What methods could a government use to shutdown Bitcoin?

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13

Let's say that a government decided to shut down the Bitcoin network. What options would they have to achieve this? Would they need to convince other governments? All governments?

Let's set as a precondition that they were able to scare away all the developers, so the Bitcoin community could not adjust the software.

David

Posted 2011-09-01T14:54:12.563

Reputation: 3 374

1

@eMansipater - thanks for starting the discussion at What is worth preserving about this question? - Bitcoin Meta - Stack Exchange. Note that you can also submit changes to the question text to make it less speculative. Remember all content is creative commons licensed, and we all have responsibility to create the site that we collectively want this to me.

– nealmcb – 2011-09-12T02:46:53.807

@eMansipater Based on the discussion, I have edited the question to encourage the answers to be more fact based. – David – 2011-09-12T13:48:06.403

2Thanks - that helps a bit. Taking "US" out of the title at least would also help. Beyond that, more precision about what you mean by "close down bitcoins" is important. Perhaps just saying "make bitcoin use more trouble than it's worth for most users" would a meaningful goal. And please drop that silly precondition - I've never seen an approach that could scare away all developers of any cool free software. – nealmcb – 2011-09-13T02:31:05.173

Why can't the government buy up all the bitcoins and shut things down? – None – 2013-04-08T06:30:27.553

5@steveHacker: The more they tried to buy, the higher the price would go. They'd have to spend more and more money and they'd never get all of them. Everyone who held Bitcoins would be rich, and if we needed to, we could just start over with a new currency. Many more people would adopt the new currency in the hopes that the government would make the price of that shoot up too. It would totally backfire in every possible way. – David Schwartz – 2013-04-08T09:28:08.813

2@nealmcb Removed US-centric references. I left the precondition simply because any objection to that can be explained in answers. I agree it is very unlikely any govt could halt all work on any open source project. – DeathAndTaxes – 2011-10-19T13:32:05.603

3This question is too subjective and speculative for a quality Q&A site, not to mention overly localised. – eMansipater – 2011-09-06T20:34:38.113

11The question is certainly not subjective. It might, though, be broad, but it addresses one of the biggest risks to Bitcoin. It is also not localized. The reason for only mentioning the US government is that it is the most powerful threat. If this could not stop Bitcoin, then no other could. – David – 2011-09-06T22:07:49.510

1This is not a Bitcoin strategy site, it is a Q&A site. It isn't overly concerned with "addressing one of the biggest risks to Bitcoin." It's concerned with the creation of quality Q&A content that will be of general use to the internets at large. Any question that attracts answers like "My predictions are", "I think", "It seems", etc. is a poor fit here. – eMansipater – 2011-09-08T21:36:45.713

3Who is talking about strategy? I am talking about risk. The question does not encourage subjective answers, but the topic is admittedly a difficult one. You are welcome to add an answer, which is more objective than the accepted one, and I will consider accepting yours instead. – David – 2011-09-09T17:36:57.363

If you rephrase it as a technical question like "How technically difficult is it for a well-funded, law-enforcement backed adversary to shut down the Bitcoin network?" I would be happy to. As it currently stands, there is only very hypothetical speculation possible. – eMansipater – 2011-09-10T13:06:03.577

Answers

26

I think the best way of analyzing your question would be to break the destruction of the Bitcoin into categories. There is the notion of a hard destruction meaning an attempt is made to physically compromise the Bitcoin network either by a 51% attack or international legislation. And there is the notion of a soft destruction, where attempts are made to De-legitimize the currency through media manipulation and also persistent DDOS attacks on the infrastructure supporting the Bitcoin.

In terms of Hard Destruction, I can identify the following scenarios:

  1. The NSA or some other entity with both the budget and experience create a VLSI project to both develop and deploy an ASIC design that would result in a 51% attack

  2. International regulation is developed that significantly inhibits one's ability to exchange Bitcoins for local currencies. Essentially forcing the Bitcoin underground like a drug cartel

  3. A mathematician discovers how to break ECDSA (very unlikely)

  4. Innovation results in the Bitcoin being replaced with another currency

In terms of Soft Destruction, I can identify the following scenarios:

  1. The media alongside a covert multi-government effort conduct several propaganda campaigns to sway public opinion that the Bitcoin is either a massive scam or somehow bad

  2. Cumbersome regulations are adopted to monitor and control Bitcoin exchange

  3. Persistent DDOS attacks occur on the major exchanges like Mtgox and also the supporting infrastructure

  4. One way to attack Bitcoin would be to have large amounts of money alternately pushed into Bitcoin and pulled out of Bitcoin, thereby massively increasing volatility. These market fluctuations could be aggravated by a covert government programme of destructive funding and public dis-information. This would make doing business in Bitcoin more difficult.

In all honesty, the Bitcoin is an experiment. We have no idea what will happen and who will oppose it.

Charles Hoskinson

Posted 2011-09-01T14:54:12.563

Reputation: 1 014

Thank you david. I discuss this in my course if you're interested: https://www.udemy.com/bitcoin-or-how-i-learned-to-stop-worrying-and-love-crypto/

– Charles Hoskinson – 2013-04-21T19:44:13.717

You are welcome. Thank you for sharing your teaching. – David – 2013-04-21T19:49:03.570

My goal is for the community to help me build it. We need to correct all this bad PR that the media has been inflicting upon us and the best way of doing that is with knwoledge – Charles Hoskinson – 2013-04-21T19:54:26.367

1Isn't forcing Bitcoin underground a "soft attack" instead of a "hard attack"? – Pacerier – 2013-08-15T18:22:24.237

46

Honestly, I think the best way for the government to shut down Bitcoin would be as a secret project. Simply construct a VLSI ASIC miner built using 40nm/1Gtransistor technology and build 100,000 of them. Effectively make them appear distributed around the world using VPNs, the bandwidth is low. Then execute frequent 51% attacks on the Bitcoin chain to "unconfirm" transactions to major sites. Confidence in the Bitcoin system would drop to nothing.

Another trick would be to switch the miners off and on unpredictably. If done right, this could lead to hours between confirmations at some times.

One can imagine the community responding to this in a coordinated way to develop a workaround. But if you assume subversion and interference in that process, such a response could be avoided.

Of course, they could also summarily execute anyone found using Bitcoins. It's effective too, but also pretty unlikely.

David Schwartz

Posted 2011-09-01T14:54:12.563

Reputation: 48 957

(40nm is quite big, Intel and TSMC are in the 20s now.) – Eyal – 2013-04-08T18:46:53.540

David would you mind doing a guest lecture for the Bitcoin Education Project on Ripple? We are building a free crowdsourced class on Bitcoin and we're trying to bring everyone in the P2P cryptocurrency community together to do guest lectures for the mainstream. https://www.udemy.com/bitcoin-or-how-i-learned-to-stop-worrying-and-love-crypto/. Contact me at charles.hoskinson@gmail.com

– Charles Hoskinson – 2013-05-05T20:26:28.847

David Schwartz, the security of PGP, Bittorrent, Wikileaks, and the others does not depend on some sort of "51% computational power" property. We cannot infer anything about the probability of NSA wrecking Bitcoin (at the behest of the whitehouse/congress) from these previous situations. – eldentyrell – 2011-10-15T05:23:58.997

1I don't see how your second claim follows from your first. Of course each situation is different, but all of these situations show us exactly how far the government is willing to go to respond to a threat. – David Schwartz – 2011-10-15T05:58:38.173

2@DavidSchwartz I agree with eldentyrell that Bitcoin is somewhat unique. Shutting down bittorrent is very difficult and likely impossible (would still exist outside the US). Strong encryption can't be broken by governments not due to a lack of will (if CIA or NSA could break strong encryption and read any cipher text as plain text I am sure they would) but because it is strongly built and may also be impossible to break. Bitcoin could represent a larger target simply because it is achievable. A 51% attack may never be economically viable but that hasn't stated governments in the past. – DeathAndTaxes – 2011-10-19T13:36:10.947

2+1 Thank you for sharing these possible way to disrupt the network. My confidence rises, as I believe they are very unlikely. – David – 2011-09-01T20:09:47.627

2I agree. One piece of evidence is that they didn't do similar things to bitorrent and haven't been effective against Wikileaks or against encryption when it first came out. Of course, the conspiracy theory would be that Bitcoin could be different because it could threaten the federal reserve, the banking elites, and the financial world order. I would argue that while Bittorent never did that, PGP and Wikileaks were similar threats and efforts on those were ineffective and didn't involve mysterious disappearances. – David Schwartz – 2011-09-01T20:10:38.513

2Old post, but fascinating question nonetheless, and great answer (as usual) by David Schwartz. Out of curiosity, I did a 'back of the envelope' calculation to see how much it would cost to amass enough computational power to pull off a 51% attack like David Schwartz describes. Today's hash rates for the entire bitcoin network are around 600,000,000 GH/s. Mining hardware that can do 4700 GH/s can be had for ~$2500. So, $320M could purchase enough hardware to match the current hash rates for the entire network. Not much for most sovereign nations (or well-funded terrorist groups). – mti2935 – 2015-12-10T17:24:26.273

@mti2935 Cool stuff, can you redo the calculation for today's situation? Bitcoin is currently worth $100B. – croraf – 2017-10-23T20:34:19.687

Croraf, Sure. According to blockchain.info, the current hash rate (on 10/24/2017) is 10,232,776,652 GH/s. I see that Antminer S9 units capable of 14 TH/s are selling on Amazon for about $3200. So, it would take about 730,000 Antminer S9's to match the computing power of the bitcoin network, which would cost about $2.3B - quite an increase from Dec 2015. Of course, this also doesn't take into consideration costs for electrical power, cooling, etc. – mti2935 – 2017-10-24T16:55:52.697

10

My predictions are they cannot close it down, but they can undermine confidence by: accepting anti-Bitcoin law, closing exchanges, closing Bitcoin businesses (according to law), infiltrating Bitcoin client developers, attacking the network (this is very extreme, low probability of happening).

By publicly attacking Bitcoin, they would feel the heat from people. Governments around the world are currently loosing support on every step they make and this would be no exception.

Edit: they CAN close it down by shutting down the internet (most extreme, government would most probably fall as a result)

klemen

Posted 2011-09-01T14:54:12.563

Reputation: 665

10

It seems to me that this question can be answered by substituting Bitcoin for similar technology and re-posing the question. For example: "How easily could the U.S. Government shut down bittorrent" is quite similar and has already been answered. The U.S. Government has TRIED to shut down bittorrent and its associated sites a great many times. The Government knows with 100% certainty that bittorrent is not only being used for illegal activities but also knows that its use for illegal activities greatly outweighs its use for legal ones. There are many good comparisons worthy of note, but here's the big one: The U.S. Government hasn't gone after bittorrent itself.

The reason for this is twofold: First it is both difficult and unreasonable to outlaw something simply because it could be used in an illegal manner. Bittorrent in and of itself is a tool, like a screwdriver and as such cannot reasonably be declared illegal. As a competing currency, Bitcoin may be different enough to be vulnerable in this aspect. The second and far more important reason is that they simply can't. Distributed protocols like bittorrent or Bitcoin make it almost impossible to shut them down. For every governmental countermeasure there is a personal countermeasure and it's easier to find the actual criminals if you haven't driven them all to TOR or I2P.

The government cannot shut down the protocol. They are aware of this and instead pursue individual criminals. Attempting to shut down the protocol is futile and only makes it harder to catch individual criminals.

David Perry

Posted 2011-09-01T14:54:12.563

Reputation: 14 120

1@DavidPerry While it is a non-trivial task saying they "can't" is somewhat misleading. Bittorrent is more hardened against attacks. It doesn't rely on public confidence as much as a currency would, it can easily rebound after being attacked, it doesn't have 51% vulnerability, it doesn't have pump and kill vulnerability (raise difficulty to many magnitudes to increase block time), etc. A government (or any entity with sufficient resources) has a lot more options to attack the Bitcoin network and the network is more vulnerable to attacks both technically and socially. – DeathAndTaxes – 2011-10-14T20:44:38.873

4I believe there is a big difference between bittorrents being used to violate copyright laws and Bitcoin network being used to finance terrorism. This big different would also affect what the government would be willing to do to stop a network. – David – 2011-09-01T20:06:32.470

1Their willingness means little in the face of their incapacity. It is of little good for them to take a harder stance since the technology prevents them from taking that stance effectively. Distributed technologies are a real-world Pandora's box: once opened, it can never be closed. – David Perry – 2011-09-01T20:21:21.103

1

In many cases a government could effectively shutdown bitcoin in its country by making the following law:

No licensed or regulated financial institution can exchange currency for bitcoin.

Since taxes and fees for government services must be paid in currency, if I receive bitcoin for services, I would have to exchange the bitcoin for something else that could then be sold. A country would have to be extremely messed up for a significant number of people to want to do this.

And in countries where this did not work, they could forbid the usage of bitcoin; which would make using bitcoin on the black market difficult as you could only barter in none transparent black markets situations.

Jonathan Harris

Posted 2011-09-01T14:54:12.563

Reputation: 33

0

They could DDOS the network since the blockchain can only handle about 3 transactions / second if a party (Or group of parties) were to generate say 6 / second on over the course of weeks or months it would pretty much make it so no one would be able to have a durable transaction.

Zachary K

Posted 2011-09-01T14:54:12.563

Reputation: 191

Shouldn't transaction fees drain him? – croraf – 2017-10-23T20:42:45.203

-2

Easiest way is to kill power/internet that the network so desperately needs.

JohnHanks

Posted 2011-09-01T14:54:12.563

Reputation: 253

-2

Nothing need be done technically. Just economics. Supply and demand. Government has infinite resources. With unlimited use of the money supply, make the system so volatile as to loose favor with the Bitcoin network. Corner the market, then crash it for instance.

mark

Posted 2011-09-01T14:54:12.563

Reputation: 1

1Hi mark, welcome to the bitcoin stack exchange. I see you've made an effort to answer this question, and I think you have an insightful point (mainly that bitcoin could be shut down by non-technical methods), but I think your answer could use a bit more elaboration. How could a government make bitcoin (more) volatile? What do you mean by "Corner the market, then crash it for instance?" – morsecoder – 2015-01-12T03:02:57.840

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Could be pretty easy. At least to cause people to pull out of bitcoin. If a government setup a massive covert trusted exchange platform, such as mt.gox, or bigger. They could have tons of coins being processed at any given time. Then the exchange shuts down, not unlike mt.gox. If the mt.gox disaster happened today with such a high value on the coins ($4000usd+), maybe even on a bigger scale, also assuming many people may have actually paid cash to acquire these bitcoins, it would sink it once again. If you manage to take your money out at the right time, thats great. But to store them away by allowing people to purchase goods from you using bitcoin, is a very risky way to do business.

benj56

Posted 2011-09-01T14:54:12.563

Reputation: 1