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It's unclear what will happen, though it's possible China's moves long-term will increase Bitcoin's value because they'll use it as a financial tool both within

It's unclear what will happen, though it's possible China's moves long-term will increase Bitcoin's value because they'll use it as a financial tool both within China and outside of China. Given that China warned the miners of their intent in advance of the public disclosure, there's reason to speculate they did this to partner with them to control Bitcoin.

runeks 10y ago
> Given that China warned the miners of their intent in advance of the public disclosure, there's reason to speculate they did this to partner with them to control Bitcoin. How so? The worst they can do is mine empty blocks. This doesn't constitute controlling Bitcoin, but rather executing a continuous denial-of-service attack against it.
- EdHominem 10y ago
  And yet the market dynamics of that wouldn't be all that bad. They'd never get 100% of the blocks, so all they'd be doing is slowing down the flow of transactions and increasing the fees (because people would be paying for fewer spots in the non-DoS blocks, which would incentivize other miners. Bitcoin scales fees, instead of scaling transactions/second, so for a while it wouldn't be economical to use it for small purchases where the fees would be almost as much as the price, but for larger purposes, and as a store of value, it'd work just as well.
  - runeks 10y ago
    I agree that it wouldn't be all that bad, but I disagree that they can't cause a complete standstill if they want to. If they have more than 50% of mining power, they simply refuse to build on top of the honest blocks (from the rest of the network). The clients will follow the longest chain. However, it's a costly attack to maintain in electricity alone -- with a dwindling income, since your income is denominated in the currency you're attacking -- and it wouldn't take that long for bitcoiners to get sufficiently pissed and change the hashing algorithm, thereby disarming this attacker completely.
    - bduerst 10y ago
      If the goal was to cause a complete standstill, then they wouldn't need to take over the mining, all they would need to do is flood the network with transactions with minimal fees. Not hard to do for someone who manipulates currencies and has large cash reserves. The miners would keep mining but Bitcoin users wouldn't be able to get a transaction through unless they paid a large transaction fee.
      - jcoffland 10y ago
        Today's mining software already ignores transactions like this. Miners select the highest paying transactions first. When the block is full they ignore the rest until the next round. This makes flooding the market expensive.
        bduerst 10y ago
        >Not hard to do for someone who manipulates currencies and has large cash reserves.
        jcoffland 10y ago
        Sure you could push the transaction cost up for a little while if you're into throwing money away.
        bduerst 10y ago
        It's not throwing away if you were going to flood that currency anyways, and just used BTC instead of gold as the intermediary. I did the math above, and if you wanted to save money on attacking the network with your own mining, you could spend up to $71 per transaction on every transaction.
        jcoffland 10y ago
        You must not be very good at math.
- politician 10y ago
  No, the worst case is that they require their population to go through approved exchanges and to only use government issued Bitcoin addresses assigned to each individual.
  - runeks 10y ago
    Oh, right, I see. Control Bitcoin as in control the use of it within China. I'm sure they can prevent the open use of Bitcoin in China, if that's what they want. But it seems to me that if people really are using it to avoid capital controls and/or Yuan depreciation, preventing consumer-to-merchant transactions isn't going to change that.
    - nl 10y ago
      This is about controlling consumer to exchange transactions in China.

runeks 10y ago

> Given that China warned the miners of their intent in advance of the public disclosure, there's reason to speculate they did this to partner with them to control Bitcoin. How so? The worst they can do is mine empty blocks. This doesn't constitute controlling Bitcoin, but rather executing a continuous denial-of-service attack against it.

EdHominem 10y ago
And yet the market dynamics of that wouldn't be all that bad. They'd never get 100% of the blocks, so all they'd be doing is slowing down the flow of transactions and increasing the fees (because people would be paying for fewer spots in the non-DoS blocks, which would incentivize other miners. Bitcoin scales fees, instead of scaling transactions/second, so for a while it wouldn't be economical to use it for small purchases where the fees would be almost as much as the price, but for larger purposes, and as a store of value, it'd work just as well.
- runeks 10y ago
  I agree that it wouldn't be all that bad, but I disagree that they can't cause a complete standstill if they want to. If they have more than 50% of mining power, they simply refuse to build on top of the honest blocks (from the rest of the network). The clients will follow the longest chain. However, it's a costly attack to maintain in electricity alone -- with a dwindling income, since your income is denominated in the currency you're attacking -- and it wouldn't take that long for bitcoiners to get sufficiently pissed and change the hashing algorithm, thereby disarming this attacker completely.
  - bduerst 10y ago
    If the goal was to cause a complete standstill, then they wouldn't need to take over the mining, all they would need to do is flood the network with transactions with minimal fees. Not hard to do for someone who manipulates currencies and has large cash reserves. The miners would keep mining but Bitcoin users wouldn't be able to get a transaction through unless they paid a large transaction fee.
    - jcoffland 10y ago
      Today's mining software already ignores transactions like this. Miners select the highest paying transactions first. When the block is full they ignore the rest until the next round. This makes flooding the market expensive.
      - bduerst 10y ago
        >Not hard to do for someone who manipulates currencies and has large cash reserves.
        jcoffland 10y ago
        Sure you could push the transaction cost up for a little while if you're into throwing money away.
        bduerst 10y ago
        It's not throwing away if you were going to flood that currency anyways, and just used BTC instead of gold as the intermediary. I did the math above, and if you wanted to save money on attacking the network with your own mining, you could spend up to $71 per transaction on every transaction.
        jcoffland 10y ago
        You must not be very good at math.
politician 10y ago
No, the worst case is that they require their population to go through approved exchanges and to only use government issued Bitcoin addresses assigned to each individual.
- runeks 10y ago
  Oh, right, I see. Control Bitcoin as in control the use of it within China. I'm sure they can prevent the open use of Bitcoin in China, if that's what they want. But it seems to me that if people really are using it to avoid capital controls and/or Yuan depreciation, preventing consumer-to-merchant transactions isn't going to change that.
  - nl 10y ago
    This is about controlling consumer to exchange transactions in China.