sales-pitch for Bitcoin is its immutability. It’s the only thing it has left! It failed to scale (LN isn’t going to make it better, sorry, but that’s another discussion), and Bitcoin is expensive and slow, and obviously doesn’t hold value too well.
Without guaranteed immutability, you have nothing. I dare you to make up a purpose for Bitcoin if it gets double-spent. Literally, Bitcoin is now a Chinese bank account, subject to the whims and musings of a communist ideology. How are you going to tell noobs that Bitcoin is perfectly safe, but with the remote chance that China might unilaterally smash it to pieces without warning? What kind of a sales pitch is that?
Open your eyes before you faceplant a low-hanging branch, take in facts, do a LOT of research, don’t trust anybody that claims to know what they’re talking about, yes, even me, but particularly stakeholders that NEED your hard-earned dollars to keep pouring into the world-famous Bitcoin machine so those rich investors can keep the party going for as long as possible. Bitcoin is shaping up to be the biggest pyramid scheme in history, and China has their finger poised above the nuke button. Today. Right now. Waiting for a reason to press it.
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