How Bitcoin Is Silently Hijacked - Without The Need Of A 51% Attack
If you don't know what a 51% attack is well, it's a situation in which one of the nodes in the Bitcoin network has more than 51% hashing power, thus being able to directly manipulate the transactions pushed to the blockchain. If, at any moment, a node gets that hashing power - which is very unlikely to happen, with the current difficulty - Bitcoin, as a store of value, will be compromised. Whoever has 51% of the hashing power will be able to double spend, create new tokens out of thin air, etc.
Like I said, with the current difficulty, this situation is very unlikely.
Yet, in my opinion, Bitcoin is getting slowly hijacked by a collusive group of big actors, and this attempt is fueled by the greed of (mostly unaware) candid investors.
Bitcoin, Bitcoin Cash and Bitcoin Gold
When the prospect of Bitcoin Cash appeared, it was "sold" as a technical improvement over the current technology. Alas, not much was changed in the codebase, other than just forking the legacy blockchain. In almost any way, Bitcoin Cash and the Bitcoin blockchain are identical.
Truth is, many altcoins are just colored coins on top of a Bitcoin codebase. Some of them have significant advancements, like Slimcoin, for instance, which is built on top of Bitcoin, but which introduces a completely new minting algorithm, Proof of Burn. But many of them are just identical clones, with the logo and name changed, or some minor parameters, like block generation time and so on.
What differentiates all these altcoins from Bitcoin is trust. Bitcoin is trusted to be transparent, decentralized and independent. When any of these 3 qualities will disappear, Bitcoin price will drop to the level of the lowest altcoin.
Alas, I think we're in the middle of an attempt to get rid of the one of these three qualities. Namely: decentralization.
How Can Bitcoin NOT Be Decentralized?
Suppose you are a mining company and you created some strong bonds with a company producing mining hardware. Also, around the house you grew in time a nice little exchange.
Things are going well, you are making good money, but you want more. Getting 51% of the hashing power is out of the question, it will be too obvious - and it's impossible anyway (at least for now).
So what you do?
You invent a new coin - a colored coin, basically - with a name containing Bitcoin in it (like Bitcoin Cash, or Bitcoin Gold) and then you prepare to fork the main chain into the one producing this coin.
And here's the core of the plot.
All the exchanges (which are probably incentivized by the mining farms and mining hardware companies) agree to do something absolutely strange: they will give away to each Bitcoin holder, the equivalent amount in the new coin.
Just like that. Out of thin air. There's no actual exchange going on. Just new number written in an account.
This tiny little thing has two fabulous consequences:
- demand for Bitcoin will increase (because everybody wants to get more Bitcoin Shitcoin), hence Bitcoin price will increase (aren't we seeing this already?)
- the price of the new coin will be determined, in a certain way, by this new high price of Bitcoin and by the promise that it will be better than it, hence, it will start not at $1, but probably at $300.
What happened in just a few microseconds is that a new coin appeared and this new coin, apparently, has a market cap comparable to Bitcoin's.
Do you see it now? Doesn't this sounds worryingly familiar with central banks printing money out of thin air under the promise of a better economy?
As of now, these Bitcoin Cash and Bitcoin Gold don't have any hidden parts, but there's nothing staying in the way of them becoming mineable only with a certain mining equipment. Or just in a certain mining pool.
And just like that, you don't have a decentralized Bitcoin anymore. You have a new centralized currency, controlled not by the banks and governments, but by Bitcoin whales, mining farms, exchanges and mining hardware companies.
Please keep in mind there wasn't any 51% attack going on. Just good ol' human greed.
I may be just rambling here, but I think this potential scenario deserves at least some thoughts.
I'm a serial entrepreneur, blogger and ultrarunner. You can find me mainly on my blog at Dragos Roua where I write about productivity, business, relationships and running. Here on Steemit you may stay updated by following me @dragosroua.
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Cheers!
Cheers, mate! Any new runs to share? I started that group on chainBB, did you know about it already?
Of course, I'm running almost every day... I posted this in steemit https://steemit.com/running/@toofasteddie/fast-run-on-hills-10-50-fiftyrunsrillmay-2017112t13859387z sorry...I have a question...
What is the advantage of using chainBB instead of putting the runcoin Tag?
You help a new steem-powered site to grow. Usually, good stuff happens from this.
nice thoughts my friend, bitcoin is a coin which got printed on every body minds just like a subliminal message whenever we talk about cryptos bitcoin comes first in everybody minds, every body thinks that it is a most trusted coin and also the king of coins.
i agree with your words and i think that getting 51% of hashing power in bitcoin is so difficult but not impossible.
No. Exchanges don't want people to leave their service, so they give them what they would get if they store those bitcoins on their own wallets, where they own their private keys. Not a conspiracy,
Bitcoin is controlled by a few people at Bitcoin Core and Blockstream. They reject any improvement they don't agree with, although been just one of the ecosystem players, not economically important neither. They could disappear or be hijacked and jailed into a island, and bitcoin would still keep working. The same with exchanges.
I agree. And your thoughts, although I am disagreeing with them, are providing a new perspective on the ecosystem.
Of course. BitcoinCash is Bitcoin without Segwit, so it is comparable. iPhone8 and iPhone8Plus are comparable also, and that doesn't make the non-Plus version just shit.
BitcoinCash has a smaller ecosystem. Not so many miners, and no so many companies supporting it on their systems, so price should be lower.
No. Central banks cannot create a new currency.
Actual usage of Bitcoin / Bitcoin Cash / Bitcoin Gold can be assimilated, they're all tradable coins. In a functional way, these Bitcoin clones act like new notes printed by central banks, they create inflation.
Like I said, it's just a scenario, but I think it deserves some thoughts. We're less than 4 months into this new "cloning and printing" strategy and a lot can happen.
I'd definitely speculate on the fact that the cryptocurrency community is still capable of seeing how useless Bitcoin forks are, and as such, in the long term, their market cap will bleed out, quickly losing the extra "coin value" behind them. As such, I don't think that "printing out of thin air" is affecting these market identically bad.
But fix me if I'm wrong, it's entirely possible I'm missing something crucial.
Agree! Plus with this sudden price burst in such a short time due to fomo-ers, good projects on alt coins gets the backlash as investors are jumping on bitcoin bandwagon leaving the alts
I really enjoy these post where you go in depth into a topic and explain it clearly. This scenario is eye-opening and it also poses a lot of questions. For example if bitcoin loses the throne, who will take it?
Crypto game of thrones (insert theme song here :) )
The crypto winter is coming...
I actually do not consider this to be rambling because you bring up very valid points, most of which I agree with.
I think it legitimate to ask what is the difference between bitcoin and fiat if the amount of bitcoin can be doubles simply by forking. We have witnessed two the last few months with another coming in a couple weeks. Where does it stop?
Personally, I dont think there is much future for BCH and even less for BTG....BTC keeps rolling on, perhaps for the very reason you mention. Ultimately, these new tokens do not offer much improvement over BTC and only confuse the general public.
We will see how the community continues to react to this. As long as there is free money, people will go along for the ride. I mean, isnt this what the banksters did for decades with their fiat?
That's what scares me, the greed of the common people who are accepting to be lured into what it will eventually be the "real" Bitcoin bubble.
Without BCH, BCG and all these high-profile, mining-pools-backed, hardware-mining-companies-supported coins, Bitcoin will not be in a bubble, because there won't be any artificial pumping of the volume. But then, again, without BCH, BCG, etc, probably the Bitcoin price will be much, much lower...
So it's tricky...
I am not sure that without the other alt coins from the forks that BTC would be lower.
Bitcoin gets all the publicity. Does that publicity draw money into BCH and BTG? Honestly, I dont think so. My view is that people could care less about these coins....they are quick money and then they will disappear. BCH really hasnt done much the past 3 months and BTG had even less fanfare.
As for the common people, I do not believe they are even close to being in this market segment yet. So few are even aware of cryptocurrencies that the potential for the masses is still way down the road. Of course, they are the last ones in.
Perhaps these forks are a learning curve the community needs to go through. If BTC ends up still the king after all this, people will start to realize that it is senseless to fork (other than some quick cash). And if there isnt much value in a token, the miners will drift away. That happens, watch those alt coins collapse overnight.
Love your musing> Steem on! I learn a lot here.
For sure. I think this is why many cryptos are moving to PoS to be the popular "mining/term" for next year I think. Anyone that holds the coin is helping decentralize the blockchain from my limited understanding, correct me if I'm wrong.