Unlike other payment systems, bitcoin does not rely on central authorities or third parties such as banks to complete payments. Instead, a decentralized network of regular users’ computers is used to enforce the rules of the bitcoin payment system. Without a central authority, there is no single point of failure in the system – trying to take over bitcoin would be like trying to take over the internet.
This article explains how an attacker could try to target individuals by taking over just a small part of the bitcoin network, and also why attackers would have trouble trying to take over the entire bitcoin network.
Attacks on Individuals
There’s a long list of attacks that target individual bitcoiners. Most of these attacks include scams where attackers try to steal bitcoin. All bitcoin users must be careful to avoid these scams because a digital currency is a prime target for hackers and scammers. It doesn’t matter if you own a small amount of bitcoin or a large amount, and it doesn’t matter if you are well known or anonymous – you must always be careful to not fall for scams. Sometimes scams are targeted towards individuals, but many times scammers cast a wider net by using techniques such as phishing scams and malware.
It is true that most bitcoin attacks on individuals are done so for monetary gain, but this isn’t always the case. There are sometimes cases where an attacker may want to censor an individual’s transactions or remove their node from the bitcoin network completely.
If you are an average bitcoin user, it’s extremely unlikely that anyone will try to censor your transactions or cut your node off from the network. While this is true now, there is the possibility that in the future governments could make it illegal for their citizens to use bitcoin. The centralized nature of internet service providers (ISPs), and the control that government has over them, could prove to be problematic. Governments could force ISPs to block traffic to and from the bitcoin network. However, with the right tools, users would be able to circumvent these bans and continue taking part in the global bitcoin economy.
Taking Over the Bitcoin Network
While attacks on individuals are plentiful, attacks on the entire bitcoin network are much rarer. Just trying to take over the bitcoin network would take a lot of money and resources, and the attacker would almost certainly end up failing.
A famous example of a failed bitcoin takeover attempt was called Segwit2x. Segwit2x was an attempt by many powerful bitcoin businesses to coerce users into changing the rules of bitcoin. However, because of bitcoin’s decentralized nature, it is very difficult to coordinate upgrades to the system if the upgrades are not backward compatible. Essentially, almost every bitcoin user must agree to upgrade to the new rules at the same time. Even with as much corporate power backing up Segwit2x as it had, including most of the mining pools who secure the network, they were unable to force their will on the bitcoin network. Instead, bitcoin users around the world stood their ground and were not willing to compromise the decentralization of bitcoin. This example of Segwit2x shows that even the very rich and powerful cannot easily take over the bitcoin network.
Still, there are governments and corporations out there who are much more rich and powerful than those who backed Segwit2x. Governments get much of their power because of their control over the money system, so it is in their best interest to see bitcoin fail. While it is extremely unlikely and unfeasible for them to attempt to take over the bitcoin network through technical attacks, a more likely scenario would be governments performing social attacks on bitcoin. We already see many Western governments portraying bitcoin as a tool for terrorist financing and money laundering, when in reality those things account for a very small part of bitcoin usage.
Governments could also attempt to take over the bitcoin network by forcing mining pools, bitcoin exchanges, and ISPs to work together under the government’s control. However, it is important to remember that bitcoin is a global decentralized payment system, so even if a few major governments worked together to try to take over the bitcoin network they would likely fail.