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Recently, the CEO of Ripple stated that more than 50% of the BitCoin miners are in China, therefore, were the Chinese government to interfere, they could control BitCoin (I assume via a 51% attack, I didn't check details).
"“I’ll tell you another story that is underreported, but worth paying attention to. Bitcoin is really controlled by China. There are four miners in China that control over 50% of Bitcoin,”"
Is it true that 4 Chinese miners can control all of BitCoin?
ViaBTC, a mining pool that favors Unlimited, tweeted “hashpower is law”.
Greg Maxwell (from the Core side) replied “Bitcoin’s security works precisely because hash power is NOT law”.
Introduction
There are lots of people scared of the 51% attack, but in practice, thanks to some changes that have been implanted for years, performing this attack would be harmful to the attacker (in a game theory sense they lose), and not that much to the cryptocurrency user.
How 51% used to be a problem
The main danger that the 51% attack used to face was consistent mining by the 51%. Since everyone takes the longest chain as ground truth, the 51% could mine by itself and not publish any blocks, wait for their chain to be longer, and publish all the blocks, selecting all the transactions inside, and getting all the block rewards.
What if they try
Let's say some team of miners buy all the equipment and accomplishs to have more than 50% of the hashpower in a network, what can they do?
They could in theory perform the attack for a while, and they would get the rewards for mining, effectively fucking over the other miners.
What about the cryptocurrency users? the most damage they could do is to censor transactions for a while, but not consistently, since as soon as one of the other miners can at some point publish a block they could include the transaction.
Can miners change the rules of the game?
No, not even if they have 100% of the hashing power. Client-side validation means that many attempts at mischief that the miner might want to engage in are by default rejected, this is the main difference between blockchains and services like Paypal.
What happens to the attackers
It's important to note that this attack would be fairly easy to detect, not only that, but there are people that base their living on mining, so we would hear about it pretty quickly. As soon as this happens, users could decide to change move their assets, kick off malicious miners, even modify the protocol (the latter one would be the hardest). This would also cause FUD and the price would drop, making the miners, specially the malicious ones to lose money.
Conclusions
A 51% attack takes much more than a 51% of the network to execute nowadays, they barely hurt the end users (delay transactions), it would be easily detected,and it would hurt (economically) malicious miners the most.
Source miners power: https://vitalik.ca/general/2017/05/08/coordination_problems.html
Client-side validation means that many attempts at mischief that the miner might want to engage in are by default rejected, this is the main difference between blockchains and services like Paypal.
Here is Blockchain.info's chart showing the current estimated distribution of the bitcoin network's hashrate.
Keep in mind: some pools are composed of many individual miners, so in the event of an attack, those individuals may simply redirect their hashpower to a different pool that is not involved in the attack.
In general, controlling the hashrate is not equivalent with 'controlling bitcoin'. If a single entity got control of 51% or more of the hashpower, then they could launch a 51% attack, meaning they could censor transactions. This is an existential threat to the network, but many developers have proposed countermeasures such as a POW change in the event such a thing ever happens.
I would rather say 'dependent' but not 'controlled'. Meaning, China doesn't control Bitcoin on some governmental level, it's just because many miners are based in China and they have a direct impact on Bitcoin's growth. Sure it's a matter of personal opinion, so correct me if I'm wrong.
