Fearless honey badger, known for the ability to survive the bites of poisonous snakes, no wonder has become a living mascot of bitcoin — during the years of its history the first cryptocurrency has experienced so many hacking attempts, internal conflicts and the attacks of the critics that has earned the reputation’s antifragile system. This term was invented by the economist Nassim Taleb, using it to describe phenomena that adverse conditions benefit:
«There are things and phenomena that shake-up is good; they blossom and develop in the face of variability, randomness, disorder, stressors, feelings of love, risk and uncertainty. Anthropole — not the same as elasticity, flexibility or invulnerability. Flexible or elastic confronts adversity and remains the same; antichrome, passing through trials, it only gets better.»
Thus, perhaps the most reliable way to kill bitcoin is to cease to doubt him. But in our world the furious competition of currencies traditional currencies, other cryptocurrencies, precious metals — is very unlikely, and we are likely to see many attacks on bitcoin and claims that «bitcoin is dead».
If you think that you can destroy the first cryptocurrency, it is possible to allocate three groups of attacks:
- Designed to slow the spread of bitcoin;
- Aimed at the destruction of the infrastructure of bitcoin;
- Aimed at slowing the development of bitcoin.
Here are eight ways to kill bitcoin, slowing down its spread.
When the authorities restrict bitcoin the law, they punish users. In many small countries, the bitcoin was banned (Afghanistan, Algeria, Bangladesh, Bolivia, Ecuador, Morocco, Macedonia, Vanuatu and Vietnam), but outside of these States it is almost anything is not affected.
Another thing a ban in one country first row (USA, EU, China), but this has not yet occurred; perhaps we will see something similar in Russia, where the legal status of cryptocurrencies is in question.
We have seen that the rumors about bans in large countries, particularly China and South Korea, cause price reductions, sometimes significant, but it stimulates the market development in other countries. Yes, a price decrease leads to loss of the owners of the cryptocurrency, but encourages others to use it. Please note — the price of bitcoin fell, but it is fully functional.
2. The ban of bitcoin
We can point to pursue the known users of cryptocurrencies, but not allow anyone to use the system is technically impossible. Blockstream satellites now broadcast a signal to America, Africa and Western Europe, and soon the coverage will be global, so that inexpensive satellite dish will allow you to communicate with the blockchain, even if such traffic is prohibited in one country or another.
In addition, there are methods of masking the blockchain messages through Tor, SMS, encrypted emails or any text messages, you can also use steganography, hiding the desired sequence into a harmless graphic image.
According to renowned entrepreneur and preacher of cryptovirology Andreas Antonopoulos, these kittens 550 thousand encoded bitcoin transaction
Thus, the ban of bitcoin — a losing game for the government, because the code changes much faster than laws. Even the attack on bitcoin at the UN and WTO will probably only lead to going underground, and at the same time provokes development of new methods for hidden information transfer. This will increase the value of the cryptocurrency, as happens with other forbidden things, like drugs.
With regard to the prosecution of dealers or other players, this is definitely happening: we can recall sitting in jail Ross Ulbricht, accused of creating a trade darknet site silk road, and Charlie Srama, who was charged with illegal transportation of money.
Nevertheless, we see that, despite the sad fate of Ulbricht and Crema, and decentralized exchange, and underground trading platform live and thrive. It seems that these legal risks do not stop users, and only encourage them to develop more sophisticated technical tools.
Usually this term refers to hacker attacks and manipulation of public opinion in social networks in the performance of the actors relevant to the state. But we’ll talk about the hacks in General, whoever they may be doing individual, group, or governmental structure.
Until now, bitcoin has proven resistant to such interventions, despite the huge financial incentive on the side of the attackers because of its decentralized nature and the system proof of performance.
If a hacker tries to run a transaction changed AT the bitcoin code, such records will be immediately rejected by the network, and the more the network of independent nodes (over 12 thousand), the less likely it is that such an attack would work.
To modify a record in the blockchain, you need to control more computational power than all bona fide miners. And even in this case you can change the algorithm proof of performance in response to the attack, thus devalued a huge investment in equipment.
Unfortunately, all of the above applies only to the bitcoin, but not serving its services or its users.
4. Cyber attacks slowing the spread of cryptocurrencies
For many years we have read of periodic break-ins of major cryptocurrency exchanges, including Mt.Gox and Bitfinex — in amount at different times it was stolen more than 1 million bitcoins. Of course, these hacks affect the popularity of the system, because, once lost money, people may not want to risk again.
The situation is compounded by the fact that the media does not specialize in technology often increases the damage to the reputation of crypto currency without sharing the hacking of a company working, for example, with bitcoin, and bitcoin itself, which, of course, generates in society skepticism about the security of cryptocurrency.
5. State hunting users ‘ personal data
States are increasing pressure on business, causing the services to give out personal user data required to identify them — this is done to combat money laundering. However, it is difficult to say how these measures affect the popularity of bitcoin as ways to buy and sell it anonymously still.
It is important to keep in mind that telling your personal information to service users risk — if the merchant’s site is hacked, their information can be stolen, and this, in turn, could lead to a massive attack (online or offline) to bitcoin users. In addition, customer information may require the tax authorities, as recently happened to Coinbase.
Public opinion habitually associates bitcoin with crime, and this card again and again cast as the leading media and policy. In 2017, a survey was conducted, which showed that the majority believes that bitcoin is more often used for crime than for legitimate purposes. Actually it is not, and probably legitimate transactions is significantly prevail in the system.
If you think it is easy to understand that the traditional currency to a much greater extent involved in illegal turnover — studies show that in darknet mainly sell soft drugs, i.e. marijuana and ecstasy, and a recent report by Europol did not provide any evidence of the use bitcoin to Finance terrorism.
7. Financial attack
This category can be attributed, in particular, the creation of a competing cryptocurrency controlled by the state — an example is the recently established Venezuelan El Petro. Although, perhaps, the competition in this particular case, can not speak, because while the new currency did not gain popularity and has no economic value.
If you can imagine a cryptocurrency, backed by a more powerful country with developed Finance and advocacy opportunities, the results can be quite different. Moreover, such a cryptocurrency will probably be centralized, in contrast to bitcoin, but however that will partially displace it from the market.
8. Parasitism in the title
There is at least one striking example of alternative cryptocurrencies, confusing users — breakaway bitcoin Bitcoin Cash. This is the most coherent and well-funded attack of this kind, consisting of the following elements:
- Pumping means competing centralized cryptocurrency (Bitcoin Cash Melnitsa almost exclusively by Bitmain) that it has surpassed the original in terms of capitalization.
- Large-scale market manipulations designed to spread fear and uncertainty in bitcoin (many against bitcoin articles in the section /btc on Reddit).
- The artificial creation of public and political opposition to bitcoin. It is argued that a Bitcoin Cash — this is the «real bitcoin» because it satisfies some perverse interpretation of the ideas of Satoshi Nakamoto. The bitcoin, they are often referred to as Bitcoin Core.
- The fragmentation of a large user community — section /btc on Reddit was separated from bitcoin under the pretext of censorship after the failed attempts to hold the various options for partitioning the network.
- Control of a large community of users. Unfortunately, the supporters of Bitcoin Cash control account #Bitcoin on Twitter, and domain Bitcoin.com and these seemingly official sources of information to confuse newbies.
Yes, for some users this «evil twin» successfully misled, but probably shortly after the beginning of operation of the system Lightning, technical and economic merits of bitcoin will become so obvious that doubts will come to naught.
A cyber attack on the network
If a spam attack, that is, to create a large flow of transactions, it would slow down the network and cause the increase of payment for the transaction — and such attacks were carried out several times. Most of them win fans altcoins, and in particular, currencies that broke away from bitcoin. Their supporters are referred to as the main reasons for creating separate projects, the high cost of using bitcoin.
Thus, organizing spam attacks on the Bitcoin network, direct competitors, for example Bcash, explain the need for its currency. Often these attacks occur in parallel with a PR attack in a traditional and not quite traditional media and in social networks.
Spam attacks are easily detected by a sharp increase in the number of transactions
If this happens in a period of high demand, for example, sharp fluctuations in prices, users are very unhappy. The cost and difficulty of organizing such attacks increases due to network upgrades — SegWit before and Lightning Network in the near future. Scales better than bitcoin, the more expensive a similar attack — with one exception…
If the spam attack conspired to commit the miners, they can recover a substantial portion of the increased commissions, as paid-they are in this case themselves. While for other users the Board will rise and the miners will receive additional income from the increased prices.
However, it is known as the attack 51%, contrary to the long-term economic incentives of miners, since such action could scare away users, to reduce the activity of the bitcoin network and the value of the cryptocurrency, which compensates for momentary received earnings.
Such economic incentives prevent many other possible attacks on the part of the miners. However, against the centralization of bitcoin mining and production of equipment for him, the Chinese company Bitmain, a fear of attack from the funded States miners.
The dominance of the dollar as the global reserve currency is likely over, and some believe that bitcoin can, at least partially, to replace him in this capacity. Such events could induce the Chinese government to force their miners to act for political purposes and against their commercial interests. However, given the fact that the people’s Bank of China reduces the supply of miners and scatters them around the country, they don’t seem to materialize this scenario in the near future.
There are several known types of attacks, which can cause failures in the network: this is Sybil (about the signature when interacting nodes), tailgating (manipulation of the timestamp of the transaction) and DoS (denial of service). These attacks require large amounts of computing resources, but their effects are not very large: most users of bitcoin are banned automatically correctly behaving nodes.
Given that now in the network there are about 12 thousand active nodes to have a noticeable effect, the attack must be very expensive and expertly organized.
A high-level cyber attacks
In August 2010, was used the so-called zero-day vulnerability, that is, previously unknown, associated with the overflow values was then created 184 billion bitcoins superfluous. The mistake was corrected five hours, the blockchain was forked, and incorrect transaction is destroyed.
The consequences of the incident were small only because at the time bitcoins were used by few people — now, this incident would have turned into chaos, major loss and blow to the reputation of cryptocurrencies.
If it has found a vulnerability in one of the cryptographic algorithms used in the network, for example, SHA-256 (used in the implementation of the algorithm proof of performance) or ECDSA secp256k1 (used in the mechanism of public and private keys) — it will be a disaster, requiring immediate updates, and the problem will affect not only bitcoin.
Some security experts predict that within 10 years quantum computing will be able to break the encryption of bitcoin, but if this prospect becomes real, the network is likely to switch to stronger algorithms.
There are other attacks that, if you believe Edward Snowden can be quite a force government agencies like the American NSA. For example, they can force a major supplier of equipment to embed a particular vulnerability in the processor or the OS — it is known that all the major tech companies in Silicon valley, including Microsoft, Apple, Google and Facebook, for years cooperated with the secret services.
Newly discovered vulnerabilities Meltdown and the Spectre in modern processors can be used to compute the private keys of Bitcoin even on a secure system with open source. This can be prevented using a hardware wallet, but the security services can be persuaded to cooperate and major provider of the software or hardware for bitcoin wallets.
It is known that in the past these agencies were implemented in various systems carefully hidden vulnerability, and concern about this increased after 2011, when a former kernel developer IN the bitcoin Gavin Andresen called for the CIA. However, given the number of experts, analyzing the code of bitcoin, hide in it something like that it would be extremely difficult.
So: we realized that the rich and the competent authority may cause significant harm to bitcoin. However, since it would reveal their capabilities and methods are likely for such an attack needs a strong political motivation.
How to slow down the development of bitcoin
A good example of attempts to prevent the necessary update can be considered a story with Bitmain. This company tried to block softpark SegWit because the update would result in the inability to further exploit latent vulnerability Mining AsicBoost. Ultimately, despite the financial resources Bitmain and their near-monopoly on mining, the other participants managed to cope with them.
Forum /btc on Reddit often attacked by someone from the bitcoin developers — most of Greg Maxwell’s or Luke Dasra, but usually it has no consequences, except messages in social networks or notes on Bitcoin.com.
Although the loss of leading developers, no doubt, would stagnate the development of the network in the worst case it would mean stop, not a setback. A much more dangerous scenario is if the attacker get direct control over one of the most influential developers, who will receive a development dead-end road.
Bitcoin is invulnerable?
It seems that bitcoin is ready to rise indefinitely, but let’s not be too optimistic. You can destroy everything, including bitcoin. Fortunately, given its architecture, already passed the test and the current macroeconomic situation, it is extremely unlikely.
A real stress test may be the next financial crisis.