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I'd like someone to tell me if I'm wrong:

  1. More than 50% of the mining is done by Chinese pools. That means that they control the network - who's transactions get in, who's transactions are left out. Since the block reward was reduced to 12.5BTC, they are completing it with transaction fees - the bigger the transaction you're sending - the bigger the fee you need to pay them. Last time I've checked I've seen some transactions with fees of more than $1000 worth of BTC in them. So in a sense, Bitcoin is starting to act like a traditional banking system - owned by Chinese people.
  2. Blockchain size is increasing rapidly and soon to reach 200GB of storage - when the size will get ever larger, especially assuming that people that host the entire chain on their computer do not get rewarded for it and maintaining a full node requires electricity + storage + network uptime, it will soon be costly to run a full node. 200GB and even 1TB of storage is no problem for a central authority to run, and it seems to be going in that direction. How can the network continue to be P2P like that? And especially what happends if that main storage will be taken over by the authorities and be shutdown?
  3. Same issue as in #2 - Because downloading and installing a node is costly and difficult, most of the wallets being opened by people today are online wallets, most likely under the mainsite blockchain.com, and this site seems to be run by ghosts - there's no actual person there that you can contact in case of problems with your wallet, and the only way to contact them is through a Luxembourg court order (see "Legal" section on their site). Same goes for the bitcoin.org domain - there's no person that can take responsibility for these operations. What happends if tommorow blockchain.com gets shutdown for legal actions? What will happend with people's wallets and their funds then?
  4. There is no governance, and the only thing that governs the entire network is mathematics. What happends if tommorow all Chinese pools collaborate together, make a Bitcoin transaction of 1M Bitcoins, and after 5 or 6 blocks (confirmation) they start to re-mine all the blocks again in order to erase that transaction from the chain? Assuming that they outmine all the other competitors, I can't think of scenario where they won't catch up and even win over the honest chain, assuming the difficulty changes only every 2016 blocks. If I was the owner of these pools, what can prevent me from deliberately ceasing all my mining power.. wait for the net difficulty to lower, and then do this attack?

Any expert thoughts on this?

closed as unclear what you're asking by Adam Millerchip, Andrew Chow Dec 13 '17 at 17:35

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    This question should be broken done into many different questions so that future audiences will find this question more helpful. – renlord Dec 13 '17 at 14:47
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    It is unclear what you are actually asking in this question. Either you are asking too many questions in the same question (in which case you should create multiple questions for each one that you have) or there is no actual question. Please edit your question to clarify. – Andrew Chow Dec 13 '17 at 17:38
  • I see that dictatorship has arrived to stackexchange.com as well. I Think my questions here are very clear and the fact 4 people upvoted it speaks for itself. and the fact people try to escape answering them and trying to shut them down instead isn't going add more trust to Bitcoin as a currency. Hope you're all enjoying what you're doing and will keep enjoying it as long as you can. – Miki Berkovich Dec 13 '17 at 18:11
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    @miki Maybe you should melt down all your bitcoin and make a tinfoil hat. Your question is too broad. Trim it down. – fredsbend Dec 13 '17 at 18:31
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More than 50% of the mining is done by Chinese pools. That means that they control the network - who's transactions get in, who's transactions are left out.

Sure. But electing to censor transactions is pretty much equal to you refusing to pick up some unwanted dollar bill on the ground. Last I checked, eventually someone would pick up free money.

Since the block reward was reduced to 12.5BTC, they are completing it with transaction fees - the bigger the transaction you're sending - the bigger the fee you need to pay them. Last time I've checked I've seen some transactions with fees of more than $1000 worth of BTC in them. So in a sense, Bitcoin is starting to act like a traditional banking system - owned by Chinese people.

False. As a user, you are in complete control of how much fees you want to pay. You can pay the minimum fee rate so as long as you have the patience to wait for the transaction to be confirmed. Alternatively, if enough users elect to pay a fee rate that is homogeneous, miners are still incentivised to mine transactions that pay lower fee rates.

How can the network continue to be P2P like that? And especially what happends if that main storage will be taken over by the authorities and be shutdown?

If storage is an issue, you can elect to run your bitcoin node in prune mode, which effectively removes the need to maintain the whole blockchain. AFAIK, there are enough full nodes with the blockchain out there to prevent a state attacker from shutting down all of them.

What happends if tommorow blockchain.com gets shutdown for legal actions? What will happend with people's wallets and their funds then?

Users should never trust web-wallets nor hold coins in web services to begin with. It was an unintended usage scenario.

Instead, users with storage and computational constraints may elect to store their bitcoins in an SPV wallet, offline paper wallet or hardware wallet with varying privacy/usability tradeoffs.

If I was the owner of these pools, what can prevent me from deliberately ceasing all my mining power.. wait for the net difficulty to lower, and then do this attack?

The net difficulty will not lower itself until a full epoch (2016 blocks) has been reached. So there is no incentive to cease mining operations for the above reason. In fact, there is a huge opportunity cost to be paid by a major pool that ceases mining operation, consider the lost revenue opportunity. That alone could potentially drive a major pool bankrupt.

  • Thanks for answering. The first point you said about someone would eventually pick up the transaction - true. But it could take anywhere from several hours to days if most miners choose to only accept transactions with large fees, aka dictatorship over transactions. Second - how do you know all full nodes are not reverse proxies that all connect to a central server? Third - if block reward is 12.5BTC, ceasing mining for 2016 blocks would be a "loss" of only 25000BTC. If the attacker could then resemble mining to gain 1M BTC by a double spend, I can't see why not do it. – Miki Berkovich Dec 13 '17 at 14:57
  • its important to understand that a full block is better than a block that is barely filled with transactions that pay large fees as the revenue derived from filling a block with transactions that pay fees anyways will most likely be greater than a block that decides not to maximise on transactions. So miners don't really have a choice to opt to not fill a block. However, when users are racing each other to pay the highest fee rate, thats when its a good time to be a miner. – renlord Dec 13 '17 at 15:00
  • Thanks again, but that still doesn't answer any of the concerns I raised above regarding security and safety of information. When someone challenges a product that lots of people are invested in with legitimate concerns and questions, and gets the subject changed or distracted from the main question towards the product's "advantages", that's an indication of a large scale pyramid scheme. – Miki Berkovich Dec 13 '17 at 16:35
  • Miki, you better sell your funds, it's not for you. It is a high risk system, very new on the market, not supported by the main stream, only similiar to banks with it's fees, a dictatorship system, supported by the stackexchange dictatorship system here, and controlled by a communism country (China!) and their miners. And "they" can always do, what "they" want, without any rules in the protocol, logic in crypto ccy or built-in security of the channels. This is not a playground for you, you are way to suspicious, and want others to explain you, why you are suspicious. No ...? ridicoulous... – pebwindkraft Dec 14 '17 at 9:27

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