Neither the author, Kai Morris, nor this website, The Tokenist, provide financial advice. Please consult our website guidelines before making any financial decisions.
Bitcoin is in an uncomfortable position. Statistics from Glassnode show that the current BTC mining process is having a negative impact on transaction speed given the mass exodus of China’s miners. On June 28, the average block confirmation time was 1,958 seconds (or 32.6 minutes) – the longest time since 2009, the year Bitcoin was created.
For context, it typically takes 10 minutes for a block confirmation. Let’s take a look at why this happened and whether such behavior could make the Bitcoin network vulnerable to security.
Bitcoin mining is feeling the effects of the Chinese ban
The reason Bitcoin transactions took so long on June 28th was because miners are currently leaving China as they were forced to leave the country. This has left the miners unable to grapple with the Bitcoin blockchain while trying to relocate and find suitable places to continue their work.
As a result, there are fewer active miners on the network, which has resulted in longer transactions as there are fewer people who can easily process blocks in the chain. It appears June 28th was the worst, with block confirmation times of 32.6 minutes. To put this into perspective, Bitcoin requires six block confirmations before a transaction is treated as real and fully verified, which means a full transaction would take 192 minutes (or 3.2 hours) that day.
For context, the Bitcoin network aims for blocks to be confirmed within 10 minutes (although this goal is not always achieved). However, the block confirmation times decreased the next day, moving to a much more reasonable 13-15 minutes.
Such long confirmation times used to be a thing of the past. It wasn’t since 2009 when confirmations took so long, which, by the way, was Bitcoin’s year of birth. At the time, Bitcoin didn’t have a set price, and Satoshi was still an active member of the community, mining from their own CPU.
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Is Bitcoin Mining Difficulty Decreasing a Security Issue?
A fair question would be whether Bitcoin is exposed to attacks or other malicious behavior as a result. Hacks took place on other blockchains like the Binance Smart Chain this year and on smaller DeFi projects last year. Although these attacks targeted protocols built on top of blockchains rather than the actual blockchains themselves, the situation still gives rise to concerns about the security of Bitcoin.
First, understand that bitcoin miners are a huge part of the network. Not only are they needed to validate and facilitate all transactions, but they also play an important role in maintaining the security of the blockchain.
Bitcoin works best when it has more miners. This can be seen in the recent decline in miners that triggered the increase in transaction times. More miners mean the network is running faster and faster.
It is reasonable to fear that the network could be more at risk if fewer miners or at least fewer miners with enormous resources (electricity and hardware) are available to secure the Bitcoin blockchain. It’s not that simple, however. More miners are important, but more important is the distribution of miners.
Bitcoin is strongest when it is most decentralized and this is because a high concentration of miners in one place or a large number of miners pooling all their resources (rather than working independently) makes the network vulnerable to 51%. -Attacks can make.
In the event of a 51% attack, over 50% of a blockchain is controlled from a central point. This is where most miners (or validators, when it comes to certain proof-of-stake consensus mechanisms) work together to gain control of the blockchain and then manipulate it through their own transactions.
An article from the University of the West of Scotland goes into detail on how these attacks work. In theory, it seems easier for a 51% attack when there are fewer active miners, but the truth is, the distribution of miners is more important.
Despite the fact that there were more active miners before China’s raid, it also meant there were more miners in a given location, which allowed China to potentially disrupt the blockchain if it wanted to. But now that these miners are spreading to other countries, due to their distribution, this reduces the risk of a coordinated attack and thus increases the decentralized nature of Bitcoin.
In essence, the June 28 reduction in miners didn’t pose too much of a safety risk because although there were fewer miners than before, there were more miners around the world. It is unlikely that transaction times will return to more than 30 minutes for a while as most miners have either successfully moved or are in the process of doing so, so this behavior is not expected to repeat itself.
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About the author
Kai Morris is a crypto and DeFi specialist and researcher. He holds a BA Hons in Law and Philosophy from the University of Essex, where he studied complex economic, legal and ethical theories relevant to the FinTech landscape. Kai has a particular interest in decentralization and privacy blockchains as they relate directly to our human rights and our prosperity. He takes care of Blockchain, DAG and DeFi in order to positively change our lived experiences. Kai is an investor in Ethereum and Monero.