Topic: Gary Gensler: "Bitcoin is not that decentralized" - page 4. (Read 1202 times)

While I agree partly that in the current reality in early 2024 "investment" (aka speculation) is the main goal most people follow when they buy Bitcoin, I disagree that there is some hard technical limitation which makes Bitcoin qualify as an investment asset only, forever. This only applies to on-chain Bitcoin transactions.

There are challenges in the scaling issue, yes, but there are also solutions. Lightning is struggling a bit with adoption currently, but there is finally some movement with sidechains (ZK rollups etc.) and other L2 solutions, where slowly more decentralized concepts appear. As on Ethereum there is already more variety, and the concept seems viable and popular, I don't see why this shouldn't be achievable with Bitcoin too.

If you were right this would actually be a quite pessimistic stance. As an "investment" vehicle alone, Bitcoin would not have any real value. Bitcoin has USPs like censorship resistance and worldwide availability. While these characteristics can also appeal to "investors", if they "invest" using their own wallet, investing in a Bitcoin ETF or "exchange bitcoin" does actually not make use of them.

IMO you're seeing the crypto world a bit black and white. Some of your forum contributions are interesting and valid but others are not.

(And if you want to direct the focus to altcoins: all cryptocurrencies face the same challenge between node decentralization and on-chain throughput. If there was any breakthrough there, Bitcoin could adopt it.)

The important point is that there's no single entity that holds enough for it to make bitcoin centralized, contrary to the government.

How much do they really own? 100k? That's nothing!
Let's imagine a scenario where 1 company owns 1 million BTC, that's going to be 1/21 of total supply. Bitcoin will still be decentralized. Even if private companies together own 90% of available supply it will still be decentralized.

Why?

Compare it to fiat money. The government owns 100% of it. The money you have in the bank belongs to the government. The money in your pocket belongs to the government.
This is centralization. Even if some ETF buys a million bitcoin, the bitcoin I own will belong to me, while fiat money never will!

Well, not a piece of paper, but rather an entry in some database somewhere. But yes, that's the idea. The way people own Bitcoin this way is completely centralized.

And yes, as I've said in my article on this subject, most people don't want to hold a chunk of their life savings by some means they could simply misplace or have physically stolen from them. Most people want an "investment account" that is attached to their identity as a person for that kind of amount of money.

And yes, the "only" thing these people do is make Bitcoin a popular investment making it worth billions of dollars in the marketplace rather that a technical curiosity like it was when Bitcoins cost less than one dollar. If you want to call that thing, "small", well, that's your prerogative, but it sure doesn't seem "small" to me .

And all Bitcoin is, in reality, is an investment asset. The blockchain architecture cannot scale to handle even a tiny fraction of worldwide daily transactions and it was arguably never even meant to do that. That means all people can do with it is invest in it as an asset they hold in a relatively large quantities and trade relatively rarely, just like they would a stock or an ETF.

In fact, when you say "adoption" here, what you are actually talking about is investor adoption. Bitcoin isn't going to be used for anything because it isn't technically suitable for anything else.

And you aren't going to get more adoption if you dismiss 95% of investors as "fake".

Gary Gensler past Bitcoin takes were kinda sus, and this decentralization thing needs some unpacking. It's not just about where your keys are chillin', like he's suggesting. Real decentralization is more like a three-legged stool – gotta have network spread, fair governance, and resistance to shutdowns, all workin' together. Miners movin' from China to the US raises eyebrows, but the network's still spread out like a global dance party. Even if some politician gets a wild hair, the whole system doesn't crumble. It's like whack-a-mole – whack one node, another pops up.

Market's a free-for-all, and folks will always have opinions. Banks sayin' bad stuff? Bitcoin shrugs it off like a seasoned investor. Now they're sayin' good stuff? We all squint, wonderin' what their game is. But hey, at least they're talkin'!

You cannot be sure he does not own some BTC, he works for the government, so he isn't going to openly say 'i just bought x amount of BTC' or 'BTC to the moon'.

But that is not even the point here, and i agree that Gary is wrong in this case, BTC is very much decentralized, there is obviously no central authority that is in control of the network and there are thousands of nodes scattered all around the world. BTC would only become less decentralized if the government finds a way to control BTC mining and use miners to their own advantage and for censoring tx's.

Interesting. All that knowledge and yet he did not have the foresight to invest into Bitcoin in 2018....

You would think he is getting paid big bucks to throw dirt on Bitcoin.

Either way, I am still not impressed.



Effectively, people are trading dollars in for a digital piece of paper that says you own x amount of Bitcoin and the only positive side is that they do not have to worry about losing any private keys because someone else is buying and hodling the real Bitcoin for them. The good thing for Bitcoiners is that this creates an increased demand for the buying of actual Bitcoin. But that's as far as it goes when it comes to the question of how much influence do ETFs have over Bitcoin.

And just like with CEXs buying up huge amounts of Bitcoin, all the ETFs do is speed up the demand and adoption of Bitcoin. Something which would happen without them anyway. Just much slower.

Genser taught a course at MIT entitled Blockchain and Money in 2018

so hes not unfamiliar with it

see
https://ocw.mit.edu/courses/15-s12-blockchain-and-money-fall-2018/

I think you touch upon the heart of the debate here by calling ETFs (and I would presume their close cousins, Bitcoin purchased through brokers like Binance and CoinBase), "fake".

It's fine if you want to call somebody who doesn't physically hold their private key, "fake" and in a way I agree with you, but Gensler is only looking at the current practical reality of the situation, which is that most of the retail investors in the USA--the ones he's supposed to protect from fraud---are these "fake" Bitcoin holders.

And if all of those "fake" holders left the market, Bitcoin would probably drop in price by about 95%.

For most average holders of a Bitcoin investment today, their holding is kept in a centralized Oracle database (or whatever) and the "decentralized" aspect of Bitcoin itself means absolutely nothing to them.

So it's absolutely correct for Gensler to treat Bitcoin just like any other investment instrument the public can buy, like stocks or derivatives or ETFs or anything else. They all work exactly the same way, as far as your average consumer is concerned.

What does Gensler mean by stating “bitcoin is not decentralized”? Well, I think this is interesting in a literal sense, for institutional investors, large corporations, ETFs it is not widely approved. Widely at the international level, the lack of uniform adoption after licensing approval will almost certainly favor the earliest Bitcoin spot ETFs, which favor the corporations that he knows the most about. Who benefits? Yes, in another sense… it means a collection of ETFs that will cooperate with each other in some special form in the future. Lol, Or this is a knife that market makers can use to take down competitors and increase their position.

Suddenly, Gary Genser knows all about how Bitcoin works? I highly doubt that.

This is nothing but pure misinformation from one of Bitcoins enemies. He wants to see Bitcoin gone and his rich banker friends made even richer. I have no idea why you are jumping on this propaganda train. You, Abiky, are not a newbie, you should know better by now. Shame on you for spreading obvious FUD.

It does not matter how much Bitcoin CEXes have. And it never did matter. The only case in which it would make a difference is if Bitcoin was POS, which it is not.

ETF's are fake Bitcoin. The worst that these CEXes can do is manipulate the price of Bitcoin by selling/buying.

That is one of the issues and the other issue, which I think is at least something that Gary Gensler understands by saying "... not that decentralized..." is that decentralization is a spectrum. It would be interesting to have some decentralization index and then compare Bitcoin as an asset to other assets, but also as a system to other systems. Because on the one hand he understands that it is a spectrum, but on the other hand his goal was to insinuate that those who call Bitcoin decentralized are on the wrong path.

He also forgets that decisions by powerful actors against the Bitcoin system will cost the powerful actors a lot of money, in a worst case everything they invested to gain that power. In the banking system, this is 100% not the case. There is no skin in the game. The too-big-too-fail problem does only exist because the most powerful centralized institutions or actors (governments) will just decide to bail them out. Hence: "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks." There is no such bailout for powerful actors in the Bitcoin system if they decide to act against it. It will be game over and the skin they had in the game will be burned to ashes.

There is some impressive interplay between decentralization and skin in the game, which I think Satoshi has solved in a way that is worth a Nobel Prize. I have often been researching and thinking about loopholes, but I always end up concluding that it would be prohibitively expensive for any actor to gain power and then destroy the network for many, many reasons. Financial reasons, geopolitical reasons, opportunistic reasons, any strategic reasons, and gaining power in order to then destroy it is probably something that doesn't really sound like something worth striving for. 

i have no mentor and thats what you are jealous of, my ability to say whats on my mind, freely. i do not need to ass-kiss

and thats what makes me think you need to learn bitcoin as it is now, in reality, not how your mentor describes it to you.. , because you, several years later still have a mentor and recite him daily, even his insults, even his pigeon hole games

you are now even copying and reciting the ill-minded stupidity that if someone is not in religious cult A they must be religious cult B
thus you are trying to put me into a group i was not part of (though your mentor told you differently)

how about realise you dont need to be in a cult at all, escape your cult and start having independence
learn what independence is, then you will start to see where things are not as decentralised, and then able to actually try to scrutinise and highlight the central points of failures instead of just being told buzzwords of years ago, told to close your eyes and dont look, while being pampered back to sleep to not notice the traps that are forming

Ser, study the Scaling Debate, and The Long Road To Segwit, https://bitcoinmagazine.com/technical/the-long-road-to-segwit-how-bitcoins-biggest-protocol-upgrade-became-reality

If the miners truly controlled the network, we would be under Jihan Wu's direction, and Bitcoin would have been forked away from under the stewardship of the Core Developers.

Plus Bitcoin may be debated to be centralized in some regard, but the network itself is decentralized.

Gary Gensler's statement about decentralized bitcoin seems largely unknown because the number of investors in bitcoin is huge. The episode focused on Gensler and the SEC's approach to the cryptocurrency sector, which has been subject to controversy and scrutiny. The warnings issued by Gensler about the risks associated with cryptocurrency investments were met with skepticism by the community, as was his subsequent endorsement of spot bitcoin ETFs, which some interpreted as an inconsistent position. This statement will have no effect on bitcoin. Investors earn profits by holding bitcoin.

Lol, it's amusing to read what some of these people think about Bitcoin, and what's more amusing is they make public statements that don't make much sense without even knowing much about it. He doesn't even know how the decentralization of Bitcoin works because decentralization doesn't depend on how the amount of coins is spread among different people but it's about the fact that it isn't controlled by anyone and the whole network is running on its own where miners are helping it run for the rewards they get.

Just because companies and investors hold a large quantity of Bitcoin, it doesn't mean they own the network have a share in it, or get to govern it. They have Bitcoins because it's valuable and they know they will get a lot of money when they sell their holdings.

Well, he is not wrong, but not that right either. Bitcoin is made to be decentralized, that's why some centralized exchanges are able to hold many bitcoins, there is no central entity that can limit or prevent that. And if we talk about Bitcoin vision or development, it's not really decided by Bitcoin holders, it will be decided mostly by miners who can vote for Bitcoin Improvement Proposals, so owning a lot of BTC not really affecting how Bitcoin developing. And we talk about the Bitcoin market, it might be true the market can be easily crashed by those big whale, but if the demand and community is strong every-time those whale drop some big amount of BTC it will be bought by other people and market will be recovered.

My point is that, currently Bitcoin is the most popular decentralized Crypto we can find, so saying Bitcoin is not that decentralized is kinda misleading. I mean, how more decentralized Bitcoin needs to be if other crypto cant even get close to Bitcoin decentralization.

 

How about your mentor? I want to ask him. He literally SOLD all of his Bitcoins and said, or spread FUD, that Bitcoin would fail. Read the propaganda, https://blog.plan99.net/the-resolution-of-the-bitcoin-experiment-dabb30201f7

SOLD literally at the price below $500, because he truly believed Bitcoin would fail. Why? Because the Core Developers maintained the block size? It's preventing the network from scaling in, no?

Eight years after that blog, has it failed? It's still chugging along producing block after block, ser. It has not failed.

People prefer convenience, so they will trust a centralized exchange even if that means losing complete control of their coins. Most of them don't even know that safeguarding private keys and/or seeds is the best choice for securing their financial future. As long as people keep trusting centralized entities, Bitcoin won't be able to achieve its full potential.

At least, not all coins are held by third-parties. A small portion of Bitcoin held on DEXs and non-custodial wallets will help prevent centralized entities from taking over the entire system. Hopefully, BTC stays that way forever.



The government will only be able to "clamp down" on decentralized apps if they're not as censorship-resistant as they claim to be. Around 90% of dApps aren't truly-decentralized and censorship-resistant. This makes it easy enough for mainstream governments to enforce the rule of law.

We can blame developers by focusing on making money (hype) instead of what matters most. One would hope Bitcoin stays decentralized no matter what. The future can't be predicted, so lets hope for the best.

unlike a simple variable 2009-2015 of maxblocksize
the way core code is now wrote, to do with the blocksize(weight). they have re-wrote the code into cludge where it requires many parts of the code to change to take full effect, as it would bug-out if one variable was changed. and i think this was intentional as its too sloppy to be useful or the proper way to code things

so it would require more then a scriptkiddy to edit core to offer a blocksize change

as for implementing it. a mining pool group cant just change the rules without the economic boards agreeing and accepting it.
where as economic group with dev support could mandate it as mining pools cant spend rewards if economic nodes cant see funds

so this is where i also laugh when many people cry/blame mining pools. when its actually not much in the power of mining pools and is more economically politically in the power of the dev/economic nodes

and we all know if a group of economic nodes want ed to hire a separate dev team that wants to go against the core roadmap. it would get REKT by those that treat core as a religion of immortal gods

They can use another service, or even work with things like atomic swaps which are not censorable at all, if they have the keys for their coins or are able to withdraw them before the fork comes into effect. However, as I wrote what is correct that the majority of the users would not bother with that, or directly held their coins on an exchange so they are bound to the service's decisions. So in general I agree.

Not necessarily. A simple change in the core software, like a change of a variable (again: maximum block size is a good example) can also be done by a small team or a single developer. So if some economic nodes, e.g. a big group of service providers or a cartel of mining pools, want to change some parameter they could simply do it. For more complex changes, like the introduction of Segwit, you are correct that they would need cooperation with the Core team or have expenses to pay an own team. It would become dangerous if this group has malicious intentions and is big enough - i.e. comprises both big mining pools and service providers.

However what I meant was that in situations like 2017 normally competing development teams work on their own "vision", and if they can't come to a consensus regarding the protocol, then their different implementations can be incompatible one with another. And here is where the services nodes come into play: they can decide which implementation they use. They don't have to pay a (Bitcoin) dev team.

In general I think user apathy is a bigger problem than minor changes in the decentralization grade or power structure. But obviously you can't require all Bitcoin users to be involved with "protocol politics". So while there are influential users advocating for the basic Bitcoin properties (censorship resistance, immutability, supply etc.) and at least a big minority of the user base has some basic conceptions about these "Bitcoin values", then I'd say everything is fine because a significant enough number of users will follow these "influencers" and boycott possible malicious changes.