Perhaps the most legitimate short- and mid-term threats to Bitcoin (BTC) are governmental regulations. Is a true Bitcoin ban even possible?
The anxiety around the rapidly-formulating regulatory environment have many people wondering if some international regulators are going to try to ban Bitcoin use altogether, accordingly.
Today, then, we’ll walk you through just how secure Bitcoin really is and if it really can be banned or destroyed by the powers-that-be.
How Secure Did Satoshi Create The Bitcoin Code?
The Bitcoin code has previously been described as “quirky” by Gavin Andresen, the former Lead Scientist for Bitcoin. Before “sailing off into the sunset,” as it were, Bitcoin creator Satoshi Nakamoto had liaised extensively with Andresen and had handed leadership of the Bitcoin project over to him.
As such, Andresen is as well-suited as anyone to have insights into Satoshi’s coding prowess.
Per Andresen during a 2015 conference:
“Satoshi was a brilliant programmer. But he didn’t have a deep understanding of all the cutting edge crypto research that’s going on.”
To this end, you start to wonder. If Satoshi’s coding style was “quirky,” and he, she, or them seemed to lack a deep understanding of crypto research, just how safe and secure can Bitcoin be?
Another early Bitcoin developer, Jeff Garzik, has also previously highlighted the peculiarity of Nakamoto’s coding style:
“He was the oracle to which we would go for questions about the system, but he rarely followed standard engineering practices, like writing unit or stress tests or any of the standard qualitative analysis that we’d perform on software. Several things had to be disabled almost immediately upon public release of Bitcoin because they were obviously exploitable.”
But, even in the midst of their quirkiness, Satoshi was ultimately concerned with preventing exploits of Bitcoin. His early emendations to the Bitcoin code are readily indicative of this concern.
For instance, Theymos, an admin on bitcointalk.org and bitcoin.org who worked with Nakamoto in BTC’s early days, has remarked that the mysterious creator worked tirelessly to mitigate the most devastating attack vectors against the first-mover cryptocurrency:
“Satoshi once told me, ‘I think most P2P networks, and websites for that matter, are vulnerable to an endless number of DoS [Denial of Service] attacks. The best we can realistically do is limit the worst cases.’ I think he viewed the 1 MB limit as just blocking yet another serious DoS attack.”
So as Bitcoin has blossomed in the ensuing years, so too has Nakamoto’s emphasis on security been passed down and been consolidated upon by the developers who have followed in his stead. Now, the Bitcoin project is seemingly legendarily secure.
But don’t take our word for it. Just ask Dan Kaminsky, the whitehat “dev-ops” hacker who specializes in identifying potentially catastrophic cyber vulnerabilities. Kaminsky should know if Bitcoin is secure, seeing as how he was the researcher who discovered and helped rectify a fatal exploit in the internet itself.
Kaminsky says “the internet wasn’t designed to be secure.” But to him, Bitcoin’s security is conversely “beautiful.” He said as much during a recent CNN mini-documentary on Bitcoin:
“I thought wow, [Bitcoin] is going to fold immediately. So I decided I would set out for a couple months to show what Bitcoin’s problems were … It didn’t fall … It was really weird … Every single time I hit on something that had to be its fatal failing, no! [The developers] had found that before. You could sort of see in the code where that had once been an issue, and they had gotten rid of it. It is a beautiful system … The core system, the core magic, the core problem that Bitcoin solves that had never been solved before, it remains solid. It’s safe.”
The grand takeaway, then? The current state of Bitcoin’s code is strong. It’s secure and a true feat of human engineering. Kaminsky would know. And its security seems to be getting stronger all the while, in a purely technical sense.
To this end, check out the early development of Bitcoin below; you can see just how meticulously the project was culled before and after the departure of Satoshi Nakamoto. Quirky, sure; lackadaisical, most definitely not:
So The Code Is Strong … What About A Political Ban?
Now that we know the Bitcoin code is secure and unprecedented, let’s move on to more political concerns.
Make no mistake, folks. In the coming months and years, there will be nations that try to institute outright bans of Bitcoin (and cryptocurrencies in general). These may be smaller nations; they may be bigger nations. But they will come.
These “bans” may make an acute fuss at the time, but they will prove to be more or less meaningless. To be sure, these potential forthcoming bans could scare off many mainstream investors in the affected nations. But scaring off investors is a different beast altogether than shutting down the Bitcoin network for good.
Consider this: the person-to-person (P2P) structure of the Bitcoin network means that people can transact permissionlessly among themselves, with no need for third-party financial institutions like banks getting in the middle to take their “cut” arbitrarily.
That means individual node operators from all across the world operate the Bitcoin network: not Big Banks, or the U.S. government, or traditional institutions of any kind.
For Bitcoin to be truly banned, then, every Bitcoin node operator would have to be shuttered simultaneously. It would take shuttering the whole internet to make Bitcoin go offline. Which just simply won’t happen.
Now, a nation can come in and say, “Our citizens can no longer legally possess or transact in Bitcoin.” That’s definitely possible. But those are just words on paper when it comes to Bitcoin. Users would still be able to transact in BTC if they wanted to after such a “ban” takes place because of Bitcoin’s reliance on nodes. In other words, it wouldn’t be a literal ban at all, then.
China Bitcoin Ban
In October, the Chinese government announced the ban of cryptocurrency exchanges and Initial Coin Offerings (ICOs) in the nation.
To pundits and outside observers, the point was clear: a de facto, if not acute, ban on Bitcoin. But what has happened in the wake of these bans has been truly illustrative for just how permission-less and, well, uncontrollable Bitcoin really is.
That’s because over-the-counter (OTC) and person-to-person trades of Bitcoin have exploded in China since October. The Chinese government is powerless to stop these grassroots trades.
So even though China has issued a de facto ban, it is neither being honored nor enforced. And that’s because a direct ban on Bitcoin use can’t be enforced by any one government.
To carry the point further, say American banned Bitcoin ownership tomorrow. That’s all fine and dandy, but such a pronouncement could do nothing to stop P2P trading or BTC ownership in general.
What About Destroying Bitcoin?
The most common proposed avenue for destroying Bitcoin is the so-called “51 percent attack” wherein an attacker or attackers are able to gain 51 percent of the hashing power of the Bitcoin network. At this point, they’d be able to manipulate the network in various ways.
The problem? People are completely de-incentivized to perform this kind of attack.
That’s because it’s more profitable to “behave” on the Bitcoin network. It would take an extraordinary sum of money and computing power to engineer a successful 51 percent attack.
So could a spiteful, disdainful nation lead a 51 percent attack against Bitcoin? It’s theoretically possible. But it’s highly improbably because such an attack would be ludicrously expensive and extremely difficult to execute.
In other words? Bitcoin looks safe from systemic obstruction for the foreseeable future.
And better yet, new innovations are being devised everyday that makes Bitcoin even more censorship-resistant. For example, new developments have made it possible to transact BTC over radio waves. There’s no stopping that!