Even if "Satoshi Nakamoto" is/was actually a real person, how can I be sure that XYZ government (XYZ can be US, or China, or ...) does not have now (or will not have in the future) 51% of the hashing power to mess with the bitcoin network transactions when the right time, in their opinion, comes?

  • Do you believe conspiracies easily? If yes, we can't help you. – frеdsbend Jan 13 '19 at 19:37

Your answer is Incentives.

Let's imagine a bad guy, called Mallory, has an interest in attacking Bitcoin and has either created for himself, or desires to, 51% of the hashing power required to start shenanigans. (Start, because he has to maintain and grow that hashing power for sufficiently long to outpace the 'good guys'.)

To start with, there's no technical or legal way to prove that Mallory hasn't, or cannot, obtain that 51% any more than than there's a technical or legal way to prove Mallory hasn't, or cannot, obtain nuclear devices to hold the world to ransom like a James Bond villain.

Instead, you're relying on incentives. Assuming Mallory has spent $1 billion to marshal his forces, you have to wonder - would it make sense to destroy Bitcoin? If he does, his $1 billion is lost. True, perhaps he plans to make $1.1 billion from the chaos, and so the cost - to him - is "worth it". Or is the cost now so high that even Mallory stops and thinks "Hey - I'm making $0.1 billion a year from securing the network. It's actually more profitable to keep doing that, even though I'm a bad guy."

It's also worth pointing out his 51% only allows him to double-spend money he's already spent.

You specifically suggested that Mallory is a Government. We can look again at the incentives above: if his interest is to destroy Bitcoin as an alternative, then he'll quickly run into trouble: everyone will rapidly know that the 51% was achieved and so everyone will know that someone (Mallory will not likely reveal himself) has mining resources previously unknown. Perhaps a more efficient SHA-breaking algorithm. Even if Bitcoin itself is flown into the ground by him, alternate algorithms can be put into place such that a Bitcoin2 is immune to his attack. So: Mallory has now spent huge amounts of his resources, revealed something that would be of interest to his existing adversaries (that he has a means to break an encryption algorithm they use) AND has found himself back at step 1: Bitcoin2 is up and going without him. What attacker deliberately makes his own position worse?

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  • What if the imcentive is to lure a party PQR to invest heavily in bitcoin, and then crash it? After all, several billion dollars is pocket money for US (since 2008 it stamped trillions) but for PQR this may not be so (yes, I do think that if Mallory is a government, it is most likely the US government). – John Donn Jan 13 '19 at 21:52
  • What does PQR stand for? – Alistair Mann Jan 13 '19 at 22:04
  • Then my point still stands: would the US Government reveal that they have broken SHA in order to destroy a Mafia? I suggest to you they would not: hiding they have broken it is more valuable than destroying a Mafia whose base is the people within it, not the bitcoins in their wallet. – Alistair Mann Jan 13 '19 at 22:14
  • Does US government really have to break SHA-256 for that? It needs only to have a larger hashing power than the rest of the miners. – John Donn Jan 13 '19 at 22:34
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    Larger hashing power only lets them double-spend funds they've just spent. How much would they get before people noticed? Very, very little, and not enough to bring down Bitcoin. Why reveal you have that capacity when you can just print off the dollars needed? – Alistair Mann Jan 13 '19 at 22:39

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