On July 12, 2019, President Donald Trump tweeted about Bitcoin.
I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air. Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity….
— Donald J. Trump (@realDonaldTrump) July 12, 2019
He is the highest ranking US politician who has publicly registered dislike or disapproval of Bitcoin. He joins a growing list of politicians hostile to Bitcoin.
In May, the Nobel peace winning economist Joseph Stiglitz added his voice to the debate of whether Bitcoin and other cryptocurrency have a place in the global economy. He thinks the US dollar is the best currency society can ever have, and cryptocurrencies should be shut down.
In November 2015, JPMorgan Chase CEO Jimmie Dimon was quoted stating:
“Virtual currency, where it’s called a bitcoin vs a U.S. dollar, that’s going to be stopped. No government will ever support a virtual currency that goes around borders and doesn’t have the same controls. It’s not going to happen.”
Many more attacks on Bitcoin have come from Jimmie Dimon since then, even though JPMorgan does offer customers ways to invest in the cryptocurrency.
If you are planning to buy some bitcoins or invest in any asset it backs or a company that offers bitcoin-related services, then such verbal attacks, and in particular calls for it to be stopped, from high ranking politicians, award-winning academics and banking executives would most likely make you wonder ‘can the Bitcoin network be shut down?‘
What is at stake
The Bitcoin network is the peer-to-peer network of independent computers that participate in maintaining the Bitcoin shared ledger (or blockchain) through mining.
The Bitcoin network serves as the cryptocurrency’s backend server. It stores all transaction data and executes all the necessary operation code to make bitcoin payments possible.
Shutting it down could have worse results than shutting down the servers of a major global commercial bank.
The Bitcoin network holds a lot of value, both directly and indirectly. For starters, the market capitalization of its native currency (bitcoin) is above US$200 billion, and it is highly likely to double in the next few years, especially with the upcoming reward having in 2020 (reduces supply) and the general growing interest around the world (increases demand).
Also, there are Bitcoin derivatives that more investors are increasingly buying. This includes the likes of bitcoin futures and Bitcoin Exchange Traded Funds (ETFs.)
And, there are hundreds, if not thousands, of Bitcoin-related companies around the world. These entities have their own investors and, also important, employees who depend on them for a living.
Then there are other networks and decentralized applications that operate on top of the bitcoin network such as smart contract platform RSK, the Microsoft identity tool ION and the blockchain data provenance framework Factom.
Not to mention the fact that if the bitcoin network, which is the most secure of all blockchain network owing to its hashing rate, is shut down then there will be little faith in the other blockchain networks and most of them could most likely be abandoned by users in droves.
In short, a lot is at stake. If the bitcoin network was to be shut down, many people would count huge losses, and entire industries will be wiped out.
But why shut down the Bitcoin network?
And who has the motivation to shut down the Bitcoin network?
Bitcoin is not short of enemies who will rejoice if it ceased to exist. Of course, top on the list is governments. It has always been taken for granted that governments, through their agencies, have the monopoly on creating and determining how money is used in society.
Trump passes this exact message in his tweet about cryptocurrencies.
…and International. We have only one real currency in the USA, and it is stronger than ever, both dependable and reliable. It is by far the most dominant currency anywhere in the World, and it will always stay that way. It is called the United States Dollar!
— Donald J. Trump (@realDonaldTrump) July 12, 2019
Bitcoin threatens this monopoly as it takes the responsibility of issuing money from the hands of probably self-seeking entities into the hands of maths, cryptography and computer protocol, which reduces errors and manipulation.
The power to issue and manage money is one of the most powerful tools the government has. Therefore it will not take losing it kindly.
US Congressman Brad Sherman has alluded to this fact. In May 2019, he urged his colleagues to nip it in the bud (shut the Bitcoin network down.)
“An awful lot of our international power comes from the fact that the U.S. dollar is the standard unit of international finance and transactions….It is the announced purpose of the supporters of cryptocurrency to take that power away from us.”
The second category of those who most likely want the bitcoin network shut down are the banks and in particular the central banks. With permission from governments, banks create money through the fractional reserve system. They lend this money out and make huge profits.
In the last few years, many in the banking sector have registered their dislike and disapproval of bitcoin, and cryptocurrencies in general. Jimmie Dimon mentioned above is the most brazen.
Bitcoin enables people to be their own bank. The wallet you need to receive, hold and send bitcoins are open source applications that no one owns or controls. In addition, other applications that Bitcoin has made possible such as smart contracts provide the necessary tools for P2P financial services such as P2P credit.
The banking industry is worth trillions of dollars and those in charge of it will not cede part of their market and power without a fight.
Others who might have the reason and motivation to take the bitcoin network down are hackers. They might do it just for the fun of it or to prove that they can do it.
But can the bitcoin network be shut down?
As the technology stands now, it is not possible to shut down the bitcoin network. If it was, then it could have already been done.
The architecture of the Bitcoin network makes it impossible. The bitcoin network is decentralized. It doesn’t have a controlling center or a heart that can be taken out to paralyze it.
It is made of independent computers that communicate and form a consensus on transactions through a protocol implemented using open source software.
Can the bitcoin network be shut down using hash rate takeover?
The most promising way to attack the bitcoin network, and potentially shut it down, is to try to take control of more than 51% of the hashing power.
To understand how hashing power works on the Bitcoin network, read a post we published here.
If a single entity can accumulate 51% of the bitcoin network hash rate, it can then override the decision of other miners on the network. That includes influencing critical processes, in particular, the addition of new transactions. This entity can also afford to censor users of the network’s shared ledger.
An entity with 51% of the hash rate might even go back in history and make changes to the ledger (the blockchain), thus taking away its immutability. And that is not a good thing because one of the main strengths of Bitcoin is that its ledger is immutable. Once a record is made, it can’t be changed.
But how realistic is a 51% attack?
It is possible to accumulate enough computer power to have the majority of the hashing rate. In fact, a few times in the life of Bitcoin, some mining pools have come close to controlling 51% of the bitcoin network hash rate.
However, using it to shut down the bitcoin network is highly unlikely to succeed for the following reasons;
First, it costs a lot of resources to acquire bitcoin mining hash rate in terms of high power expensive mining rigs as well as electric power consumption.
This cost of entry provides the first layer of protection against this attack. For most people to invest in Bitcoin mining, there must be an ROI.
But that means a determined entity like government, whose ROI doesn’t have to be financial and that also has access to an enormous amount of funds it can use to acquire hash rate; this attack is doable.
But can bitcoin be stopped this way?
No. First, the entity, say government, should be willing and ready to compete with honest players, many of which are enthusiastic enough about the cryptocurrency to invest resources in hardware and software that supports it.
Most importantly, in the event they manage to gain 51% of the hashing power, the rest of the miners and the community can simply fork the blockchain to create a new branch and ignore the chain the attacker took over.
The attacker is then left with a branch that has no users, and that is after spending an enormous amount of resources without a return on investment as the rest of the network ignores them. Meanwhile, honest miners will hardly lose anything and will continue receiving the mining reward to cover their costs.
The Bitcoin community can keep forking as long as the attacker has resources to burn in pursuit of shutting down the Bitcoin network.
It is important to point out that the Bitcoin protocol is designed in a way that it pays to play by the rules. Breaking the rules in the consensus process leads only to losses.
What about quantum computing?
Can a quantum computer hack bitcoin?
There is a lot of concern that quantum computers are a threat to Bitcoin. The particular area of concern that quantum computers can hack bitcoin is in the cryptography that secures bitcoins in wallets. It is thought by many that the computer can do calculations fast enough to figure out a private key.
However, experts in the area have indicated that this is not a severe threat. In particular, because the exposure period is minimal and, more importantly, there are solutions to fix that.
Scientists from New Zealand’s Victoria University of Wellington have proposed making the blockchain have properties of a time machine using the concept of entanglement, first described by Einstein.
The other concern regarding quantum computers and the Bitcoin network is the possibility of it being used to produce a hash rate enough to launch a 51% attack. That it could calculate fast enough to change data on the shared ledger to the Genesis block.
This is hypothetical, of course. But it is essential to consider that quantum computers will be available to the rest of the bitcoin mining community. Therefore the only clear impact possible, in this case, is likely to be an increase in the mining difficulty.
Can the Bitcoin network be shut down by shutting down the Internet?
Shutting down the entire Internet itself seems like the surest way to shut down the Bitcoin network. Let’s imagine for a moment that the entire internet could be switched off, something totally impossible. Even that will not work as an infrastructure that makes the Bitcoin network use other channels such as radio waves to propagating data are being put in place.
In late 2017, blockstream, a blockchain solutions company, launched a satellite connection for the Bitcoin network. The company has formed partnerships that make it possible to use Bitcoin without the Internet.
But even with that safeguard, it is highly likely that the entire internet could be shut down just to kill Bitcoin. So it is safe to say bitcoin can’t be stopped this way. Even if two-thirds of the Internet is shut down maybe through a natural disaster like a massive asteroid hitting the earth, the part that will survive will have all the network memory intact.
Last but not least, it is counterproductive to shut down the Bitcoin network while over 2000 alternative cryptocurrencies (altcoins) exist. Some of the altcoins have even more robust privacy features. An excellent example of such kind of cryptocurrency is Monero. In fact, as more cryptocurrency are coming into the picture, Bitcoin is turning out to be the least dangerous to the old systems.