One of the first criticisms of the bitcoin proposal on the cryptography email list appeared on Monday, Nov. 3, 2008:
> As long as honest nodes control the most CPU power on the network
> they can generate the longest chain and outpace any attackers.
But they don't. Bad guys routinely control zombie farms of 100,000 machines or more. People I know who run a blacklist of spam sending zombies tell me they often see a million new zombies a day. This is the same reason that hashcash can't work on today's Internet -- the good guys have vastly less computational firepower than the bad guys.
I also have my doubts about other issues, but this one is the killer.
Before we get further, lets point out that the author of this critique is entirely correct. However, his point here - if taken further - becomes not a critique of bitcoin but in fact the thing's very raison d'etre!
Today this kind of critique is phrased differently. "Bitcoin is controlled by a conspiracy of chinese miners" claim similar voices across the blogosphere. And perhaps they also are correct. While the veracity of a claim that one party or another is "the bad guy" is beyond the scope of this post, we can still agree that the bad guys could control the hashpower, and could conspire to cartelize or make a monopoly in the business of bitcoin mining.
Can you agree that it's possible? It's important to consider this before we move on. Perhaps you feel the majority of SHA256 hashpower on the bitcoin network is "good guys", but.. do you acknowledge that bad guys could get their hands on more, at least temporarily, if they needed to?
Now that you are in the suspicious mindset, lets take a look at another kind of coin: the fiat unit, for example the so-called "united states dollar". The means of production of this coin are printing presses and bank computers. The limits of the production are, well, there aren't any public limits because this is a private coin.
Do you think maybe the bad guys could get a hold of some printing presses? Do you think the bad guys could get control of a bank computer? Maybe, right?
You see, the improvement of bitcoin here is that it limits the power of those bad guys who have taken control of the system. Money creation events become public and therefore limited by checks and balances of oversight.
The bad guys can leverage their resources here to get 12.5 BTC every 10 minutes. Now you do the analysis for fiat please: how many dollars do the bad guys get, and what resources does it cost them?