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China will nationalize the domestic miners and treat Bitcoin as a commodity asset that the state controls. I believe this will immediately cause a constriction

China will nationalize the domestic miners and treat Bitcoin as a commodity asset that the state controls. I believe this will immediately cause a constriction in supply as those coins will not be sold at least initially on the open market. Look for this messaging to coincide with the pronouncements around the new five-year plan(FYP)[1]. As the first major section of the 13th FYP, innovation is emphasized as a cornerstone of China’s development strategy.[2] Bitcoin is a technology and has already come along way from the Satoshi whitepaper. State-Owned Enterprises will be emphasized as they strengthen SOEs as national champions at home and abroad and protect their interests in this emerging blockchain space. The goal of the One Belt, One Road (OBOR) initiative is to facilitate access to natural resources and encourage economic development in China’s poorer western provinces. While such an initiative can continue without bitcoin, it is interesting to think of how OBOR would be strengthened on the world stage with an instantly settled mechanism such as bitcoin behind its infrastructure. [1] https://en.wikipedia.org/wiki/19th_National_Congress_of_the_Communist_Party_of_China https://en.wikipedia.org/wiki/19th_National_Congress_of_the_... [2] https://www.uscc.gov/sites/default/files/Research/The%2013th%20Five-Year%20Plan.pdf https://www.uscc.gov/sites/default/files/Research/The%2013th...

ComodoHacker 9y ago
>China will nationalize the domestic miners and treat Bitcoin as a commodity asset that the state controls Sounds like a good reason for a fork.
- stefano 9y ago
  But if China has the majority of mining power, they can start mining your fork and do as they please with it.
  - che_shirecat 9y ago
    which (at this point in time and in the foreseeable future) they definitely do.
  - flyGuyOnTheSly 9y ago
    Then you fork to proof of stake or another proof that mining-power alone cannot control.
    - tannerbrockwell 9y ago
      I agree that centralization is antithetical to Bitcoin, game theory says that it is to China's advantage to mine for profit. I believe they will want to mine and hodl, vs sell immediately to cover costs. Think of it as their strategic crypto reserve... how much is enough to float an e-yuan?
  - ComodoHacker 9y ago
    This would be a good test for the whole concept of decentralized cryptocurrency and Bitcoin design in particular.
  - relyio 9y ago
    Bitcoin could hard-fork to a memory-hard algorithm (like Lyra2RE), or even change to any hashing algorithm for which ASICs don't exist yet. Even if they switched to Scrypt (from SHA256) for which dedicated hardware exist, it would cost them millions of dollars and require months of manufacturing re-organization to get to their share of hashrate. Of course, the miners would still be able to mine the old fork and at that point it is more likely that an altcoin (like Ethereum, Litecoin or Vertcoin) would eat up Bitcoin's marketshare.
tboyd47 9y ago
Interesting theory but how can China control Bitcoin if there's nothing stopping people in other countries from mining it?
- howlin 9y ago
  The majority of the hash power is in China. If China can seize the miners all at once, they'll have control over the blockchain. At that point, other countries would be foolish to compete, and may focus on alternate alt currencies.
  - tboyd47 9y ago
    But they still can't change the blockchain. And there would still be miners outside of China.
    - XR0CSWV3h3kZWg 9y ago
      If you control 50 + epsilon percent of the hash power you can censor blocks at will. You can ignore every block that anyone else makes and still have the longest chain.
      - tboyd47 9y ago
        Except for the fact that they can still get confirmation from the other 50 - epsilon percent. Having 51% of hash power doesn't mean you mine 100% of blocks. That's not how Bitcoin works. With 51% you will probably mine around 51%.
        Dylan16807 9y ago
        You're forgetting that every miner chooses how they mine. Someone with 51% hash power can decide to always mine on top of their previous block, ignoring what everyone else does. And because the 51% chain is longer, the 49% chain get discarded by any miner following default bitcoin rules. So the effective block rate gets slowed down, and the person with 51% of the power has control of 100% of the canonical blocks.
schintan 9y ago
If China is able to do it, wouldn't Bitcoin lose all its value ?
- DINKDINK 9y ago
  No. Miners can only double spend transactions if they have > 50 % of the hash rate. The only purpose of miners is to add proof of work to in exchange for new coins that users value. If the proof of work is on a chain that contains valid transactions and conforms to consensus rules, it'll be valuable.
  - namelost 9y ago
    Bitcoin is not the only game in town, there would be a mad scramble to Ethereum et al.
    - DINKDINK 9y ago
      I prefer a blockchain that is immutable, has controlled inflation. Bitcoin users can always choose a different PoW algorithm if a threat actor coerces too high of a percentage of SHA256 mining equipment
  - tboyd47 9y ago
    But that would just create an invalid side chain and result in all the miners' hash power being wasted. https://bitcoin.stackexchange.com/questions/55316/what-happens-if-a-miner-publishes-a-block-which-contains-an-invalid-transaction https://bitcoin.stackexchange.com/questions/55316/what-happe...
    - freeloop2 9y ago
      Your link doesn't address the question. It's about an invalid transaction within the block, not the refusal to place a particular transaction into one. With over 50% of mining power you can definitely do this.
      - 9y ago
XR0CSWV3h3kZWg 9y ago
Interesting theory. I don't like the idea of 2/3rds of the hashpower to be owned by one player. 50% hash power means not only the ability to double spend, but also to censor txs. If someone else mines a block they don't like they can just ignore that block and eventually get the longer chain.
- coryfklein 9y ago
  > 50% hash power means not only the ability to double spend, but also to censor txs. If someone else mines a block they don't like they can just ignore that block and eventually get the longer chain. This is not true if you just have 50%. You'd have to consistently win the next block for double spending to be reliable, and users would just be wary to wait for more confirmations before accepting payment. Besides, if China takes over all bitcoin exchanges and mining in China, that changes the "bad news" to huge positive news and basically a Bitcoin endorsement by a major world power. Once that happens the value of bitcoin would likely increase at a rate such that maintaining even a 50% hold on hash power would be difficult for a single player.
flatfilefan 9y ago
Why a disruptive nationalisation should be better than just buing the bitcoins on the open market? Or investing into the new rigs itself?

ComodoHacker 9y ago

>China will nationalize the domestic miners and treat Bitcoin as a commodity asset that the state controls Sounds like a good reason for a fork.

stefano 9y ago
But if China has the majority of mining power, they can start mining your fork and do as they please with it.
- che_shirecat 9y ago
  which (at this point in time and in the foreseeable future) they definitely do.
- flyGuyOnTheSly 9y ago
  Then you fork to proof of stake or another proof that mining-power alone cannot control.
  - tannerbrockwell 9y ago
    I agree that centralization is antithetical to Bitcoin, game theory says that it is to China's advantage to mine for profit. I believe they will want to mine and hodl, vs sell immediately to cover costs. Think of it as their strategic crypto reserve... how much is enough to float an e-yuan?
- ComodoHacker 9y ago
  This would be a good test for the whole concept of decentralized cryptocurrency and Bitcoin design in particular.
- relyio 9y ago
  Bitcoin could hard-fork to a memory-hard algorithm (like Lyra2RE), or even change to any hashing algorithm for which ASICs don't exist yet. Even if they switched to Scrypt (from SHA256) for which dedicated hardware exist, it would cost them millions of dollars and require months of manufacturing re-organization to get to their share of hashrate. Of course, the miners would still be able to mine the old fork and at that point it is more likely that an altcoin (like Ethereum, Litecoin or Vertcoin) would eat up Bitcoin's marketshare.

tboyd47 9y ago

Interesting theory but how can China control Bitcoin if there's nothing stopping people in other countries from mining it?

howlin 9y ago
The majority of the hash power is in China. If China can seize the miners all at once, they'll have control over the blockchain. At that point, other countries would be foolish to compete, and may focus on alternate alt currencies.
- tboyd47 9y ago
  But they still can't change the blockchain. And there would still be miners outside of China.
  - XR0CSWV3h3kZWg 9y ago
    If you control 50 + epsilon percent of the hash power you can censor blocks at will. You can ignore every block that anyone else makes and still have the longest chain.
    - tboyd47 9y ago
      Except for the fact that they can still get confirmation from the other 50 - epsilon percent. Having 51% of hash power doesn't mean you mine 100% of blocks. That's not how Bitcoin works. With 51% you will probably mine around 51%.
      - Dylan16807 9y ago
        You're forgetting that every miner chooses how they mine. Someone with 51% hash power can decide to always mine on top of their previous block, ignoring what everyone else does. And because the 51% chain is longer, the 49% chain get discarded by any miner following default bitcoin rules. So the effective block rate gets slowed down, and the person with 51% of the power has control of 100% of the canonical blocks.

schintan 9y ago

If China is able to do it, wouldn't Bitcoin lose all its value ?

DINKDINK 9y ago
No. Miners can only double spend transactions if they have > 50 % of the hash rate. The only purpose of miners is to add proof of work to in exchange for new coins that users value. If the proof of work is on a chain that contains valid transactions and conforms to consensus rules, it'll be valuable.
- namelost 9y ago
  Bitcoin is not the only game in town, there would be a mad scramble to Ethereum et al.
  - DINKDINK 9y ago
    I prefer a blockchain that is immutable, has controlled inflation. Bitcoin users can always choose a different PoW algorithm if a threat actor coerces too high of a percentage of SHA256 mining equipment
- tboyd47 9y ago
  But that would just create an invalid side chain and result in all the miners' hash power being wasted. https://bitcoin.stackexchange.com/questions/55316/what-happens-if-a-miner-publishes-a-block-which-contains-an-invalid-transaction https://bitcoin.stackexchange.com/questions/55316/what-happe...
  - freeloop2 9y ago
    Your link doesn't address the question. It's about an invalid transaction within the block, not the refusal to place a particular transaction into one. With over 50% of mining power you can definitely do this.
    - 9y ago

XR0CSWV3h3kZWg 9y ago

Interesting theory. I don't like the idea of 2/3rds of the hashpower to be owned by one player. 50% hash power means not only the ability to double spend, but also to censor txs. If someone else mines a block they don't like they can just ignore that block and eventually get the longer chain.

coryfklein 9y ago
> 50% hash power means not only the ability to double spend, but also to censor txs. If someone else mines a block they don't like they can just ignore that block and eventually get the longer chain. This is not true if you just have 50%. You'd have to consistently win the next block for double spending to be reliable, and users would just be wary to wait for more confirmations before accepting payment. Besides, if China takes over all bitcoin exchanges and mining in China, that changes the "bad news" to huge positive news and basically a Bitcoin endorsement by a major world power. Once that happens the value of bitcoin would likely increase at a rate such that maintaining even a 50% hold on hash power would be difficult for a single player.

flatfilefan 9y ago

Why a disruptive nationalisation should be better than just buing the bitcoins on the open market? Or investing into the new rigs itself?