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Study Argues Chinese Mining Centralization Poses Threat to Bitcoin Network

October 14, 2018 |

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”

Study Argues Chinese Mining Centralization Poses Threat to Bitcoin NetworkThe 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

Study Argues Chinese Mining Centralization Poses Threat to Bitcoin NetworkThe 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

Study Argues Chinese Mining Centralization Poses Threat to Bitcoin NetworkThe 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!


Images courtesy of Shutterstock


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The post Study Argues Chinese Mining Centralization Poses Threat to Bitcoin Network appeared first on Bitcoin News.

Bitcoin News

FSB: Crypto-Assets Not a Threat to Global Financial Order

October 11, 2018 |

FSB: "Crypto-Assets do not Pose [...] Risk to Global Financial Stability"

Cryptocurrencies do not pose a threat to global financial stability, but the diverse range of national regulatory regimes throughout the world continues to complicate efforts to establish an international legislative framework overseeing their use, the Financial Stability Board says in a new report. 

Also Read: Billion-Dollar Startups Flourishing in Switzerland’s ‘Crypto Valley’

Report Advocates ‘Vigilant Monitoring’

FSB: "Crypto-Assets do not Pose [... ] Risk to Global Financial Stability"In a document titled “Crypto-asset markets: Potential channels for future financial stability implications,” the FSB argues against an alarmist view of the perceived threat that cryptocurrencies may pose to financial markets throughout the world. It finds that “based on the available information, crypto-assets do not pose a material risk to global financial stability at this time.”

However, the Switzerland-based international body, which offers recommendations on the global financial system under the leadership of Bank of England Governor Mark Carney, nonetheless advises a cautious approach to the industry. “Vigilant monitoring is needed in light of the speed of market developments,” it says. “Should the use of crypto-assets continue to evolve, it could have implications for financial stability in the future.”

The FSB predicts that said risks may include “confidence effects and reputational risks to financial institutions and their regulators.” It also points to “risks arising from direct or indirect exposures of financial institutions,” as well as “risks arising if crypto-assets became widely used in payments and settlement.” In addition, the organization points to concerns about “market capitalization and wealth effects.”

Broader Crypto Policy Challenges

FSB: "Crypto-Assets do not Pose [...] Risk to Global Financial Stability"The report is a follow-up to the FSB’s “March 2018 letter to G20 Finance Ministers and Central Bank Governors” and its July 2018 “summary of the work of the FSB and standard-setting bodies on crypto-assets.” It highlights a number of broader policy issues pertinent to crypto-assets, such as “the need for consumer and investor protection; strong market integrity protocols; anti-money laundering and combating the financing of terrorism (AML/CFT) regulation and supervision, including implementation of international sanctions; regulatory measures to prevent tax evasion; the need to avoid circumvention of capital controls; and concerns relating to the facilitation of illegal securities offerings.”

While noting that the board has pursued a number of “domestic supervisory, regulatory, and enforcement actions related to crypto-assets,” the report reiterates the FSB’s ongoing efforts to facilitate the development of an international regulatory framework pertaining to cryptocurrencies. However, it describes the current diversity of national crypto regulations as a potential barrier to the establishment of an international juridical apparatus for virtual currencies.

The report also states that “illiquidity, concentrated ownership, fragmented market structure, and other issues also make crypto-assets potentially susceptible to price manipulation.”

What is your response to the new FSB report? Share your thoughts in the comments section below!


Images courtesy of Shutterstock


The Bitcoin universe is vast. So is Bitcoin.com. Check our Wiki, where you can learn everything you were afraid to ask. Or read our news coverage to stay up to date on the latest. Or delve into statistics on our helpful tools page.

The post FSB: Crypto-Assets Not a Threat to Global Financial Order appeared first on Bitcoin News.

Bitcoin News

150% interest on a loan? Consumer advocates hope the threat of a ballot measure will get lenders to ease up

October 4, 2018 |

When LendMark started offering subprime loans to California residents a few years ago, it noticed something odd: a vast and growing number of big loans offered by rival firms at interest rates of 100% or higher, and relatively few smaller, cheaper loans.

To executives at the suburban Atlanta company,…


L.A. Times – Business

Man Gets 20 Years for Threat to Judge, Erupts in Court

September 27, 2018 |

Florida’s Alan McCarty has made clear he does not like judges, and he will spend the next 20 years in prison as a result. The 36-year-old received the 20-year sentence this week—along with an extra 10 days for contempt of court, a penalty more serious than it sounds—for…
Newser

With Six Months to Brexit, EU Sees May’s Plan as a Threat

September 17, 2018 |

EU leaders will hold their first serious discussions on Brexit since March this week as both the U.K. and the rest of the bloc aims to reduce major disruptions if a deal isn’t reached.
WSJ.com: What’s News Europe

Elizabeth Smart Says Kidnapper Still a ‘Threat’

September 14, 2018 |

“I know the depths of her depravity.” That’s what Elizabeth Smart had to say Thursday about her kidnapper, Wanda Barzee, who is set to be released from prison , the Salt Lake Tribune reports. During a press conference , Smart said Barzee is still a “danger and a threat to any vulnerable…
Newser

Natural Grocers Shrug Off Amazon-Whole Foods Threat

August 27, 2018 |

Sales at Sprouts Farmers Market, Natural Grocers and hundreds of other health-food retailers are up both in terms of dollar and unit sales a year after Amazon’s $ 13.7 billion takeover of Whole Foods.
WSJ.com: US Business

After Threat, ‘Every Part’ of Arlington Cemetery Searched

August 22, 2018 |

Funerals will proceed as scheduled, but Arlington National Cemetery is otherwise off limits on Wednesday. This after a bomb threat was made. The Washington Post reports the cemetery was evacuated around 9:30am and that it will remain closed to the public for the remainder of the day. A rep…
Newser

Librarian Makes Fake Bomb Threat In Order to Make Flight

August 21, 2018 |

A librarian has been jailed after calling in a fake bomb threat so he wouldn’t miss a flight. Per Reuters , Jacob Meir Abdellak, a Frenchman living in London, called in the hoax eight minutes before his Norwegian Airlines flight was slated to leave Gatwick Airport after staff wouldn’t let him…
Newser

TMZ

NBA Commish Adam Silver Lets Death Threat Sender Slide, Charges Dropped

August 18, 2018 |

The man who threatened to kill Adam Silver over an NBA roster spot just caught a huge break … and he has the commish to thank for it. 27-year-old David Pyant was arrested and charged with aggravated harassment back in May after sending an email to…

TMZ.com