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Censorship

Governments And Large Institutions Can Buy All The Bitcoin They Want (Except Yours)

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An X post by Anita Posch warning about the risks of governments and institutions buying up large amounts of bitcoin went viral this week— even if just because of the trollish community note that appeared underneath it. I think the main concern here is that these big holders could influence the Bitcoin consensus rules to impose censorship.

When it comes to censorship specifically, mining centralization is actually a more direct threat. But if it’s just miners censoring, it would only last for as long as a majority of miners is willing to keep doing it— at the expense of forfeiting transaction fees. If and when the censorship stops, transactions would start confirming again as if nothing happened.

If economic nodes were to enforce censorship as new protocol rules as well, however, it can indeed be considered a soft fork. In this scenario, miners can’t revert from the censorship without splitting the blockchain between “upgraded” (censoring) and non-upgraded nodes; that would constitute a hard fork. Buyers and sellers of the two versions of bitcoin would then determine which blockchain is more valuable; this is why some bitcoiners are concerned about governments and other large institutions accumulating a significant share of the bitcoin supply.

It’s a reasonable concern, and something to be aware of. At the same time (and similar to my argument in this Take), it’s not obvious to me that governments or large institutions would be willing to risk it all by betting on a censorship fork of Bitcoin. But even more importantly, there isn’t much we can do to stop governments or other institutions from buying bitcoin anyways— nor should there be, as that would (ironically) itself represent a form of censorship.

The best countermeasure, in this regard, was actually already proposed by Nikolaus: Don’t sell MicroStrategy your bitcoin.

This article is a Take. Opinions expressed are entirely the author’s and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.



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Censorship

Forget About The Strategic Bitcoin Reserve For A Moment — Mining Censorship Is Back

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The news got buried in part due to Trump’s inauguration and subsequent rumblings of a Strategic Bitcoin Reserve (SBR), but developer b10c recently published research showing that F2Pool — a mining pool representing ~11% of hash power on the Bitcoin network — is censoring OFAC-sanctioned transactions… again.

In case you don’t know what this means: the US Department of the Treasury’s Office of Foreign Asset Control (OFAC) maintains a list of sanctioned entities, including a number of Bitcoin addresses; it’s illegal to do business with these entities under US law. It’s actually unclear if this means miners cannot include transactions to and from these addresses in blocks they produce — but F2Pool appears to be rather safe than sorry.

Now, as long as it’s just F2Pool applying this policy, this is not really an issue. Some transactions will be delayed by about ten minutes or so, once in a while, but that’s about it.

If more pools start doing it, the delays will get longer and more frequent — but still not terrible. Not even if it’s a majority of pools.

The real issue will arise if a majority of mining pools not only censors transactions, but also refuses to build on top of blocks that do include these transactions. If this were to happen, these transactions wouldn’t confirm at all anymore… not for as long as these mining pools remain a majority. Bitcoin would no longer be censorship-resistant.

I can’t really fault F2Pool for adopting their policy. Although I would much prefer it if no mining pools censor, we unfortunately live in a world where even open source software developers may face prison time for enabling users to transact freely.

Rather than flirting with an SBR, it would be great if the new Trump administration first just stopped such state attacks on Bitcoin.

This article is a Take. Opinions expressed are entirely the author’s and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.



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