What Is Censorship Resistance?

How can a digital currency like Bitcoin resist censorship?

The phrase “censorship resistance” is often used by those in the Bitcoin (BTC) community.

To many of us, censorship Involves the political right to speak and write candidly without restrictions from government or powerful companies. So how is this concept related to digital currencies?

With many economies now transitioning to cashless payments, and consumers having access to new methods of transactions like mobile payment apps or digital banking, one might think that we live in an era of financial freedom.

Bitcoin and other digital currencies were created to ensure a stronger sense of freedom than what was previously available — one that would provide consumers with more convenience and choices.

No matter which mobile finance app consumers use, there is always a centralized authority – such as a bank or fintech firm – that has complete control over the users’ funds.

These authorities function as middlemen between users of traditional (or “fiat”) currencies.

Because they sit in the middle of transactions, financial intermediaries have the power to halt exchanges that they find questionable or undesirable. Although this authority is usually invoked to stop criminal activity (like money laundering), it also takes away users’ freedom and control over their own assets.

Users who only transact in government-backed currencies are susceptible to having their assets seized by the state—for example, if a nation imposes sanctions or capital controls to stop investors from moving money out of the country.

Blockchain-based currencies, such as Bitcoin, are designed to be decentralized and without intermediaries — making it difficult for anyone to censor a particular transaction.

This is one of the fundamental concepts behind censorship-resistance when we speak of digital currencies. Another meaning is tied to the technical design of blockchain networks and their use of cryptography to ensure that transactions are irreversible once completed.

“Immutability” is the term used to describe something that cannot be changed. No matter what kind of changes occur in society or politics, the history recorded on a shared ledger cannot be overwritten to suit someone’s agenda.

Although it is unlikely, a 51% attack could theoretically compromise the immutability of the Bitcoin network. In this scenario, a malign actor would control a majority share of the network’s resources and intentionally disrupt or alter transactions on the blockchain.

An attacker would be able to reverse their own transactions in this particular type of attack (double spending becomes a possibility), but wouldn’t have the ability to tamper with other users’ transactions.

The likelihood of a 51% attack on a large network such as Bitcoin is very low, as the resources required to carry out such an intervention are likely to be more costly than the prospective illicit gains.

Smaller networks, with a lower hash rate (i.e. lower levels of participation), have been victim to such attacks in the past (for example, Monacoin (MONA), Bitcoin Gold (BTG), and Ethereum Classic (ETC)).