This is basically really good news for bitcoin, since China will no longer source the majority of hashing power. It’s an opportunity to further decentralize hashing power across the globe, and for the west to take a stronger foothold.
I would correct your statement: 1. Greater hash power makes the system more secure from attack 2. A large amount of hash power geographically concentrated is a weak point 3. More geographically dispersed hash power is better. 4. Ideally a large amount of globally dispersed hashpower provides the best security.
-- Disclosure: I do not currently own any BTC.
Not necessarily. There's a lot of "latent" hashpower ready to join the fight if bitcoin gets under attack, including random people and orgs around the world and the current miners themselves aswell: a lot of them mine other cryptos aswell, and could diminish their mining intensity on them to devote hashpower to bitcoin wars or stop altogether.
Unless I'm gravely mistaken about the bitcoin protocol, you wouldn't know that bitcoin is under a 51% attack until it completes.
The 51% attack succeeds when the attacker's blockchain becomes longer than the publicly-accepted blockchain. But there's no reason that the attacker needs to show their work publicly; they can start in secret, mine blocks, and reveal the entire chain at once after it is some number of blocks longer than the public chain.
there are 2 parts: one is mining the block, the other is propagating the block.
if you do what you describe, computing blocks would not be enough. you would also need to recompute blocks to account for what happened on the block chain since the split. the more time it passes, the more computing power you would need.
when people talk about 51% attack they usually talk about the double spend issue. this requires 1) a large number of nodes (>51% of the network) and 2) a large amount of hashing power. you would spend some bitcoin, let it be captured in the chain and after that you would fabricate a block that spends the coins differently. now you’ve spent it twice. the miners would pick this as the longer chain and keep going. the important thing to remember is that you cannot keep your chain in the shadows and that this type of attack would be a really hard to pull off (have you ever synchronized a lot of machines to do something? it’s incredibly hard)
But yes of course, this is good for Bitcoin. Everything is good for Bitcoin.
By the same token I could say all the power (and pollution!) used by the US military given that it's actively hostile to my country is a waste, bad for the planet and I wish it went away, but that wouldn't be too fair towards US citizens or their allies.
> But yes of course, this is good for Bitcoin. Everything is good for Bitcoin.
Well, Bitcoin is cleaner for now, wasn't that one of the greater criticisms levied towards it? I'm pretty sure by now that it could be found that mining Bitcoin cures cancer and AIDS by tomorrow and detractors would still find a reason to criticize it. I don't think there's a way to win, so I don't bother.
You could make that claim, but of course, if the US military went away I suspect more than a few people would notice.
However, Bitcoin continued to work exactly as well without the extra hash rate. No byzantine generals were harmed in this hash draw-down. As such, when I say it made no difference, I mean it.
Mining exhibits an un-damped positive runaway condition with respect to price, as price goes up it becomes more economical to mine. As such you can waste more power and add unnecessary extra hash capacity and make more money. Not just can, have to, as others do so, to avoid getting left behind. Full on prisoner's dilemma. When 70% of it disappears en masse, it makes no difference.
> Well, Bitcoin is cleaner for now, wasn't that one of the greater criticisms levied towards it?
For sure, but it won't last, that's kind of my point.
The criticism is that it's roughly speaking the least efficient system humanity has ever implemented. Moving a mountain with a spoon is likely more thermally efficient. That hasn't changed, really, it's fundamental to the model.
Maybe, but setting bitcoin aside for a moment, the blockchain and the distributed trust is a revolutionary technology.
Imagine people complaining about how much cars pollute and how we should stick with horses. Are you willing to give up your car and everything that has an internal combustion engine?
so you would have more expensive imports, maybe. and you would move to produce things locally. also, the cheap imports are cheap because there is a human price (ie basically slavery) paid at the origin. if you produced things ethically they would be more expensive rendering the navy useless as you would once again shift to producing locally.
also, since when does the us navy provide this service? i mean maybe it provides it, but i have a hard time believing it protects all the shipping lanes all the time (ie other nations surely protect their trading routes)
However a lower hash rate means less security, but if it is temporary reduction, whilst equipment moves elsewhere, this reducing reliance on mining in one nation, then the reduction in hash rate in the short term is not ideal, but has long term benefits for the network.
Given there is no intrinsic worth of BTC, rather just the collectively belief it is worth something, these incentives are very strong with BTC.
Explain how this is any different from the US dollar? What is the intrinsic worth of USD?
The value of Crypto comes from the decentralization (no need for trusted third parties), and is proportional to the hashing power of the network. Upstarts can easily be 51%ed by an incumbent with a large mining infrastructure of the same kind... But this holds as long as people with destructive power let them run.
The primary difference is that people have to pay taxes and monthly payments on their debt. Every dollar created has to be returned one day. This ensures the continued existence of USD as a medium of exchange. Once something turns into a "store of value" it ceases to be a good medium of exchange.
The ability to eat something is not what makes it a store of value. Milk is a TERRIBLE store of value for time frames greater than a few weeks, for instance. The USD is a store of value as it is relatively stable and so you know that you'll be able to leverage its value in the future; gold does the same. The beauty of USD is that unless you think the United States of America is going to cease to be, it is the only thing accepted for tax payments and so a few hundred million people along with countless businesses and institutions are going to need USD to pay the government every year. Literally every stable currency is a "store of value"; the predictability of the value is what makes it stable. This is precisely why BTC is not stable, nor a good store of value. It is an asset whose primarily uses are speculation and illicit financial flows.
> Once something turns into a "store of value" it ceases to be a good medium of exchange.
I fail to see the connection. Sure, not all stores of value are good mediums of exchange, but this has more to do with the physical properties of the underlying commodity rather than the fact that it holds its value stably. Gold is too heavy to carry around in your pocket, and securely storing a lot of it requires specific infrastructure that most people don't want to maintain. These things are true regardless of whether or not the value of gold is relatively stable over time.
Since dropping gold standard, I've always seen it as faith in the US economy. There's no similar entity backing BTC.
all forms of money are worth something because people collectively agree that they are worth something and trade them for goods.
the USD is not special. BTC is not special.
People getting on their high horse about the USD and the faith in the US economy seem to forget that all things have a lifecycle and eventually everything goes away / is replaced. There is immense immediate pressure to keep the USD valuable and the thing that is used for international trade, but my guess is given 20-30 years a lot of things can happen.
If Bitcoin has no intrinsic value, how is that different than fiat? What gives the USD or British pound intrinsic value?
To the extent that any goods and services are for sale with prices in BTC, they are (in my experience) priced consistently with trading out of BTC into some currency (say USD) and then purchasing the product with proceeds of the sale.
The relevance of USD, and any currency, is a regional value.
And bitcoin is actually widely accepted here in Switzerland
Meanwhile BTC currently only serves as an abstraction over fiat currencies. It's practically only exchanged from and to fiat currencies, and that's not stable, as popularity is then the only mechanism dictating the price. BTC is much more like gold this way than the dollar.
I agree, which means both fiat currencies and Bitcoin have no intrinsic value, only what we collectively believe.
> BTC is more like gold this way than the dollar
agree
In 1933 $20USD would buy you 1oz of Gold. In 2021 it would take $2000USD to buy the same oz of gold.
It seems that the world’s reserve currency leaks approximately 99% of its value per century through the process of debasement which leads to inflation.
I would argue the world deserves a better store of value.
I am so confused by this argument.
I think you are right though that Bitcoin isn't acting like a currency, it is acting like an asset. Although it is highly speculative, more so that gold, as evidenced by its wild swings.
Bitcoin is a crypto-asset, not a crypto-currency.
I challenge the assumption that a currency is naturally inflationary in nature. Though it is very tempting to politicians to print money and debase the currency if they can get away with it, there is no inherent law of currencies that makes them inflationary. In fact, throughout hostory the only way fiat currencies could be inflated was through debasement. Bitcoin has a fixed supply and cannot be debased but those properties do not make it less of a currency.
> explains how this is very different
>> Launches a completely unrelated complaint about inflation which seems to serve mostly to highlight that BTC compares poorly to gold; the original answer is unacknowledged
It is held by other countries to pay their international debts, or to manipulate the exchange rate of their local currency.
First comment
That the hash rate has fallen so much means that coordinating a 51% attack is perfectly doable. Imagine that the missing hashing power was mining a parallel blockchain right now. We know it's not happening, but this proves that it's much easier to do than expected. These news essentially mean that the claims about bitcoin being completely safe from state attacks are vaporware.
China could have relatively easily done that previously but now it will probably be difficult for any one country to become that non-economic actor with both control of hash rate and the ability to coerce miners.
Miners aren’t throwing in the towel. They’re relocating.
I find it so odd that many speak in phrases that suggest there is some global “west” vs. “east” whereas in reality it more so seems the case that there is more internal struggle within “the west” and “the east” respectively.
The Chinese in general seem to have a far higher opinion of, and feel less animosity to, say, the Danish, than they will the Japanese.
The terms “Western” and “Eastern” seem more than anything be based on race, not on actual cultural similarities. — Perhaps these existed a century back, but after the Chinese cultural revolution and the U.S.A. occupation of Japan, I do not believe Chinese culture to be closer to Japanese culture than Japanese culture to be U.S.A. culture.
If anything, the older division of communist vs. capitalist states made more sense. Though that difference too is shrinking with many officially communist states having incorporated a fair deal of free market, and many technically capitalist states having extensive government market direction into what is some call “social democracy”.