Topic: Gary Gensler: "Bitcoin is not that decentralized" - page 6. (Read 1203 times)

I actually think that's his whole point: those customers own an entry in an Oracle database that is attached to their real-world identity. They don't know anything about "decentralized" and they don't care.

Most holders of Bitcoin don't benefit from the "decentralized" nature of Bitcoin, nor do they care.

Since Bitcoin could never scale to being a mainstream digital currency that could handle worldwide transaction volume, it's only remaining utility is to be an investment instrument--which is exactly how it's used today.

And since that is, de facto, how most people use the product, then he's right in saying it's not really decentralized in a way that most consumers care about.

That's a good point. Usually when people try to make the claim that Bitcoin is not decentralized, they misuse certain facts.

They say mining is centralized because of mining pools, not understanding that the mining pools don't own the miners and its just a bunch of different people participating in a group.

They say mining is centralized because a lot of it is in one country (whether thats China or US or wherever), not realizing that thousands of different entities (people and companies) mining within the same country it not at all the same thing as a single entity (though of course it is always preferable that mining is geographical decentralized as well).

They say that the ETF firms are gonna own a ton of bitcoin, not understanding that the ETF firms are holding the Bitcoin for clients, and when clients sell the firm sells the bitcoin, people aren't just donating money to ETF firms so the firms can buy themselves a ton of bitcoin haha.

They say that exchanges have all the Bitcoin, again not understanding this isn't the exchange's money but they are just holding the bitcoin for their customers. We saw with FTX what happens when a company takes customers' money and then tries to treat the crypto those customers bought as the company's own money. It's called fraud.

People also seem to not understand the difference between owning bitcoin and operating the Bitcoin infrastructure which runs the network. Bitcoin is not proof-of-stake, where ownership of coins equals control over part of the operations of the network. Bitcoin separates owners from operators, thus keeping it decentralized no matter who owns however many bitcoins.

Yes, I think this is a problem (not a very severe one however, see below). However, the answer to the question if Bitcoin is "less decentralized" due to developments like the ETF approvals in the US for me has no easy answer.

I disagree somewhat with this popular meaning for example:
My assessment is that both are important: the "mining decentralization" and the "economic decentralization". The "users" (also called "economic nodes") have the power to accept or not accept the blocks the miners mine, so if a miner cartel tried to mine with an updated code changing important parameters (e.g. the 21 million limit) the economic nodes can accept them or not. The more concentrated these nodes are, the more likely it is that they could also be co-opted by the miners cartel. And let me not even begin mentioning gubermental pressure, above all if services are too concentrated in one region like the US.

@adaseb has a point when he writes that the CEX's/ETF's funds are not their property but their customers'. That is correct. However, this does not mean these entities don't play a role in the power structure of the Bitcoin ecosystem.

One example is for example what happened in 2017 when the big block/small block war was fought out. We were lucky that almost all exchanges preserved the "Bitcoin" moniker for the original chain, and not for the hard forked chain today called "B[itcoin] Cash". Such an event can repeat. The problem is that while in theory customers could boycott/leave an exchange or ETF "behaving maliciously", most customers are quite passive and would simply accept what the exchange or service provider is doing.

So in general it does make sense to educate people that they should try to hold their Bitcoins on their own wallets with their own keys. It would be better for the ecosystem in general. However, due to the multiplicity of economic actors, I currently don't see a critical situation. The US ETFs could even have improved the situation, as before the biggest exchanges (like Binance) were probably even more dominant.

I think at least it's a good idea to have some strong decentralized "backup chains" just for the case. It would be healthy if there was a decentralized chain at least as strong as BNB for example, if not as Ethereum. But there seems a long way to go for that to happen, as presently 90%+ of the altcoin crowd doesn't care at all about decentralization. I'm optimistic for the long term though, eventually the centralized altcoin bubble will pop in my opinion.

haaainnnn... Really Bitcoin is not that decentralized does he even realize what decentralization means, hmm I can agree on some point that whales acquire most of Bitcoin's supply still we cant point out that it's a massive supply centralization, still, the supply is distributed well, I would like to say on the network concerns Bitcoin is far more decentralized nd with time, I'm expecting the expansion of the network on next scale but for the supply concerns now the market is much mature comparing to the times of 2016s..

Haha.. Anyway does Bitcoiners care about it ahhh not at all, We are in the joy of 50k + so neglect him from wold.

OP, Gary Gensler's only goal is to attack Bitcoin and make people not want it. He's lying to you. If you're believing what he is saying then that is a win for him. Generally people who hate Bitcoin don't tell the truth about it. He is just tricking you. Is Bitcoin perfectly decentralized? No. Of course not. Nothing is. Is Bitcoin by far the most decentralized thing we have? Yes.

He apparently understands absolutely nothing about the functioning of the bitcoin ecosystem, all he needs is to have as many bitcoins as possible to be centralized, totally wrong, and this man only opens his mouth to talk nonsense... well, what to say... lol .... Even a parrot talks... Don't take him so seriously, he (gary gensler) doesn't know what he's talking about.

Technically, Bitcoin is decentralised, always on the code. But centralised organisations are taking control over Bitcoin by accumulating a large number of bitcoins. We can't ignore this, even though we love Bitcoin. But if you don't hand over your bitcoin to a centralised organisation, then they won't control it. It means when your bitcoin is held on a non-custodial wallet, it's truly decentralised for you. We can't stop anyone from accumulating Bitcoin since it's continuously trading on the market. 

He jumped out to the other side of the fence when Binance rejected his application on Binance. He wants CZ to regret the rejection and he seems to have won, CZ was gone.


Well, there's Dogecoin too. There are lots of altcoins to move to but they will not stop taking control of which coin we may try using. I think if we all start using memecoins, they will like it.   BTC may look to be decentralized. It is meant to be that way but a lot of changes are happening just when institutions are coming.

not verbatim, but you are using promotional words from 15 years ago. not looking at the reality of how bitcoin has changed and evolved over those 15 years

who are you even speaking to when you speak the promotional words.. people reading this forum have already heard of bitcoin so dont need the promotional speak. they are looking for the actual current information to do their due diligence.. risk mitigation

we should actually stay vigilant and scrutinise things when things change, dont just settle for letting it happen coz "ideology" "trust" "promotional words tell me"

Isn't this the Gary Gensler was was teaching a bitcoin/blockchain course at MIT some years ago? He is well versed in bitcoin and cryptocurrency and there is no way that he doesn't get what bitcoin is, a decentralized system. That is an open and transparent system without human decision makers over ones that have them. But why does he continue to be against it? Is this politically motivated because he is gunning for the sit at the treasurer or is it because the big financial institutions are scared of bitcoin? This is for Gary, can the banks and the governments provide a true ledger and let's compare with bitcoin?

I believe Bitcoin's decentralization is a perspective thing, cause of its arguments and counterarguments. It's not static, it's kind of a dimensional discussion affected by various factors. If Gary Gensler thinks Bitcoin isn't decentralized anymore, then that's his opinion. There are lots of people out here and there who believe Bitcoin is very much decentralized and all hoarding through the mining in Big firms doesn't affect its decentralization.

Even if it's becoming centralized slowly, there are certain factors that completely hinder it from becoming so. So, I believe there's no need to worry about Bitcoin's decentralization.

He's absolutely right, in the context in which he was speaking.

In all practicality, most holders of Bitcoin (in terms of numbers of individual holders) use some kind of centralized entity to hold their private key, which is in turn connected to your name, address, social security number, and so on.

In other words, most Bitcoin investors hold Bitcoin in the same way they hold AAPL or MSFT.

That's not in any remote way, "decentralized". Most investors don't even know what a "private key" is, let alone keep it physically on their person.

As I wrote in the Anon Paradox, most average consumers don't want the kind of "privacy" that means escaping the government, they just want their actions kept from everybody else but a government with a court-ordered subpoena. For the latter, the only people that actually care about that are those who go against the law where they live, and most people don't want to tangle with their government.

So Bitcoin's decentralized architecture is not a value to most people who invest in Bitcoin, so it makes sense that most people don't use it that way.

Today, in practical reality, Bitcoin for most people is an investment in a brand, or an abstract idea, or a name that they know and think will go up in value. They don't know what it means and they don't care.

Yes, the blockchain architecture enables a decentralized ledger, and yes, technically Bitcoin is decentralized, but that's not the way consumers use it, and that's what somebody like Gary Gensler concerns himself with in his role as SEC chair.

the network (due to the backward compatibility trick) no longer needs the majority of the masses of user full nodes to be ready to then activate a new feature
the power triangle is now more centered around economic fullnodes(services, not users), pools, and dev politics of core

we have seen proven instances of the economic nodes clearly stating they would reject pools blocks that did not comply to the mandatory changes envisioned by core

so stay vigilant and scrutinise things when these games are played, dont just settle for letting it happen coz "ideology" "trust"

If as much as we can agree that the total decentralization people talk bitcoin isn’t that, but no financial network actually beats bitcoin network decentralization currently. What Gensler is thinking is definitely just about the price of bitcoin and not the network, all this entities mention can only decide to affect bitcoin price If they all decide to either sell (dump) or buy (pump) bitcoin at the same time and as I said it needs to be a consensus decision still which shows a bit of decentralization too not like fiat that a single government structure can decide on. For them to affect the network they need to control more than the total hash power of the network and that’s still limited to some decisions as they also need other nodes to accept some consensus rule, this is decentralization to me even if it is not total decentralization.

Bitcoin network IS decentralized! Dont twist the facts.


First of all, big companies, governments, and institutional investors cannot forcibly take your coins. So if you are an individual who wants to keep your BTC in self-custody, youll always have that right...  unless you opt to sell off your stash, that is!  Sure, selling might mean rebuying at a higher price later, but thats on you, buddy.  You cannot have a global decentralized internet currency without a free market.

Really, the only way bitcoin loses its decentralization is if the bulk of node operators voluntarily shut down their setups.  But I dont see that happening in the foreseeable future.

#not-your-key-not-your-coin
having a balance on a offchain system is an IOU not actual ownership (then note instances of MTGox(people havnt got 'their' coin))

and share holders of ETF have no owner claim of bitcoin whatso ever, so not even a IOU of bitcoin(note SEC regs of not allowing in-kind redemption)

we need to stay vigilant and actually look for the changes and risks,, scrutinising them..  rather then play dead and say "its decentralised simply because that was a buzzword of 2009 so must be true now"

The large amount of bitcoins held at CEX like Binance or etfs like IBIT are not owned by one entity. They are their customers funds. So what you are saying doesn’t apply.

When it comes to decentralization I think the way the hash power is distributed is more important. I remember back in the early days there was over 51% of hashpower in a single pool. We don’t have that problem anymore. China has less hashpower than before and it’s more distributed throughout the planet.

open to read as a book. but there is a tiered hierarchy of moderation and recruitment process for the privilige to be able to offer proposals to evolve the source code of activated rules of the network.


..
when economic nodes (NYA) have the sway of what transactions they prefer to use and see wiling to ban pools blocks that dont comply to a economic node preference

when the source code is literally in the hands of a brand that purposefully named itself CORE (center)

when the mining is no longer solo but pooled..

when full nodes offer features to disable peer services such as full archive seeding and also backward compatibity so that older nodes get stripped data or data thats not required to be validated fully..

.. whats left?

we need to stay vigilant and actually look for the changes and risks, rather then play dead and say "its decentralised simply because that was a buzzword of 2009 so must be true now"

As usual, Gensler is cautious about Bitcoin, making a disclaimer that ETF approvals don't mean approval of Bitcoin by the SEC, as well as reiterating that Bitcoin is among speculative assets, not backed up by anything or issued by any authority.
As for a comment on decentralization, he clarified that his point was that "finance tends toward centralization since antiquity", so it's not as much about Bitcoin as it is about his belief that humanity historically gravitates toward centralization of finances. Later, he follows up with a bit of US history, about the idea of 'buying the basket' instead of buying individual stocks, and how that democratizes but also centralizes finance.
To me, it looks like it's just his overall position that centralization is natural and perhaps even positive, so he views Bitcoin in light of that position.
But as long as people are legally allowed to store their coins in non-custodial wallets, I think it's fine that some choose centralized platforms.

Not so long ago, GG had some much worse statements about Bitcoin, and this one about decentralization doesn't really make much sense if we know that decentralization is actually about something else, and not about who and where keeps someone's private keys. Perhaps it is a much bigger problem for us that miners from China (and other parts of the world) have moved to the US, and we can never know what the politicians in that country may come up with literally overnight. If Mr. T becomes president again, who knows what crazy ideas he might come up with.

As for who buys or sells BTC, it's a free market and no one can do anything there, and no matter how you turn it, someone won't like it. Let's remember what the reactions are when a bank refuses to process crypto transactions, or when a well-known banker says something negative about Bitcoin - and now that they have begun to speak and act positively, we again wonder where this is going.

Fortunately, not everyone sells, and it remains to be seen what will happen when (if) supply becomes greater than demand.