According to a new study conducted by Princeton University and Florida International University Bitcoin has a very dangerous threat. The joint study explains that the most popular virtual currency has a significant mining geographical centralization. China accounts for almost 75% of the total mining activities.
The study analyzed the threats posed by China to Bitcoin’s security, stability and viability. As per the study, one of the most powerful potential adversaries to this cryptocurrency is this giant Asian country since it can potentially influence it.
The researchers explain that 74% of the hash power used to Bitcoin is generated by Chinese mining pools. One of these companies is Bitmain. Additionally, the study explores different ways in which it can use the mining power located in the country to attack Bitcoin.
China has been very hostile with Bitcoin. Last year, the government decided to ban virtual currencies and trading activities. Initial Coin Offerings (ICOs) have also been banned.
The paper says that those mining pools that are managed by individuals based in China constituted over half of the total network hash power since 2015. Furthermore, 80% of Bitcoin mining until June was performed by six mining pools. Of those six pools, five were managed by Chinese companies.
At the same time, if these pools are located in China, a 51% attack could be possible if executed by the government. The Chinese government has always attacked freedom on the internet. Moreover, different agencies operate extensive surveillance and censorship.
Although mining capabilities do not allow the Chinese government to completely destroy the network, it can combine it with different tools to harm the network and Bitcoin markets.
On the matter, the exchange informed:
“We conclude that China has mature capabilities and strong motives for performing a variety of attacks against Bitcoin.”
Clearly, Bitcoin represents the opposite view compared to Chinese centralization. While Bitcoin is a decentralized network, the Chinese government did everything as possible to control every market in the country as possible.
The study concludes that China is a threat to Bitcoin. However, if the government decides to start mining virtual currencies or attacking the network, other miners around the world could defend Bitcoin’s blockchain by adding more hashing power.