COMPUTERS


Bitcoin is vulnerable to sabotage from the Chinese government because of its overwhelming exposure to the country, researchers have warned.

Beijing could render the Bitcoin network effectively useless by taking control of the powerful computers used to maintain the digital currency, which are largely based in China, according to a report from security companies Hacken and Gladius.

This is cryptocurrency explained in video

Bitcoin is seen by its supporters as free of government control, a feature that is highlighted as one of its key benefits.

The digital currency is maintained not by any central organisation but by a collection of “miners”, computers that are rewarded in new Bitcoins for updating the ledger of all transactions known as the blockchain.

As Bitcoin has grown, it has required more expensive and powerful computers, and meant mining has migrated to parts of the world where electricity is cheap, in particular China.

Some 77.7 per cent of the “hashpower” – the computing strength behind Bitcoin – is now based in China, according to the report, leaving the network vulnerable. The majority of the specialised hardware used to mine Bitcoin is also made in China.

“It is obvious what this country can do to the network. [It] is over-exposed to China and the government can sabotage it,” said Vladyslav Makarov, an author of the report.

Bitcoin transactions must be confirmed by a consensus of users, which protects the currency from cyber attacks.

However, if one party were to control more than half of its processing power, they would be able to manipulate Bitcoin in a way that renders it useless, the report says. Such a “censorship attack” would cause transactions to grind to a halt, be completed twice, or result in Bitcoins disappearing from wallets. These events could be launched by Beijing if it coerced enough miners in the country.

Beijing has already proven itself to be sceptical of Bitcoin and other cryptocurrencies, prompting fears about financial stability and capital flight. This year China has already banned initial coin offerings, a form of crowdfunding that involves companies issuing cryptocurrency-like tokens, and has shut the online exchanges that allow people to buy and sell cryptocurrencies.

Neither act dampened appetite for Bitcoin, whose price rose to an all-time high near $US20,000 this month, before dropping back last week.

An attack on the network could have potentially devastating effects. Even if it does not completely freeze the network, it could cause a confidence crisis that leads to Bitcoin’s price collapsing.

It is obvious that a huge amount of hashpower concentration in a single jurisdiction is detrimental to the health of the Bitcoin ecosystem.

“It is obvious that a huge amount of hashpower concentration in a single jurisdiction is detrimental to the health of the Bitcoin ecosystem,” said Hacken’s Hennadiy Kornev.

Adam Anderson from Gladius said that the damage from such an attack could be limited by cloning, or “forking”, Bitcoin to create a version less vulnerable to Chinese influence.

“[However], I’m not sure faith in Bitcoin could be restored,” he said.

The Sunday Telegraph, London

THE WORLDS RICHEST PERSON BILL GATES TO REACH THE 1ST TRILLIONAIRE STATUS

BILL GATES MICROSOFT SUPER RICH IMAGE www.acbocallcentre.com

Will Bill Gates be the world’s first trillionaire? Photo: AP

The world’s first trillionaire could emerge within just 25 years, financial forecasters have claimed.

Bill Gates, the Microsoft founder and world’s richest person, is expected by many to be the first to reach trillionaire status.

If the world’s greatest fortunes continue to grow at their current rate, boosted by the rapid wealth creation in emerging markets such as India and China, then Gates or one of the planet’s super-rich elite could have a trillion US dollars to their name by 2039, according to some predictions.

Others, such as investment bank Credit Suisse, believe there will be 11 trillionaires within just two generations.

“Two generations ahead, future extrapolation of current wealth growth rates yields almost a billion millionaires, equivalent to 20 per cent of the total adult population,” the bank wrote in its annual Global Wealth Report last year.

“If this scenario unfolds, then billionaires will be commonplace, and there is likely to be a few trillionaires too, eleven according to our best estimate.”

A trillion dollars is a million million or $1,000,000,000,000, the equivalent of $US140 for every person on the planet.

It is enough money to buy up every last inch of property in central London at today’s prices, according to The Times.

Mr Gates, 58, currently the richest man on Earth with a fortune of about $US120 billion, is widely expected to be the world’s first trillionaire.

If the US national wealth carries on growing at its current rate and the richest few continue to increase their share of it in an increasingly polarised economy, Mr Gates will claim the title of world’s first trillionaire in his old age.

The share of America’s national wealth held by the country’s 400 richest individuals has more than tripled from less than one per cent to three per cent since the Forbes 400 list was launched in 1982.

American tax lawyer Bob Lord, who writes for Inequality.org, believes the growing concentration of world wealth will lead to a trillionaire in just a quarter of a century.

“We’re sliding back to Gilded Age levels of wealth concentration,” he said. “My guess is 2039 is the most likely time frame to cross that threshold.”

When Forbes began tracking the wealth of the richest 400 Americans, those with $US75 million could make it onto the low end of the list. Now at least $US1 billion is needed.

Other contenders for the world’s first trillionaire include Carlos Slim, the Mexican telecoms mogul and legendary US investor Warren Buffett.

But there are some that doubt the 25-year predictions and believe it may take few generations for another Gates-style entrepreneur to take the title.

Oliver Williams, of the London-based consultants Wealth Insight, told The Times: “You can’t be exact on when we will see the first trillionaire, and it is ‘when’ not ‘if’, but it is doubtful that it will be within 25 years; double that estimate would be more likely.

“The first trillionaire will be an inventor, someone who creates something world-changing, like Bill Gates did with the PC.

“It might be a solution to a global problem, such as the lack of fresh water, or something the world didn’t know we needed, like Facebook.”

Mr Williams believes the world’s first trillionaire would almost certainly be based in the US, where wealth accumulation is most acute.

Others argue they may come from a fast-growing economy such as India.

The Telegraph, London

Henry Sapiecha

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