Satoshi's Big Mistake & The Centralization of Bitcoin. What are your thoughts?

[ATguy]

I think this is only temporary, because mining is a highly competitive business, the one who can always win are those home miners without electricity cost, industry miners will always have to pay electricity cost thus have some disadvantage against home miners. When the day comes when the chip technology has reached its limit (bitcoin quickly jumped to already the most advanced process node now), then only those who can run without electricity cost will continue, at that stage mining will be distributed again, large mining farms will all run with a loss thus shutdown

Even if chip technology reach limit, you can continue decreasing cost of production over time, meaning for the same hashpower you could pay less over time. So although not energetically more effective, initial cost play a role as well

[yoona]

https://www.youtube.com/watch?v=_RC8wEL2r9s


The discussion really starts at the 34:00 min mark. I really respect James D'Angelo and appreciate hearing his constructive criticism. Often times the discussions surrounding BTC are either too much "cheerleading support" or "scam/pyramid critics". James D is humble enough to admit he does not have an answer to the increasing centralization problem, but I would like to see what you all think could be a solution.

Please watch the whole discussion from the 34 min mark onward before discussing...

More than 50% of the hardware mining is located China, is this correct? Could this cause problems in the future? why or why not?

I do not know at all if More than 50% of the hardware mining is located China, I am also curious about the truth, if this is true, does this mean China will dengn easily control the bitcoin market, particularly down or rising prices?

[n2004al]

https://www.youtube.com/watch?v=_RC8wEL2r9s


The discussion really starts at the 34:00 min mark. I really respect James D'Angelo and appreciate hearing his constructive criticism. Often times the discussions surrounding BTC are either too much "cheerleading support" or "scam/pyramid critics". James D is humble enough to admit he does not have an answer to the increasing centralization problem, but I would like to see what you all think could be a solution.

Please watch the whole discussion from the 34 min mark onward before discussing...

More than 50% of the hardware mining is located China, is this correct? Could this cause problems in the future? why or why not?

Since the mining is a free activity and a legal one there cannot be made nothing even if at China goes 80% of hardware. If Chinese are so smart to understand more than the rest of the world that bitcoin can have a brilliant future this is not their fault but their ingenuousness. Normally, they who are the smartest must be respected and must be (normally are) rewarded. The same with Chinese people. They are working in something that believe will be profitable in the future. Are not stealing nothing to no one. Are only working, honestly and hardly. Cannot be punished at all about this by blocking them. In contrary, the only thing that the others can and must tell to them is: good work and good profit. At least this is what I would make.

[franky1]

if Miner A had 26% in texas
if Miner B had 21% in colorado
if Miner C had 18% in new york
if Miner D had 14% in washington
if Miner E had 12% in arkensas
if miner F had 9% in california

would you be screaming that bitcoin is doomed?
would you be screaming that obama owns the entire network?
would you be screaming that the miners are colluding and working together?

no..
because you cant grasp that china is a country.. and not a corporation.
because you cant grasp that china has more population and more diversity than america
because you cant grasp that bitcoin is based on IP addresses of the world so location is meaningless

[pawel7777]

you complaining about countries is just racism.. it doesnt matter if bitmain has a ware house in china or in america.. it really doesnt.. the location has no concern about anything..

It does a little bit. It increases the risk of network being attacked by the government, especially if the >50% in specific country consists of only few mining farms.

So if Chinese (or US, or whatever) government ever sees Bitcoin as a serious thread, they could quite easily force operators to perform 51% attack.

Although it's unlikely to ever happen, it would be better (security-wise) to have the hashrate distributed among number of countries (truly independent from each other).

[n2004al]

you complaining about countries is just racism.. it doesnt matter if bitmain has a ware house in china or in america.. it really doesnt.. the location has no concern about anything..

It does a little bit. It increases the risk of network being attacked by the government, especially if the >50% in specific country consists of only few mining farms.

So if Chinese (or US, or whatever) government ever sees Bitcoin as a serious thread, they could quite easily force operators to perform 51% attack.

Although it's unlikely to ever happen, it would be better (security-wise) to have the hashrate distributed among number of countries (truly independent from each other).

As I understand from this kind of things nothing can happen to bitcoin and to blockchain if this story happen. If attacked the 51% (or even more) of the blockchain can be a big damage but the rest of network can continue its work and the part our of work can (will) be replaced with other mining farms or source of mining. This is the superiority of being decentralized. Every cell can act independently from the other ones. Maybe I'm wrong (I repeat that I am not a good specialist in this field) but the meaning of decentralization (as a term) is exactly this. Every part of the entire is independent from the entire. The overall system can be damaged if damaged part of it but never die. The remaining sane part act as an entire even without the damaged part continuing in this way the normal activity.
 

[pawel7777]

As I understand from this kind of things nothing can happen to bitcoin and to blockchain if this story happen. If attacked the 51% (or even more) of the blockchain can be a big damage but the rest of network can continue its work and the part our of work can (will) be replaced with other mining farms or source of mining. This is the superiority of being decentralized. Every cell can act independently from the other ones. Maybe I'm wrong (I repeat that I am not a good specialist in this field) but the meaning of decentralization (as a term) is exactly this. Every part of the entire is independent from the entire. The overall system can be damaged if damaged part of it but never die. The remaining sane part act as an entire even without the damaged part continuing in this way the normal activity.
 

If the 51 attack was ever to happen, it probably won't kill Bitcoin (maybe in the long-term it would even strengthen it, who knows) but it would cause a massive damage.

I'm not sure whether there are tools to blacklist misbehaving miners, so the 49% could take over. But my point is, the distribution-by-country does make some difference from security point of view.

[johnyj]

I think this is only temporary, because mining is a highly competitive business, the one who can always win are those home miners without electricity cost, industry miners will always have to pay electricity cost thus have some disadvantage against home miners. When the day comes when the chip technology has reached its limit (bitcoin quickly jumped to already the most advanced process node now), then only those who can run without electricity cost will continue, at that stage mining will be distributed again, large mining farms will all run with a loss thus shutdown

Even if chip technology reach limit, you can continue decreasing cost of production over time, meaning for the same hash power you could pay less over time. So although not energetically more effective, initial cost play a role as well

And home miners at cold area can use it as a heating device, thus eliminate the cost for the mining rig totally. Industrial miners might be difficult to cash on their excessive heat

[bearex]

I dont think it might cause problems. I mean, it isnt like China ownes the BTC mines, they are private and therefore it does not matter. It would matter if a person was holding 50% of the mining value however.

[LiQio]

if Miner A had 26% in texas
if Miner B had 21% in colorado
if Miner C had 18% in new york
if Miner D had 14% in washington
if Miner E had 12% in arkensas
if miner F had 9% in california

would you be screaming that bitcoin is doomed?
would you be screaming that obama owns the entire network?
would you be screaming that the miners are colluding and working together?

[...]

Yes, but doomed is too strong a word, let's say it would definitely not be decentralized.
No, not Obama, he's just a puppet on a string - but the the network would be "owned".
No, not without proof, but the probability would lead to sleepless nights.
Bottom line: Bitcoin would have failed.

[Amph]

if Miner A had 26% in texas
if Miner B had 21% in colorado
if Miner C had 18% in new york
if Miner D had 14% in washington
if Miner E had 12% in arkensas
if miner F had 9% in california

would you be screaming that bitcoin is doomed?
would you be screaming that obama owns the entire network?
would you be screaming that the miners are colluding and working together?

[...]

Yes, but doomed is too strong a word, let's say it would definitely not be decentralized.
No, not Obama, he's just a puppet on a string - but the the network would be "owned".
No, not without proof, but the probability would lead to sleepless nights.
Bottom line: Bitcoin would have failed.

bears in mind that the network, in any case is not owned only by miners, there are merchants, too, and miners without them are useless

if the sole purpose of not having as possible a decentralized mining system is to prevent 51%, then you can be assured that it will not happen, miners will not kill their own profit

[pawel7777]

bears in mind that the network, in any case is owned only by miners, there are merchants, too, and miners without them are useless

if the sole purpose of not having as possible a decentralized mining system is to prevent 51%, then you can be assured that it will not happen, miners will not kill their own profit

The discussed scenarios are more about possible government attack on Bitcoin (ie forcing miners to perform 51 attack), so the financial reasons are less relevant.

But the truth is, if either China or US really wanted to kill/cripple Bitcoin, they've got more than enough financial resources to secretely produce >50% of hashing power and perform the attack themselves. So current location of miners is not a significant issue.

Also, Chinese miners have positive impact on economy (not significant countrywide, but still) as they drive in money from abroad to China. So even if they decided to completely outlaw Bitcoin, the miners would likely be allowed to carry on with their operations.

[chennan]

yes they are all in china but they are different farm with different company behind it, so now they are not a single entity and thus not centralized

i will leave here again this example, if all the miners from every country go in only one country, to mine, do you think this can be considered centralized? i think not

and last but not last, it was intended by satoshi, to have high specialized megafarm, and leave the casual mining behind

agreed centralization is definitely not the case.
 in 2012 america had most of the distribution.. but did the yanks scream that the europeans needed to jump on board faster? did they scream for Australia to jump into mining? did they demand spain jump onboard.. nope.. they were happy with america owning the majority of the distribution..

as they seen the pools were individual companies.. which is the same for china

This really isn't the point though.  You are assuming that you have a lot of miners going into one country... the reality is, is that in this situation, you would have sort of an oligopoly of miners going in and mining.  These mining "CEO's" own this equipment and are supposed to benefit them as a individual, or more realistically, a business. 

As a business, you need to meet certain demands to keep your business afloat.  When the price plummeted to below $200 a little while back, they were still mining at a loss... Now, because you have big time miners starting to have some say in this new little world of nerdy "politics", they start gaining control over not the supply, but yet the security of the system.

So in other words, you can argue that if the big time miners needs aren't met by devs, then they can threaten to drop mining all together in sort of a protest until they get what they want. If there were dynamic block sizes in some way that can be reasonably achievable to meet the needs of transactions at any given time... then miners wouldn't have so much of a say so in holding the security of the network at hostage to get what they demand.

Touchy subject I know... but that's how I see things as of right now.

[RobbieRoor]

I don't understand how this would be Satoshi's fault? He hasn't been publically active with Bitcoin in year's, so really how could it possibly be his/her/their fault?

People tend to forget that Bitcoin is a experiment. There was nothing like it before its creation. No one can say fully that it will work or fail, we just don't know.

Oh and 50%+ is NOT centralized.

[gkv9]

I don't understand how this would be Satoshi's fault? He hasn't been publically active with Bitcoin in year's, so really how could it possibly be his/her/their fault?

People tend to forget that Bitcoin is a experiment. There was nothing like it before its creation. No one can say fully that it will work or fail, we just don't know.

Oh and 50%+ is NOT centralized.

You are right...
It isn't Satoshi's fault if China is mining more from their place, even with that in mind, if they want, no one will ever be able to trace them...
How can this be a centralization issue???
Satoshi didn't even move a single coin from his wallet till date, how can it be his mistake???
People are interested in tracing, else there are multisig wallets with which one cannot be traced at all, so how everything is centralized BTW???

[n2004al]

As I understand from this kind of things nothing can happen to bitcoin and to blockchain if this story happen. If attacked the 51% (or even more) of the blockchain can be a big damage but the rest of network can continue its work and the part our of work can (will) be replaced with other mining farms or source of mining. This is the superiority of being decentralized. Every cell can act independently from the other ones. Maybe I'm wrong (I repeat that I am not a good specialist in this field) but the meaning of decentralization (as a term) is exactly this. Every part of the entire is independent from the entire. The overall system can be damaged if damaged part of it but never die. The remaining sane part act as an entire even without the damaged part continuing in this way the normal activity.
 

If the 51 attack was ever to happen, it probably won't kill Bitcoin (maybe in the long-term it would even strengthen it, who knows) but it would cause a massive damage.

I'm not sure whether there are tools to blacklist misbehaving miners, so the 49% could take over. But my point is, the distribution-by-country does make some difference from security point of view.

I haven't told that the distribution by country is a good thing or even an indifferent thing. All my post speak about the situation after a probable damage. So have in mind exactly the damage caused by such situation in which the Chinese market dominate the production of bitcoin. Otherwise have no meaning to do such reasoning like I did in my post. I accept that this kind of distribution of "power" over bitcoin is a possible risk. And it would be always. But my point is that even with probable damage the network must survive. Will suffer (in the meaning will be restricted) but will survive and will act as an entire full entity even after this possible damage. That's the power of being decentralized of bitcoin. Cannot be dominated because has hundred "heads" and hounded "hearts". If one of some of those can be dead the other ones can assure the normal life of it.