BitCoin and the 51% attack vector

Despite vague assurances back in January 2014 about limiting the power of their network, GHash.io have yet again hit 51% of hash mining, this time for extended periods.

BitCoin is no different from any system: it is open to abuse from coercion, greed and corruption. The weak link is always human. Although the community have raised valid concerns in the light of alleged double-spending attacks against gambling sites, almost all of the trust in such a decentralized currency is based on the notion that nobody from within would want to undermine the system because they’d lose out (either in terms of investment in hardware, resources, time, money, or future business growth).

What has yet to be addressed is a concerted effort by external influences who might want to destabilise, discredit or otherwise disrupt the harmony of a fledgling currency that is bound to hit a few road bumps in its development. I can think of a few, such as *cough cough* fiat currency printers, financiers, banks, governments, policy makers, bond issuers, … and as we’ve seen time and again, such people are masters at preserving their own controlling interests.

This problem is not unique to BitCoin of course. It’s the same for any fiat currency: it’s only as good as the faith that people put in it to deliver “worth”. Stocks and economies can collapse at any time due to rumours. The choice of image from Trading Places at the top of the above linked article is not random.

Shills are rife on Internet forums and within traditional television and radio media in general, undermining Good Things in the name of self-preservation, and I suspect BitCoin is one such target. If enough bad publicity and doubt is cast upon its nature, people will default to the “safe” hegemony we have today instead of allowing a revolutionary change to the balance of power to take place.

Long term, BitCoin may not be the answer. Perhaps it is flawed and a better system may be born in the wake of such stories. But the thing it has going for it is the resilience and momentum of the community at large who all have a vested — and controlling — interest in its development and stability.

Caving now to pressure for:

1. privatisation of the network
2. regulatory involvement by governments or some “independent” external body
3. forking the codebase (a.k.a. ‘divide-and-conquer’ which was a widely used technique to reduce the threat from mis-labelled “conspiracy theorists” in the aftermath of 9-11)

are just knee-jerk reactions to sustained pressure from these threats. If the community can hold together, think rationally, ride out the storms and innovate around the problems, the panacea of a set of truly decentralized, stable currencies can take a step further towards fruition.