Talk to your average Twitter bitcoin stan and they will tell you, in line with right wing libertarian ideology, the government is at fault for most if not all of the world’s ills and only bitcoin can help us create a more fair world. The problem here is that if you read a bit more underneath the surface of what they’re saying, it’s clear that their reasoning comes from a very neoliberal point of reference with a touch of Austrian flare and cyber-utopian dreaming. If markets were just “more free” from the government (small-“s” state), they would create the most efficient and equitable way for allocating resources to everyone.
I’ll save my full critique of their reasoning for another time. For this article, I actually want to focus on the things we can sort of agree on. As Leftists, we should also be against the encroachment of the government (big-“S” State) as a vehicle for the legitimation of capitalism and its monopoly on violence used overwhelmingly against the working class and poor. The truth is that as it stands, cryptocurrency can act as a legitimate alternative to establishment financial and State institutions if you’re willing and committed enough to do it. The entire decentralized finance (DeFi) and open finance movement has the explicit goal of creating a dual power structure to the traditional finance system so that people no longer need to be dependent on traditional banks.
However to think that these alternatives are good enough for Joe the Plumber to start a decentralized lifestyle at this moment is foolish at best. Let’s entertain the thought that blockchain technology becomes advanced enough so that Joe the Plumber can start paying his rent, buying food, and receiving his salary in cryptocurrency. The State has quite a lot to lose if all the Joe the Plumber’s use a currency which is not controlled by State institutions to receive taxes, exert their control through monetary policy, and legitimate their violence towards its citizens. Even Investopedia understands the reasons why some governments would be opposed to cryptocurrency adoption. Let’s not be naïve though, the shareholders of the Capitalist State won’t sit there and just let it happen. This behooves us to know, how exactly can the State try to destroy blockchain based networks like bitcoin and others.
I’m not much of a cat person, but I think I’d like these Anarchokitties
The Normal Attack Vectors
Every digital currency faces the issue of preventing users from creating duplicate transactions to make money out of nothing, or the double spending problem. Bitcoin solved this problem by instituting its consensus mechanism, Proof of Work (PoW), which relies on nodes’ computational power to compete for the “right” to mine blocks for a reward to incentivize the integrity of the system. The problem can also be solved with other consensus mechanisms made after the release of bitcoin that don’t require nearly as much energy. These systems are pretty good but they aren’t perfectly impervious from attacks, especially from an institution like the State with many resources at hand. If you want to know more about how blockchain technically works, you can refer to Part 2 of the Blockchain 101 for Socialists series I’ve already written here.
51% Attack – In this type of attack, an attacker would need to own at least 51% of all the computational resources being used to sustain a PoW for mining so that they can perform a double spend. This sounds simple, but it’s not easy, even for the State to do. Check the infographic below to understand a bit why this is a difficult thing to do in a system that uses a large amount of computational resources like bitcoin already. Attacks like these are mitigated through checkpointing or storing the history of the blockchain and refusing to accept blockchains without that trail of blocks. This also makes it easier to revert the blockchain back to a previous version if an attack is successful.
Mr. Red would need to have an obscene amount of resources at their disposal to hack bitcoin directly (via IEEE)
Eclipse Attack – Here the attacker can use malware, location, power, or scale to gain control of nodes’ access to the network and manipulate their view on the network’s operations. As a victim to this type of attack, the user may see false information on their screen only to learn the truth after they’ve connected to the real network. If the attacker has the scale of an ISP and the resources, they could attempt to split the network to make it easier to attack the real one. However, the success of an eclipse attack reduces as a network increases in size (i.e., has more nodes), if a network uses a whitelist of trusted nodes, limiting the number of nodes per IP address, and randomize connections to reduce the probability of connecting to a malicious node.
Denial of Service Attack – A traditional Denial of Service attack usually focuses on a network’s single point of failure so they are difficult to do on decentralized networks like blockchain but there are some roundabout ways to do it. For example, an attacker could flood the network with transactions or artificially increase the difficulty of PoW to slow down the blockchain. This attack has been attempted many times against bitcoin in the past but has never been successful due to costs and the incentive structure.
Routing Attack – By attacking the underlying network used for blockchain peer-to-peer communications, an attacker can try to partition the network to perform a 51% attack, a Denial of Service attack, or a double spend. Since the internet relies on the Border Gateway Protocol (BGP) to find the quickest route to send a message to another computer an attacker could advertise the shortest route between two network segments to isolate them from each other. The success of this attach depends on other nodes not finding alternative routes so the probability of success decreases when nodes have internet connections in the different segments, use trusted routes over BGP, or use encrypted communications to ensure messages can’t be changed between nodes.
So while all of these types of attacks are totally plausible, they are highly unlikely to be successful in completely destroying a network. This is the part of the allure of blockchain networks. They are incredibly resilient and not easy to destroy without an organized and multi-pronged attack. Kind of like the State. Or capitalism if we’re being honest. My view however is that none of these attacks would be seriously used by a State to destroy a blockchain network. No, what they would do would be much more sinister.
States are not aligned on their stance towards bitcoin for reasons related to geopolitics and economics (Source)
Andreas Antonopoulos needs to google COINTELPRO
Andreas Antonopoulos, author of “Mastering Bitcoin” at the Texas Bitcoin Conference @ 00:13
TLDW: Bitcoin has reached a level of computing that would require a nearly impossible covert operation involving many States to achieve one double spend which would then be reversed soon after by the network and the protocol updated to prevent it in the future. He then proceeds to explain that they would be better off joining the network and besides such an operation “would actually require a government that can do IT.”
While I partly agree with a lot of what Andreas says in the clip above, he’s a little bit (maybe a lot bit) short-sighted in his thinking of how the State would go about destroying bitcoin. This is besides the fact that for some reason he believes the government “can’t do IT” when the NSA and other government agencies use mass surveillance of the internet to exert control, but whatever.
We agree, the State would unlikely try to hack bitcoin directly to do a double spend. What Andreas forgets, and many right libertarians in general, is that the State, has a long history of exerting control either through physical violence or a systematic and little noticed progression of insidious manipulation. The proof can be found in US foreign intervention around the world, the tactics used by the House Un-American Activities Committee to target American communists, or the truly despicable atrocities committed under the FBI program, COINTELPRO.
The list of examples Andreas could have referenced could go on, but the point is that it isn’t surprising actually that he doesn’t know these things. It takes a lot of reading and luck to happen to learn about these things besides the fact that we’re all bombarded with pro-State propaganda in various forms (i.e, nationalism, military worship, police violence justification, draconian immigration policy, etc.) and its difficult to completely remove yourself from all of it.
He sometimes has these types of Radical Centrist takes but he has better political understanding than your average bitcoin maximalist (Source)
States are extremely unlikely to create a concerted and united effort against bitcoin or other cryptocurrencies because it actually works more in their favor to use it as a weapon against other States in the geopolitical competition for world domination fueled by capitalism’s never-ending quest for more markets.
It is much more likely that a State will, in the case of bitcoin, target large mining operations either through violence / seizure or by exacerbating already existing fissures in the community to separate the network through covert operations and disinformation campaigns. They could also start a mass campaign that combines nationalism with opposition to cryptocurrency use, like the reports accusing countries of using cryptocurrencies to avoid economic sanctions or Trump’s tweet how he’s “not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air” (Source).
These attacks are more likely to succeed within one State but still unlikely to be successful on a global scale because of the simple truth that cryptocurrency on its own does not oppose bourgeois capitalist hegemony. DeFi and open finance will likely ruffle the feathers of some in the bourgeoisie, but it will only split the elite, akin to choosing between Pepsi and Coke, but won’t end blockchain networks. There are few, if any, projects that seek to decommodify markets, redistribute power to workers, and be a global success in the short term. If that project were to exist, I would expect a much more coherent assault by the State similar to what I described above.
Saying all this, I still think it’s imperative that the Left still works to build alternative power structures to State and capitalist institutions and blockchain should be one of the technologies in the inventory to pull out when needed because there are serious technical advantages over traditional systems to consider. It’s only by building these structures over time and proving to people like Joe the Plumber that they work can we possible stand a chance against State violence and oppression.
Gritty is the huggable, raging id to unite us in bringing down the State
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