The concept of Bitcoin often seems to cause some confusion. People still believe governments can shut down the Bitcoin network. They will never be able to, as long as the internet exists.
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Understanding How Bitcoin Works
It is impossible to consider a consequence without knowing whether it is even a distinct possibility. Hacking Bitcoin or shutting down the network is not an easy feat. The network’s underpinning technology, called the blockchain, is subject to a complex algorithm to ensure blocks are added and data is processed and verified.
Through the use of cryptographic hash functions, network participants must continually update the network by producing new blocks of data. Additionally, every network node needs to accept this new network block as a “correct” addition to the overall blockchain. Without a consensus, no one can add the data to the network under any circumstance.
Manipulating this workflow is incredibly challenging, expensive, and time-consuming. Erasing or overwriting new or existing data requires a double-spend or 51% attack against the network. It makes no economic sense even to attempt such an attack today, as there is no guarantee of success. Other public blockchains with a lower miner concentration and value, on the other hand, may prove more susceptible to these types of attacks.
Furthermore, it is pertinent to remember there is more than one copy of the Bitcoin blockchain. More specifically, all full nodes on the network store a copy of the ledger to date. It is insufficient to hack or disrupt one copy, as attackers need to compromise over half of the network to be successful.
A Growing Network Of Bitcoin Nodes
Speaking of Bitcoin’s network nodes, there are currently over 10,000 computers or other devices hosting a Bitcoin blockchain copy. These nodes are found worldwide, although specific “clusters” exist in the US, Germany, France, and so forth. Attempting to shut down all of these regions will prove incredibly difficult, as it is a logistical nightmare.
Additionally, there is a growing number of nodes that cannot be tied to a specific location. Known as “anonymous” nodes, these are usually operated via the Tor network. Using Tor offers an extra layer of privacy and anonymity while also supporting the broader Bitcoin network.
It has become increasingly easy to set up a full Bitcoin node on the network. All it takes is a Raspberry Pi device and a hard drive to get up and running. Anyone can complete this process without a few minutes, although it can take several days for the full blockchain copy to synchronize with the network.
The 51% Attack Method
Attacking the Bitcoin network – either as a hacker or a government – will require substantial preparation and a lot of money. The only viable approach is performing a 51% attack against the network to control the network permanently. To do so, someone needs to maintain 51% – or more – of the network hashrate to allow for transaction double-spending or prevent new transactions from being picked up by the thousands of miners worldwide.
Currently, the Bitcoin network represents 155 exohash/second of mining power. That is a lot of computer hardware pointed at one network to create more BTC and process transactions. To perform a 51% attack, a culprit needs to either “corrupt” 51% of the mining hashrate or bring an extra 51% in mining power online.
Both options are unfeasible, as corrupting miners and mining pools are very complex. There are currently 13 known mining pools, although some miners may be joining forces to create their own “mining farm”. Combining hardware will often yield a higher share of the network’s block rewards and transaction fees in the next network block. It could make sense to target the larger pools – F2Pool, Poolin, ViaBTC, and Antpool – but maintaining 51% of the network hashrate is complex. Individual miners can still switch to a different pool if they notice something is amiss.
The financial cost of procuring 51% of the Bitcoin network’s hashrate is immense. Whether one tries to corrupt pools, individual miners, or bring extra hardware online, the total cost will be several billion dollars, with no guarantee of success. Economically speaking, there is no incentive for anyone to attack or disrupt the Bitcoin network, not even for central banks or governments.
Governments Can’t Control Bitcoin
Unlike traditional financial systems, Bitcoin is not controlled by middlemen such as banks, governments, politicians, or technology companies. Instead, it is a decentralized and globally distributed network powered by individual users. These users can be quantified as node operators, miners, service providers, and regular enthusiasts. It is simply impossible for any government, politician, or bank to shut down the network.
More importantly, Bitcoin has never been hacked before, nor will that ever be the case. There have indeed been hacks affecting companies who deal with Bitcoin. That is very different, as every company presents a single point of failure in the technology industry. The Bitcoin network itself, called the blockchain, has never been tampered with by nefarious individuals.
As long as the internet persists, Bitcoin will be alive and well. All it needs is the internet, which is – by default – global and unlimited. Even if individual Internet Service Providers (ISPs) were to block access to the Bitcoin network, there would always be alternatives.
To make any lasting impact on the network, all ISPs worldwide will need to block access to Bitcoin at the same time. Even then, there is mobile internet, or even internet via satellite to explore. In the future, we may very well get an internet connection from space, adding another exciting layer to the Bitcoin network.
No Solid Plan to Shut it Down
There have been proposals to attempt and shut down Bitcoin. These proposals were put forward when the Bitcoin network was relatively new and posed little threat to the financial system. Even then, there was never any real support for the idea whatsoever. Governments and banks cannot influence the Bitcoin network in any capacity, no matter how hard they lobby.
What can happen, however, is governments curbing the use of Bitcoin and other cryptocurrencies. Again, this is not the same as shutting down the existing network. It is possible governments will prevent domestic companies from dealing with Bitcoin. Even so, those changes are never widespread and often reversed eventually.
Considering how there has never been a successful 51% attack against the network, it is not hard to see why no one can turn off Bitcoin. There is no “on/off switch” to toggle, allowing the network to achieve an uptime of as close to 100% as humanly possible. That said, there are always some [rather unlikely] scenarios that may disrupt the network either temporarily or permanently.
A global power outage, for example, could spell trouble for Bitcoin. However, it would also cripple the traditional financial system and everyone that ties into it. Our society relies on electricity for many things, and no longer being able to access Bitcoin is the least of concerns if there is a global outage. Even then, there are ways to broadcast Bitcoin transactions without the internet, albeit it is a bit tricky to do so.
Another potential scenario is a bug in Bitcoin’s code. The developers keep rolling out new updates and features, but there is always a chance of something going awry. In Bitcoin’s case, a critical bug can cripple the network permanently. It is an unlikely outcome, as all code is subject to thorough testing and peer-review. However, no software is ever 100% safe from such bugs.
It is worth noting governments could have shut down Bitcoin many years ago when the network was still young, and few people expressed an interest in it. That option is no longer on the table today.
Banning Bitcoin Won’t Help
One option several governments have exerted over the years is an attempt to ban Bitcoin. More specifically, these governments will prevent people from buying or trading BTC or use it as a payment method in a domestic setting. An intriguing approach, although one that falls short for many reasons. Preventing people from accessing something will only make them explore other ways to defy those orders.
In the long run, governments will more than likely introduce regulatory measures to protect users, similar to how the rules work in traditional finance. While not everyone may see merit in Bitcoin or other crypto-assets, they can not be ignored or “wished away”. Cryptocurrencies are here to stay, and it is best to deal with them head-on instead of preventing citizens from accessing alternative financial solutions.
There is no need to worry about an impending collapse of Bitcoin’s network now or in the future. What will happen if and when quantum computing comes around is anyone’s guess at this point. A lot can happen to threaten the current encryption standards, including those used by the Bitcoin network.
Until that happens, things will remain as they are today. Bitcoin is the dominant cryptocurrency and will not go away ever again. The same cannot be said for the current financial system. However, That seems to be on its last legs, without even realizing it.