Understanding the risks surrounding Bitcoin will help users make better decisions about how to use the network.
In addition to the security and privacy of your coins, there are other Bitcoin stability and security concerns that deserve our attention. These risks are typical of the design of Bitcoin and its young ecosystem and are often beyond our control.
While there is little we can do about it as individuals, understanding these risks helps us understand Bitcoin as a whole and allow us to make better decisions about how much we can trust the network. There is a new way to work with Bitcoin, more details here https://thebitcoinera.io/.
Its proponents advertise Bitcoin as a decentralized network that cannot be controlled by anyone. In fact, it’s nearly impossible to finish the cryptocurrency experiment valued at more than $ 300 billion – even its users don’t know how to turn it off.
Some obvious things could stop Bitcoin, of course. But they often lead to more complications and are very complicated in themselves.
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What could an organization do to make Bitcoin worthless?
Shut down the internet
How do you turn off the internet? Aside from the high level of cooperation that would require from private institutions and governments, we don’t know how to shut down the internet. Part of the network was designed to keep going after a nuclear strike, and it doesn’t have a kill switch, and the internet itself is also very resistant to attack, and information would simply be routed around any part we disable.
Even if substantial parts of the internet were shut down or damaged, Bitcoin’s bandwidth requirements (currently at least 1MB per ten minutes) could be small enough to transmit successfully over radio waves or the telephone system.
In addition, does every organization really want to turn off the internet? The internet has many other uses, such as sending cat photos. The economic damage from switching off the internet would be gigantic and would very likely even cost lives.
Destroy all nodes and miners
The Bitcoin network is made up of individuals, groups, and organizations who run the Bitcoin software on their laptops, phones, and even Raspberry Pis. Some of these participants also operate dedicated computer chips, so-called Bitcoin miners, to exchange electricity for Bitcoin. In some kind of digital lottery where those who make the network more secure may get some bitcoin.
While some of these bitcoin miners and node operators are very visible, they won’t be interested in voluntarily shutting down their systems. It might be possible to seize or destroy some miners or node operators, but this will only make mining more profitable for those who operate clandestinely.
In response, Bitcoin mining will go underground and nodes will hide behind VPNs and the Tor network. As long as there is money to be made in mining bitcoin, people are risking their freedom to participate; bitcoin mining, for example, remains attractive in Venezuela, where bitcoin is illegal.
Making Bitcoin Illegal
If a state made bitcoin illegal it would make it much more difficult for people to buy bitcoin miners, convert bitcoin for paper money, or take it as payment in a store.
But as in the world of online drug markets (which, for some degrees, are powered by Bitcoin), people are very willing to break the law for some gain, and Bitcoin’s pseudonymous nature will make it difficult to find its Identify dealers, owners and users.
Mining empty Bitcoin blocks
The only guaranteed way to stall Bitcoin and make it worthless is to join the network yourself and disrupt it from within.
It is in the anarchist nature of Bitcoin that anyone can participate anonymously in the system as long as they follow the rules of the Bitcoin software. For example, there is no rule stating that blocks must be filled with transactions to be valid, so a miner could theoretically only mine empty blocks.
If all the blocks were empty, no one could trade the Bitcoin trans blockchain, and without the ability to send money, it would be worthless.
With only 10% of the world’s bitcoin computing power, an organization could slow down the bitcoin network significantly. If the nasty operation extends, it will eventually hit 50% of the total hashing power, so they can keep all the blocks empty.
Bitcoin nodes accept the longest valid blockchain as valid. So if a group has more than 50% of the total hashing power, they can eventually create a chain that is longer than the other, honest miners who would rather populate their blocks with transactions.
Bitcoin’s founder, pseudonym Satoshi Nakamoto explains:
“The race between the honest chain and a chain of attackers can be characterized as a binomial random walk. The success event is that the honest chain is lengthened by one block, which increases its lead by +1, and the failure event is that the attacker’s chain is lengthened by one block, which reduces the gap by -1. “
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