Subject: Re: [bitcoin-dev] A reason we can all agree on to increase block size

From: odinn <[email-masked]>
Date: Sun, 02 Aug 2015 20:13:21 -0700

Jim, some good points... People are rightly concerned about any given
regional or nation-state's dominance in mining, but China has
certainly become more of a subject of concern as of late, and not
simply because it is a communist country and because its economy is
highly centralized and state-run, but rather, because of the advent of
newly proposed or adopted laws (not unlike those which we see being
proposed in the UK or those recently adopted in France, so that no-one
may say I am unfairly targeting China).  Further, the recent shots off
the bow between the USA and China in the latest crypto-wars saga
(whether bluster or ultimately not) mean that we should be seriously
concerned about too much mining happening in one specific region; thus
there shouldn't be too much incentive for that to happen, yet at the
time being (as you've rightly pointed out) the subsidization of
electricity there, combined with the availability of certain
environmental conditions for cooling and / or hydropower, means that
China dominates the mining realm.

Recently I took the time to ask someone associated with a new bitcoin
mining operation in China some questions about the new (apparently
developing) National Security Law of China.

According to an early draft of this National Security Law, "the State
maintains the basic economic system and order of the socialist
marketplace ... safeguarding security in important industries and
fields that influence the populace's economic livelihood ... as well
as other major economic interests."

The Chinese government is currently reviewing another national
security related law, which in its first draft would mandate ALL
Internet companies operating in China to provide backdoor access and
encryption keys to the government.  (One would imagine that would
include any exchanges and mining operations as well.)

The US FBI Director (Comey) has also, of course, made plenty of
arguments for backdoors in encryption.  But as security expert Bruce
Schneier points out, there "really is no way" to keep users' data safe
while providing backdoors. He said:

    "I have two options. I can design a secure system that has no
backdoor access, meaning neither criminals nor foreign intelligence
agencies nor domestic police can get at the data. Or I can design a
system that has backdoor access, meaning they all can."
(Reference:
http://www.zdnet.com/article/because-there-is-no-such-thing-as-a-secure-
backdoor-gosh-darn-it/
)

Anyway, the response of the individual (eric@haobtc - of haobtc.com)
to my questions can be seen here:

https://bitcointalk.org/index.php?topic=1072474.msg11914077#msg11914077

His responses were provided to me before the recent "Crypto Wars"
announcements which I think will only think make things worse:

https://twitter.com/helios_unbound/status/627648646985719809

So, I try to be optimistic, but I'm leaning pessimistic right now
about the situation with the effect of the Crypto Wars combined with
the dominance of Chinese mining plus China's development of new laws
that seem to involve further attempts to backdoor hardware and / or
software.  Obviously this doesn't break bitcoin for mathematical
reasons that everyone on this list is already familiar with I'm sure,
but it is concerning to me, and now I will /endrant

On 08/02/2015 02:02 PM, Jim Phillips via bitcoin-dev wrote:
> China is a communist country. It is no secret that all
> "capitalist" enterprises are essentially State controlled, or at
> the very least are subject to nationalization should the State deem
> it necessary. Most ASIC chips are manufactured in China, so they
> are cheap and accessible to Chinese miners. Electricity is
> subsidized and essentially free. Cooling is not an issue since
> large parts of China are mountainous and naturally cool. In short
> the Chinese miners have HUGE advantages over all other mining
> operations. This is probably why, between just the top 4 Chinese 
> miners, the People's Republic of China effectively controls 57% of
> all the Bitcoin being mined.
> 
> The ONLY disadvantage the Chinese miners have in competing with the
> rest of the world is bandwidth. China has poor connectivity with
> the rest of the world, and Chinese miners have said that an
> increase in the block size would be detrimental to them. I say,
> GOOD! Most of the free world has enough bandwidth to be able to
> handle larger blocks. We need to take advantage of that fact to get
> mining out of the centralized control of the Chinese.
> 
> If you're truly worried about larger blocks causing
> centralization, think about how, by restricting blocksize, you're
> enabling the Communist Chinese government to maintain centralized
> control over 57% of the Bitcoin hashing power.
> 
> -- *James G. Phillips IV*
> <https://plus.google.com/u/0/113107039501292625391/posts>
> <http://www.linkedin.com/in/ergophobe> /"Don't bunt. Aim out of the
> ball park. Aim for the company of immortals." -- David Ogilvy /
> 
> /This message was created with 100% recycled electrons. Please
> think twice before printing./
> 
> 
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