Welcome to the weekend, folks. Grab a coffee and let’s recap the biggest news stories of the week in cryptocurrency and blockchain.
China Has “Capability” and “Motive” to Destroy Bitcoin, According to Report
A new report this week claims China could destroy Bitcoin. The report, authored by researchers at Princeton University and Florida International University outlines 19 different ways China could attack the Bitcoin network.
Is it based in truth?
Theoretically, yes. The report points to the fact that 74% of Bitcoin mining hash power comes from China. And five of the six largest Bitcoin mining pools are located in the country.
If those mining pools collectively orchestrated a 51% attack, they would control the network, and bring it down if they wish.
However, it’s important to point out that the Chinese government doesn’t own these mining pools. And the mining pools themselves have little incentive to execute a 51% attack (it would kill the value of bitcoin, making their efforts worthless).
What is concerning is the level of Bitcoin centralization in China.
The report goes on to explain how China’s “Great Firewall” appears to give Chinese miners an advantage. It slows down miners outside China and incentivizes those within the firewall to generate “empty blocks” (the blocks contain no transactions, but the miner receives a bitcoin reward anyway).
This, coupled with cheap electricity in China, is centralizing mining power in one country. And that’s a problem.
Note: the report in question has not yet been peer-reviewed.
Venezuela Is Forcing Citizens to Use Its Controversial Cryptocurrency to Buy Passports
As Venezuela’s fiat currency, the bolivar, soars towards 1,000,000% inflation, the government is putting its faith in a state cryptocurrency, petro.
The petro was created by the Venezuelan government and its value is backed by the country’s oil price to keep it stable. Citizens are now required to pay for passports and renewals using only the petro cryptocurrency.
But the petro isn’t without controversy. Its creators have been accused of ripping off the Dash whitepaper. The US government has also accused Venezuela of using the petro to defraud investors, and critics say the petro pre-sale didn’t generate nearly as much as the Venezuelan government claims.
Cryptocurrencies Pose No Risk to Global Financial Stability
In somewhat brighter news, a report this week concluded that cryptocurrencies are not a risk to the global financial system.
However, it does go on to say there may be a tipping point in the future.
If they continue to grow, the report claims, cryptocurrencies may one day pose a threat to the reputation of current banks and financial systems. There may be a risk of exposure if traditional banks adopt crypto on a wider scale.
And there may be risky consequences if bitcoin or other cryptocurrencies become a common payment method.
The cryptocurrency market suffered an epic $16 billion wipeout on Thursday. It took place in just a few hours, dragging bitcoin down 4%.
That’s all for this week. We’ll be back bright and early on Monday.
Learned something new in this article? Subscribe to the Block Explorer newsletter.