In this video, I discuss the recent news that two KYC'd mining pools (Foundry USA and AntPool) now control over 50% of the Bitcoin network's hash rate.
So what are the real risks? 51% attacks are difficult both to initiate and to maintain, especially if they require the cooperation of two countries like the US and China that are increasingly having trouble doing anything together. In addition, a 51% attack cannot create fake Bitcoin, steal your Bitcoin, or rewrite the whole blockchain. Empty block attacks are more a temporary nuisance than an existential threat to Bitcoin.
What seems more likely is the possibility of government-imposed censorship on certain transactions. The US government can contact Foundry USA (since it's regulated by and located in the US) and tell them that they are not allowed to include certain potential Bitcoin transactions in a block.
The US government could also contact AntPool, but they are unlikely to comply unless it's also in China's interest to censor a certain Bitcoin transaction.
Likewise, Foundry USA will probably ignore phone calls from China.
What should someone do if their potential Bitcoin transaction is being actively censored (not included in a block) by Foundry or AntPool?
You simply need to wait for a miner from the other 49% of the network to include that transaction in a block.
You could also raise the transaction fee to tempt one of the other miners to include the transaction in a block.
Conclusion:
Even with 51% of the Bitcoin network being controlled by hostile, government-controlled mining pools, anyone would still be able to transact using the Bitcoin network. The Bitcoin transaction fee market ensures this.
Unlike Ethereum (which runs on proof of stake), Bitcoin would be able to recover from these kinds of attacks-- and would emerge on the other side even stronger.
Not investment advice! Consult a financial advisor.
I am not being paid or otherwise compensated by any company or cryptocurrency project that I mention in my videos. My opinion is not for sale. Please do not contact me with any affiliate or advertising deals.
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