Could state authorities shut down Bitcoin at any time? A state-sponsored 51% attack would be very difficult. Even though a lot of the mining is in China, it's not as concentrated as you think; some of the pools are, but the mining farms themselves are distributed in very remote rural areas. In those areas, the mining farms represent a significant percentage of the local economy.
Before a hired gun gets up and tells them to shut down the mine, you first have to pay them a salary, and the Chinese government is a minority bidder because the mining farm operator is paying them much more lavishly. Don't underestimate how much resistance you're going to see in areas where this is having a significant impact on incomes in rural areas that have excess capacity electricity.
The biggest threat for the Chinese government isn't Bitcoin or America, it's a billion peasants with pitchforks who have decided they've had enough. They've been trying to forestall that from happening for 25 years. Economic growth in rural areas is the goose that lays golden eggs, which benefits them too. Don't overestimate how effective a 51% attack would be either, or how long it could be sustained, and what kind of countermeasures we could put in place.
This is a system that will evolve, not just sit still and take the blows. After 7 years of Bitcoin, it's not because they're not trying or that they don't want to stop it.
Transcript
[AUDIENCE] Just to throw a wrench in that... [ANDREAS] Please. [AUDIENCE] The authorities can take out Bitcoin any time they want. [ANDREAS] I don't think so.
[AUDIENCE] A significant fraction of the miners are in China. A 51% attack from China is easily available. To think that the Chinese miners would not attack, even with a gun to their head, is just unbelievable. There is nothing in Bitcoin that guarantees you won't have a 51% attack, if a nation-state dictates it.
[ANDREAS] I disagree. Even though a lot of the mining is in China, it is not as concentrated as you think. Some of the pools are, but the mining farms themselves are distributed in remote rural areas. In those remote rural areas, those farms represent a significant percentage of the local economy.
Before your hired gun can walk up and tell them to shut down the mine, you first need to pay their salary. The Chinese government [will probably be] the minority bidder for that salary. The mining farm operator is paying them more lavishly. They may already own the government in that province, I would guess.
That is how government works. I think you underestimate how much resistance there will be in places where... [mining] has a significant impact on incomes in rural areas with excess energy capacity they can't use. Where it is generating millions of dollars and creates motivation [to defend the infrastructure].
The biggest threat for the Chinese government isn't Bitcoin, or even America. It is a billion peasants... with pitchforks who decide they've had enough. They have been trying to forestall that for twenty-five years.
Economic growth in rural areas... That is the goose that lays golden eggs for them, too. I think you [underestimate how hard] it would be do that, and overestimate how effective a 51% attack would be, or how long it could be sustained. We could put countermeasures in place.
This is a system that will evolve. We won't sit still and just take the blows. You may be right, but after seven years, it is not like they aren't trying [to attack]. [The fact that we have seen them try] is not because they don't want it to stop.