Bitcoin

Over the past few years, Bitcoin has experienced a huge number of attacks and external criticism, getting a reputation of Antifragile. This term was coined by Nassim Nicholas Taleb and describes the phenomenon when something becomes popular under unfavorable conditions.

“Some things benefit from shocks; they thrive and grow when exposed to volatility, randomness, disorder, and stressors and love adventure, risk, and uncertainty. Yet, in spite of the ubiquity of the phenomenon, there is no word for the exact opposite of fragile. Let us call it antifragile.”- says Taleb.

From this point of view, probably, in order to kill Bitcoin, you just have to stop criticizing it. However, in the world of constantly competing currencies and precious metals, this is very unlikely to happen.

Attacks on Bitcoin: Past, Present, and Future

Several months ago, the user of the Reddit network, under the nickname themetalfriend, compiled a list of all attacks that can be aimed at killing Bitcoin. In his opinion: there are three most common types of attacks on Bitcoin:

  • Attacks to slowdown the Bitcoin development
  • Attacks to slowdown the Bitcoin adoption
  • Attacks to reduce the efficiency of the Bitcoin infrastructure

From all the above it follows that all three types of attacks are interrelated. At the very least, they lead to the same result. Let’s consider each of them in more detail.

To ‘Kill’ Bitcoin

Legal attacks

By imposing bans on using Bitcoin, governments can cause some inconvenience to the owners of the cryptocurrency. Bitcoin was banned in many countries, particularly in Ecuador, Afghanistan, Morocco, Vietnam, Bangladesh, and Bolivia, but these bans did not bring any results. At the same time, such countries like the United States and the European Union countries, do not even plan to prohibit cryptocurrencies.

In China and South Korea, even banal rumors about the possible prohibition of Bitcoin were immediately reflected on its exchange rate. But even at the times of general public fear, Bitcoin continued and continues to exist.

Despite the fact that many countries are trying in every possible way to prohibit the use of this cryptocurrency, they simply cannot stop the interaction of this citizens with the network. Today, services like Blockstream Satellite broadcast real-time blockchain data from satellites to almost all countries including Africa. Satellites enable everyone on the planet to connect to the Bitcoin blockchain even without access to the Internet.

As for transactions, there are several anonymous ways to send Bitcoins, including Tor browser, top VPN services, SMS messages, encrypted messages or even stenography and ordinary postal services.

It is useless to prohibit Bitcoin or any specific cryptocurrency since its code may change very quickly, much faster than the next legislative ban is ready. Even a well-coordinated legal attack from the UN and the WTO is likely to lead only to the fact that Bitcoin will go underground. There is a high probability that Bitcoin can become a subject of contraband, as it happened with drugs.

If we talk about the persecution of those who are engaged in mining and owns big sums in crypto, then this has already happened. For example, Charlie Shrem was sentenced for aiding and abetting the operation of an unlicensed money-transmitting business. Despite such cases, underground black markets continue to gain momentum, so we can conclude that even the most severe punishments and bans do not stop users, but only fuel their interest in the cryptocurrency.

Because of the fight against money laundering, various governments constantly increase their pressure on cryptocurrencies. Authorities dictate their own rules and require that exchanges and wallets share their users’ personal data under the guise of KYC and AML rules. It is possible that tax authorities will soon become interested in data of Bitcoin traders, as it already happened with Coinbase. It is necessary to take into account the fact that, one way or another, anonymous trade takes place anyway.

Cyber warfare

Cyberwarfare includes hacking and various kinds of illegal manipulations in social networks. Bitcoin, in spite of multiple hacking attempts, demonstrated its excellent resistance to such attacks. Bitcoin owes its high level of protection to its Proof-of-Work system.

If even cyber crooks manage to change the Bitcoin code or alter transaction records, the network will immediately reject such actions. The more decentralized are the nodes in the network, the less likely such attacks succeed. At the moment, more than 12,000 such attacks have been recorded.

It should be noted that Bitcoin owners and various services related to it (like exchanges and wallets) are exposed to attacks much more often than the cryptocurrency itself.

Companies serving the cryptocurrency industry often get compromised, and data leakage occur. For example, large Bitcoin exchanges, such as Mt.Gox and Bitfinex, have been repeatedly attacked, resulting in more than 1,000,000 Bitcoins being stolen. Such hacking certainly prevents the adoption of Bitcoin, and the owners who suffered from these attacks and lost their money often stop using it.

PR attacks

For many people Bitcoin in associated with crime. Popular media and even politicians often say about it. But few people understand that gold is much more likely to appear in criminal cases. The media often exaggerate the extent of damage from data breaches. Journalists create more doubts and fear without taking into account the fact that breaching companies that serve Bitcoin and hacking Bitcoin itself are two different things. As a result, such reports of hacking give rise to unjustified doubts about the safety of Bitcoin.

National Cryptocurrencies

When Venezuela introduced its cryptocurrency Petro, it did not become so popular. All because the state did not have the resources to develop it. If a more developed and powerful country follows the same path, creates its own cryptocurrency, and in every possible way engages in its promotion, then, most likely, the result will be different. It is possible that such a coin will exceed the share of the Bitcoin market.

Using similar names

As for similar names, this is done in order to confuse users. Striking examples include Bitcoin Cash, Bitcoin Gold, Bitcoin Diamond, Bitcoin Private. Attempts to rise at the expense of a well-known brand can be called an attack too. As a rule, such an attack is characterized by good funding and includes the following components:

  • Buying huge amounts of cryptocurrency that is a competitor.
  • Increased mining activities.
  • Spreading rumors about Bitcoin. There are a lot of articles against original Bitcoin. Many of them are ordered by competitors.
  • The creation of an opposition insisting that for example, Bitcoin Cash is “real” Bitcoin, although this is certainly not the case.
  • Separation of bigger communities. For example, r/btc on Reddit separated from the r/bitcoin.

Despite the fact that many newcomers were deceived by the bitter counterparts of Bitcoin, I would like to hope that the technical and economic merits of Bitcoin will become so obvious that in the near future, it would be impossible to cheat even those people who have never heard anything about cryptocurrencies.

Attacks aimed at the cryptocurrency infrastructure

Intentionally creating a big flow of transactions to slow their processing helps other cryptocurrencies to get popular. In this case, the increase of commissions for Bitcoin transactions helped alternative coins to justify their existence.

The very well-known 51% attack is very unlikely to happen with Bitcoin but still many people fear such an attack carried out by state-sponsored player like China and its biggest market player Bitmain that produce ASICs.

It can also happen that the dominance of the US dollar will soon come to an end. Some financiers suggest that in the near future Bitcoin will be able to outshine the US dollar. By the way, this turn of events would be of interest to the Chinese authorities. In this situation, they could force their miners to work towards Chinese political goals, scarifying immediate monetary gains. However, now the National Bank of China, on the contrary, reduces the energy supply of mining farms forcing miners to seek “safe havens” in other countries.

High-level cyberattacks

The so-called zero-day bug is an attack associated with unknown vulnerability for the correction of which the developers have 0 days. Because of such an attack in 2010, 184 billion Bitcoins were created. The problem was resolved within 5 hours, and the blockchain got forked. The incident did not cause serious troubles, because at that time Bitcoin was not used by so many people. But if this happens today, then it will cause real chaos, many users will suffer heavy losses and Bitcoin would get very bad PR.

Network attacks can also be carried out by intelligence agencies, such as NSA. They can force operating system and CPU vendors to introduce special exploits in their products. It has long been known that most of the major companies in Silicon Valley cooperate closely with intelligence agencies. These include all major IT-giants like Apple, Microsoft, Google, and Facebook.

Some security experts say that in 10 years quantum computing will be able to decipher Bitcoin crypto system. But even if this becomes possible, Bitcoin will most likely immediately switch to an attack-resistant algorithm.

Conclusion

it should be noted that if you take into account the total number of Bitcoin users, then really “killer” attack would require a lot of effort. Only a well-funded agency can inflict significant damage to the Bitcoin system.

Ultimately it is possible to kill anything, even Bitcoin. Fortunately, Bitcoin already experienced many unpleasant moments and still remains very reliable. Probably, the next test Bitcoin will have to go through will happen during the next financial crisis. In the meantime, I do not worry much about its future.

About the author: The author, David Balaban, is a computer security researcher with over 15 years of experience in malware analysis and antivirus software evaluation. 

Disclaimer: The views expressed in the article are solely that of the author and do not represent those of, nor should they be attributed to CCN.

Featured image from Shutterstock.

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