Topic: Centralization in BTC Decentralization (Read 321 times)

Ok...it's not ''5 idiots'' like you say but official government and bank announcement, and here is the link for official website of Central Bank of Iran that was announced in May of this year, but if you dn't trust me you can ask someone who actually lives in Iran who can confirm this to you.
Here is google translated text:

https://www.cbi.ir/showitem/21636.aspx

I can find more links to confirm this, but I think this is official enough, and I am not saying they can really enforce that in practice but they have rules about it.

But from OP’s context, he raises a valid point. Mining farms/mining pools, which both can be owned by a single entity. Plus different mining farms/mining pools can unite together against the community, against the developers. BUT what many people have forgotten is, POW is a Sybil Attack prevention mechanism, NOT a consensus mechanism.

I hope all the above posts are good enough to help you understand thoughtfully about these topics. Just in case you'd interested more toward Satoshi's minds you could hop in on this link: https://satoshi.nakamotoinstitute.org/quotes/mining/.

That link only shows 5 idiots guessing about something they don't even understand!
If you read in the link Persian that the article included in first paragraph it doesn't even mention anything about a "ban". Actually here is a better link.
There are 2 things here.
1. The central bank (which has nothing to do with the "law" and "bans") is warning people to be careful when it comes to cryptocurrencies due to their volatile nature and also not to get scammed.
2. It is saying that the government, banks, etc. can only use bitcoin's mined inside country for imports which is to prevent the government for example using a foreign exchange to swap USD for BTC then use BTC for import which would make no sense. It has no restrictions on what people do.

And again the Parliament (Majles) has to pass the law. Central bank or even the government making statements don't make them into "law".

They definitely can control exchange, mining regulation, and those services with centralized nature. But other than that, it's almost impossible. Mining regulation is certainly the most urgent matter right now, but I doubt all of them will hold a negative stance on it. The profits are there, if they can take the pie, then they'd take it.

What I do think is most of the time we connect Centralization with "governmental bodies" or even "owners" of some strong company. When we are thinking about the Centralization of Bitcoins and other cryptocurrencies alike. We have to remember that this is more or so connected with the whales in the bitcoin world.

I do believe that they have the power to affect the market left or right and thus it influences the market at a very big level.

When you are talking about the mining farms. This is indeed something that is to ponder upon but here I would like to point out an even from the past that happen in China. Where the authorities were trying to seize the Mining farms. Now they would have caused a huge depletion in the hash power as a whole causing the whole system to break down for a while. But the control would not 🚫 go to the government as a whole.

We can talk about Centralization but only to an extent.

I would like to point out something significant about the “centralization” that may result if one entity owned the majority of the computational power.

The incentive. There's no incentive on attacking the network of Bitcoin. You're trashing the value of your wealth if you do so, whether if you own bitcoins or not. If you understand what exactly you're attacking, you'll notice that there's no purpose on proceeding to its practice. If you succeed on destroying the network, people will abandon it and no one will ever consider bitcoins valuable. But, that wouldn't stop people from using cryptocurrencies.

There's no purpose on refusing to earn the majority of the bitcoins that are mined every day and attack the network by burning some billions of dollars. And that's, indeed, different with altcoins.

Wrong.
Here is the article reporting that any bitcoin mined abroad is not allowed to be used in Iran for anything including trading, and they are actually selling most of the coins mined in Iran to avoid restrictions related to sanctions.
Iran also banned usage of Bitcoin for payment, they are seizing ''illicit'' Bitcoin mining machines all the time, and they banned mining during summer time.
https://www.coindesk.com/iran-central-bank-ban-trading-crypto-mined-abroad

There is a difference between an actual law that is written somewhere and someone (even the government itself) saying something. And there is no law saying you can't use bitcoin that is mined outside Iran. They had a meeting in central bank and decided that there should be one but nothing has gone to congress to even be discussed let alone become law.
By the way the news was the opposite meaning you can't spend bitcoins mined inside Iran for anything other than import/export.

There are some countries like Iran that probably have most of Bitcoin mining centralized and controlled by government but they can't fully control everything.
They also don't allow any Bitcoin mined outside Iran to be used in their country, that is so stupid and ridiculous but other countries like China may follow something similar in future.
If governments create their own centralized coins (like they are doing) they don't need to spend any money for mining devices because everything will be fully centralized and controlled by them.

Something else helps keep mining decentralized: the "Difficulty Adjustment". If a whole country bans mining for example, mining difficulty is reduced and it becomes more profitable for other miners in other countries to mine... better yet, more miners in other countries will take the place of the miners in the banned country.
There are also what is called Mining Pool (global miners pooling resources together to mine Bitcoin), which also contributes to mining decentralization.

You can't dictate what people (miners) are doing, that is what decentralization means. You also don't have to have a big mining farm with millions of dollars invested in order to be able to mine bitcoin, you can easily do it at home with a much smaller investment in ASIC(s) and mine bitcoin that way.
Obviously someone who has access to cheaper electricity and is willing to invest more of their money and take bigger risks would invest more and gain more hashrate.

I think the factor we have to consider here via distributing of mining farm to different continent is the management, and power supply, because i reason that the facilities use for the farm needs government support, because allocating mining farm to country that doesn't have adequate power supply, automatically it will not come into existence, but but if really each continent have a centered place that is nice for mining farm, i think they should be allow for the establishment process.

Why would mining farms be equally distributed across the continents?
Mining farms are located in places,where the electricity is cheap.It doesn't matter in which continent or country.If mining farms are banned from mining in a certain country,they will move elsewhere.
A government has the resources to build a giant mining farm,but no government will do that,because the governments can simply change legislation and regulations,in regards to crypto mining,instead of investing/wasting tons of money to build crypto mining facilities.

This is unfortunately a side effect of PoW, where miners will always flock to places which gives them the greatest profit margin. There is nothing you can do about this.

The government needs to control at least 51% of the network's hashrate to effectively enact any censorship or attacks. That comes at quite a huge cost, especially since ASICs are fairly proprietary and you have to specifically buy Bitcoin ASICs. While it is certainly possible for government to try to seize as many mining farms as possible, I highly doubt that it would reach an extent where they can get that much hashrate. There is currently little incentive for government to do so.

If I'd like to go with your assumption which is to let each continent have its own mining operation/farm. Then I believe that it is still "centralization" in process, each continent has its own climate nature and its own cost production of electricity, therefore it is correlated to the price of Bitcoin production. How can it be a decentralization if some continent has an advantage to mine Bitcoin cheaper.

I agree with @bitmover, as does like how Satoshi said about the particular topics in the past. Bitcoin mining will move toward the place where it's as efficient as possible to mine Bitcoin without sacrificing its own true decentralization.

And a reference for you about Satoshi's thoughts.

Widely distributing miners all over the world is unnecessary. However, it is also a risk if all the miners are operating within a single town where electricity is dirt cheap. That might become a single point of failure. But that's not what is happening right now. So I guess there's nothing to worry really. As a matter of fact, even if the Chinese government would declare once and for all that all mining operations within the country should stop and leave immediately, Bitcoin would still be very much alive.

Having planned areas to house Bitcoin mining farms is centralized in nature.

Exactly. That would be centralization, a central  authority deciding which countries/continents need to mine more or less.

The free market is the most efficient system we have, so far, to let miners decide where to place their operations. There is no central authority asking them to move to china. They have economical reasons to be in China or Canada or whatever: cheap hardware, cheap and abundant electricity, low temperature (canada) and so on.

Mining is not centralized as it looks like. A mining pool isn't a single computer or a single farm. A mining pool hashrate may be distributed across the globe.

First, I think you're mistaken mining farms for mining pools, there are not just a few mining farms, there are a lot of them and they quite distributed across the globe. Second, what would your distribution achieve, one farm in each continent is better than three farms in Europe, one in China US, and Canada?  And if there would be one farm in Africa let's say in Nigeria, how is that evenly distributed when Nigeria has one farm the rest of the 50 countries have none?

What you're trying to do here is actually centralized planning, there are a few counties who tried that last century, deciding what to build in each city based on population distribution rather than economical reasons, so that all regions would have their own industry of everything, and we all know how this ended.


As you can see, it is wrong!

For the evil government part, when one government starts building a farm that would be able to centralize bitcoin, again things don't work like that, probably you've mistaken a 51% attack with somebody gaining control over all the hash power of the network, and that's pretty impossible. Not that a 51% attack right now is feasible in any way unless a G7 government is bent on doing that! Just the power required for the attack is bringing the list down to 30 countries as they don't even have the necessary electrical power capabilities to host such a farm even if they cut power to all the people in that country.

Is there centralization in the decentralization system of bitcoin? I understood there are few BTC mining farms in the world. This mining companies are not distributed across the continents, let's say each continent should have one mining farm.
Is it therefore not wrong to say that there is an iota of centralization in the decentralized system.
Remember, what largely defines centralization of the banking system is it's transaction approval and/or confirmation system(The Ledger). So, it is somewhat correct to say that the blockchain is the ledger of the bitcoin. So, if the process is centralized, it is therefore a sign that in the nearest future, the government of different countries can build a mining farm where they can manipulate to centralize digital currency, if not bitcoin it can be another. By then they can achieve total centralization in Decentralization.
Am I missing a point here or there is something I didn't understand?