What is censorship resistance in blockchain technology?

When a country or government wants to bring down an influential person or organisation, one of the first things they do is lock their assets and freeze their bank accounts. In a way, it paralyses the person or organisation, and the government can then try to persuade them into doing what they want.

We've seen such influence recently put into practice with western sanctions on Russia after the Kremlin invaded Ukraine. While it may seem like an apt thing to do to weaken an individual or organisation, there is always a chance of misuse.

This article discusses censorship resistance, a feature of blockchain technology that can help avoid such mistreatment from authorities.

Censorship resistance is the feature in blockchains that ensures a transaction will go through as long as all the set criteria are met. This ensures that, no government or organisation can influence or alter transactions on a blockchain, regardless of the amount of power they wield.

Censorship resistance in blockchains is entirely unlike how regular banks work — where everything is tracked, and governments can ask banks to freeze certain assets and accounts or even stop transactions from happening. In a world where everything works on money, any organisation or government controlling it leads to disproportionate power distribution.

Censorship resistance could also refer to the blockchain's immutable record of transactions. Blockchains are basically distributed ledgers. Every node in the system stores and updates its version of the ledger containing details of all the transactions ever carried out. Therefore, no government or authority can censor/alter transaction details.

Blockchains, at least the major ones like Bitcoin and Ethereum, are revolutionary because they deliver the power back to the people. It is the equivalent of the Italian protest song of the 19th century, Bella Ciao, but with real-world applications.

The first importance of censorship resistance is that it provides a way for people to own assets without the stamp of authority of governments. It doesn't take long for good governments to turn sour or turn against a minority or develop into dictatorships. But if people transact through blockchains, there is a limit on the government's control.

The second importance of censorship resistance is protecting the idea of privacy. While blockchain ledgers are publicly available, there is a possibility of complete privacy, as demonstrated powerfully by Bitcoin's pseudonymous founder, Satoshi Nakamoto — we know how much bitcoin he probably has but no idea about who he is.

The third importance of censorship resistance is that blockchains can never be brought down. No government or entity, let's say hackers, can bring down a blockchain as big as bitcoin unless they can take control of 51 percent of the total hash rate on the network. However, that would cost tens of billions of dollars for the possibility of affecting the blockchain (no guarantees).

There are mainly two threats that can cause the censorship resistance of blockchains to take a fall. First is the availability of the internet, which is controlled by internet service providers and governments. Governments can block out the internet or certain websites important for blockchain transactions to occur.

This is a clear threat today, as witnessed by some parts of Ukraine when Russian forces blocked the internet from the area. A simple solution to that was Elon Musk's Starlink which provided internet from beyond the clouds. We can see more such technology soon that could further strengthen the censorship resistance of blockchains.

The second threat is the straight manipulation of blockchains by an entity taking over a majority of the hash rate and thereby wronging the blockchain. This is very expensive and very theoretical at the moment, but it is a possibility. It would approximately cost more than 100 billion dollars to take over the bitcoin blockchain, but that's surely an amount no one is willing to part with for a so and so chance.

The darker side of censorship resistance is that even the bad guys dealing with bad things get away with it because authorities cannot track or bring down blockchains. This is what is argued in legislative assemblies worldwide as the reason they want to ban cryptocurrencies in their jurisdiction.

The fact of the matter is that this blatant misuse of censorship resistance within blockchains is done by a tiny fraction of people and improved technology could soon tackle that. But that is not enough reason to devoid people of the power to own their own destiny without agreeing to every whim of authorities.