Topic: Will Bitcoin lose decentralization? (Read 163 times)

Well this can't be right..


A Bitcoin ETF has the potential to actually enhance the decentralization of Bitcoin by providing a more diversified and widely distributed ownership structure. Here are some reasons why:

Increased Accessibility: An ETF makes it easier for a broader range of investors, including institutional investors and retail investors, to gain exposure to Bitcoin without directly holding the cryptocurrency. This increased accessibility can lead to a more diverse ownership base.

Reduced Concentration of Ownership: Currently, a significant portion of Bitcoin ownership is concentrated in the hands of a relatively small number of holders. The introduction of a Bitcoin ETF could attract a larger number of investors, distributing ownership more widely and mitigating the concentration risk.

Institutional Participation: Institutional investors, which often have large pools of capital, may find it more convenient and compliant to invest in Bitcoin through regulated financial instruments like ETFs. Their participation can contribute to a more balanced and decentralized ownership structure.

Regulatory Recognition: The approval of a Bitcoin ETF by regulatory authorities can signal a level of acceptance and legitimacy for Bitcoin as an asset class. This regulatory recognition may encourage a broader range of investors to participate, further decentralizing ownership.

Market Liquidity: An ETF can enhance market liquidity, making it easier for investors to buy and sell Bitcoin exposure. Increased liquidity often attracts a more diverse set of participants, contributing to a decentralized market structure.


While a Bitcoin ETF can contribute to decentralization, it's important to note that decentralization is a multifaceted concept, and factors such as mining distribution, network nodes, and community governance also play crucial roles in determining the overall decentralization of the Bitcoin network.

I understand the point. But isn't it a thing to be afraid of? What if more mining pools or firms start doing these practices? I just noticed the news is more than two years old already. I researched about it a little more and came to know that later next month, marathon says they won't censor transactions anymore ^[1].

Why would a mining pool start practicing this thing, which will eventually destroy the decentralization of Bitcoin? Does OFAC force them to follow any rules to operate their business?

[1] Marathon says its mining pool will stop censoring transactions following bitcoin community outcry

  The question is: what is the reason for losing Bitcoin's decentralization? Isn't the decentralized nature of Bitcoin the reason why it cannot be controlled by any government in the world?

  So, obviously, the question in the title is vague as to whether decentralization will disappear. And it is known that other communities here also know that, and that is why they believe that it is impossible to lose Bitcoin's decentralized-based system.

One of the factors that has ensured that Bitcoin remains totally Decentralised is the coding aspect of the tech and the immutability that has been enshrined into it. With this in place, it is impossible to say that Decentralization cannot be achieved as its the core of the technology, if its centralised then its not Bitcoin, hence, Bitcoin cannot loose its Decentralization.

If bitcoin loses it's decentralization, then it is no different from what already exist and hence will not be able to remain long lasting, because there will be no competitive advantage over Fiat and other financial systems controlled by the government. If bitcoin losses it's decentralized nature, then we should also expect it to be overthrown by another technology that will seek to be decentralized like bitcoin was and remain decentralized. I do not believe that bitcoin will loose decentralization.

a pool manager does not need to sit in an fixed location office with a factory of asics next door.. a pool operator can move about.

ASICS do not choose transactions. they just hash a given header detail(by pool manager), thats it

so pool managers can move around physically faster than asics physically can.
asics however without physically moving can 'pool hop' their server login to a different pool in seconds, should a pool be badly managed

thus the worry about pools being forced to comply to national laws, is simply the laziness to not try other options

Exactly. There's no two ways about the fact that Bitcoin can never be centralized. The decentralized nature of Bitcoin is like a foundation of a building which when built, you cannot change it unless you have to pull down the structure from the root. That is what makes Bitcoin unique and what it is today. The moment someone out their comes out with a concept like Bitcoin in the name of a centralized system, we already know it is not Bitcoin because it's simply and basically lacking the concept behind which it is known for.

Another aspect that have been hammered on when discussing the future of Bitcoin is whether it will last forever or not. The most suiting response to that question is that although nothing on the face of the earth that will last forever but because Bitcoin has been built in an open sourced manner, it will definitely stand the test of time. In another words, it will last long in time.

Not really, all these companies are here for profit and will never combine together to do the 51-49 scenario which most of you think might happen. It can happen, but for good of people.
Bitcoin will never be centralized, it's built on the foundation of decentralization, so no need to worry about that. Satoshi Nakamoto was a genius. He already knew what all could be possible.

So no, Bitcoin will never lose decentralization.

This has also been in my thoughts too mate. Miners has stated to become the new Gods in Crypto-currency and it's increasing at an alarming rate.

https://bitcointalksearch.org/topic/m.63131503

In the thread above the op made great point about the future and I think it is something that could happen where the miners would rule over the security of your Transaction based on your transaction fee, and this my give miners the ultimate authority in Bitcoin.

Technically the only way possible for Bitcoin to lose its character of decentralization is if government agencies or some entity buys most of the Bitcoin on the market, which could allow them to solely control it and price as they can easily buy or sell by controlling the order books...

But as it is, the power of BTC is in decentralization which makes it impossible for a government to put it out of business if they declared that it should shutdown... otherwise decentralization is going nowhere!

The harsh reality of operating in jurisdictions that are possessed with control and regulations.

It is true that decentralization nature of Bitcoin is a challenge for the governments worldwide, as it undermines the role of central banks in controlling the population through the manipulation of money supply. Therefore, it is obvious that governments will do all what they can to diminish the influence of Bitcoin in the global financial system. I am also afraid that participation of big institutions in Bitcoin via ETFs could jeopardize its decentralization, potentially concentrating the ownership of Bitcoin in few hands. This also raised concerns about market manipulation.

Others or Unknown label does not describe Unofficial Mining pools. It's my opinion on it.

We just don't know where those miners come from but they are official miners on Bitcoin network. Hashrate from those miners are official too.

Bitcoin is for privacy and anonymity so it's good to have Unknown Bitcoin holders or Unknown Bitcoin miners.

Isn't US Bitcoin Corp is only sell their mining rigs? so I don't see there's a correlation they will control Bitcoin hashrate, but they're might want to monopolize mining rigs and take profit from that.

It's high unlikely it will happen, it's need an one mining pool to control the whole hashrate.

There's "Others" 1.8% in Bitcoin distribution pools.

The answer to the OPs question is the same every time it comes up. No.
There are more small and medium miners that point their gear wherever they want to.

If one pool gets too big, or in their opinion gets too big miners will point elsewhere.

It has happened in the past and will happen again.

Yes you have a lot of places with their own gear but compared to the people with 1 or 2 or 50 miners who will point elsewhere if they feel the network is loosing it's decentralization it's not a worry.

-Dave

Miners, mining pools are always official to mine Bitcoin blocks. There is nothing called as unofficial mining pool.

The reality is in the past, there are more miners from Unknown category.
All time is 53.96%: https://explorer.viawallet.com/btc/pool?tabs=5
Last 3 years is 27.42%: https://www.blockchain.com/explorer/charts/pools
Today is 3.47%: https://coin.dance/blocks/today

The trend is more known mining pools and more decentralization of the network. The decentralization rate is increasing since the Great Hashrate Migration from China since April 2020.

Go West, Bitcoin! Unpacking the Great Hashrate Migration.

Largest Bitcoin mining companies by marketcap. There will be more mining companies to decentralize the network hashrate more from power to geo location.
Bitcoin mining and energy statistics.

This has already happened and we have the Marathon mining farm blocking Bitcoin addresses and adding an OFAC list. Not only that, they also prevented some transactions from being included in them blocks^[1]. Unless these farms obtain a hashrate of more than 51%, making such lists will be useless, as anyone who has mined the block can list those transactions from those addresses.


[1] An 'OFAC-compliant' bitcoin miner revives debate about transaction censorship

Decentralization is the major crime of Bitcoin against the government and the powers that be. Many efforts are being put to ensure regulation to enable government take absolute control of everything, depending if people will comply or find a way around it.

By design, Bitcoin cannot loose decentralization, however, access to and usage of Bitcoin can be contrained to follow centralization with limited options available should there be full regulation like I explained before.

Many things that people are looking up to such as the Bitcoin ETF might make Bitcoin less decentralized.

Anyone who follows mining news knows that the hashrate of official mining companies is constantly decreasing.
Official mining companies have huge competitive advantages over private unregistered miners.

The average cost to mine Bitcoin was negative ($6,141) in the third quarter, as compared to $8,227 per Bitcoin for the same three-month period in 2022.
https://www.riotplatforms.com/riot-platforms-reports-third-quarter-2023-financial-results-current-operational-and-financial-highlights/

Mining companies are growing larger through mergers

]We have made a significant stride toward closing the transaction now that the SEC has declared new Hut’s Registration Statement effective. You can find the latest here
https://twitter.com/Hut8Mining/status/1722750671135399978?
https://hut8.com/2023/11/09/hut-8-announces-effectiveness-of-registration-statement-on-form-s-4-in-connection-with-merger-with-us-bitcoin-corp/

Since miners decide which transactions to add to blocks and which ones not to add, governments can block them with a specific list of addresses.