Bitcoin decentralization myth - is it important?

[nwbitcoin]

Bitcoin is meant to be a decentralized system where anyone can do business and nobody is in control, but - it doesn't seem to be panning out like that.

MTGox has the vast majority of exchange transactions.
The official bitcoin price is based on their average. 
We also have MTGox being courted by Wall St and suddenly the bitcoin price goes nuts!

For a decentralized system, that is an awful lot of influence on bitcoin from one location. 

While I know that anyone could set up their own exchange, it does seem to me that being centralized is benefiting bitcoin.

How does this work with the whole ethos of nobody being in control of bitcoin?

Is it important to the success of bitcoin or is a little bit of 'rebellion and dangerous out of control' decentralized PR just a hook to catch initial interest?



BTW, This is a serious question!

[grondilu]

While I know that anyone could set up their own exchange, it does seem to me that being centralized is benefiting bitcoin.

First, bitcoin exchange markets are not all bitcoin activity.  It's only one part of it.

Second, you already provided your answer:  anyone can set up an exchange.  It's true that having a prominent exchange has some advantages in terms of liquidity and efficiency.   But it's up to you to come up with a solution to this if you think it's a problem.  Also, consider using bitcoin-otc or Ripple then.   They are the only decentralized exchanges that I know of.

[lassdas]

MTGox has the vast majority of exchange transactions.

As you mentioned yourself, you're free to offer your own exchange service, try to compete, competition is always healthy

The official bitcoin price is based on their average.

There's no such thing as an official bitcoin price,
the price is what a buyer is willing to pay for and a seller is willing to sell for.

How does this work with the whole ethos of nobody being in control of bitcoin?

There's some difference between being in control of bitcoin and offering an exchange service.

[Peter Todd]

Ask your self, can Mt. Gox prevent you from doing a face to face bitcoin exchange?

No.

As long as mining stays decentralized, your ability to perform a Bitcoin transaction will be exactly the same as anyone else's ability: pay the fee, and you're transaction gets confirmed. It doesn't matter if you're a huge bank settling accounts cross-borders, or just some guy who needs to wire money to your parents in Iran. You're all on a level playing ground because as long as no one entity controls more than 51% of the total hashing power, no-one can risk rejecting a valid block.

[nwbitcoin]

From the replies I've had, the answer is its decentralized as long as nobody is stopping you from doing something.

Obviously, I've confused centralized with a practical monopoly.

My bad!

[lassdas]

No, you've confused the bitcoin system with the exchange-service-market.
Both are completely unrelated.

[DannyHamilton]

From the replies I've had, the answer is its decentralized as long as nobody is stopping you from doing something.

Obviously, I've confused centralized with a practical monopoly.

My bad!

What is the minimum number of people you would have to convince if you wanted to change the inflation schedule?

What is the minimum number of nodes you would have to shut down it you wanted to make it impossible for people to send bitcoin transactions?

What organization would a government contact if they wanted to "freeze" someone's bitcoins and prevent them from sending the bitcoins anywhere?

What organization would a government contact if they wanted to seize someone's bitcoins?

The answers to these questions explain what is meant by "decentralized" when used in reference to bitcoin.

[Bitcoinpro]

all i see is people selling bitcoin at such a cheap price it beggars belief

[franky1]

i think a few people need to re look over the words centralised..

centralised is DIFFERENT from controlled/owned/ patented.

no one single entity owns the entirety of Bitcoin. but where everyone uses one central place as their value indicator then that IS centralisation.

an idea of decentralised:
basically if it took you all day to mine Bitcoins and you had no other real life job then you should value those Bitcoins as enough to cover a days worth of bills/lifestyle needs.

if you have a job and Bitcoins don't mean as much to you as the last statement suggests then you should base your Bitcoin values at less.

but:
where everyone uses one single and sole provider of price value is centralisation at its main and best description.

do not confuse being centralised with being controlled. they are 2 different things. you have the choice to value your coins at gox prices or not.

[DannyHamilton]

- snip -
do not confuse being centralised with being controlled. they are 2 different things.
- snip -

centralized: To be under a single authority
controlled: To be under an authoritative influence

So they both involve being under the authoritative influence.  The difference is that there is a single authority when centralized, whereas there may or may not be multiple authorities when controlled.

In other words: I suppose anything that is centralized is controlled, but things that are controlled are not necessarily centralized unless only controlled by a single authority.

[kerogre256]

Bitcoin is meant to be a decentralized system where anyone can do business and nobody is in control, but - it doesn't seem to be panning out like that.

MTGox has the vast majority of exchange transactions.
The official bitcoin price is based on their average. 
We also have MTGox being courted by Wall St and suddenly the bitcoin price goes nuts!

For a decentralized system, that is an awful lot of influence on bitcoin from one location. 

While I know that anyone could set up their own exchange, it does seem to me that being centralized is benefiting bitcoin.

How does this work with the whole ethos of nobody being in control of bitcoin?

Is it important to the success of bitcoin or is a little bit of 'rebellion and dangerous out of control' decentralized PR just a hook to catch initial interest?



BTW, This is a serious question!

Every tenth new user post 'OMG Bitcoin is broken'  in one or another form, I see it every day from 2011 be more orginal or mayby use serch button on this web page. Bitcoin is here to stay until last minig rig is runig, does not matter what you think .

[Elwar]

MtGox is giving a good example of why patents and copyrights are not as necessary as one would think.

Come out of the gate early, with a new idea that is useful and in demand and you will build a level of trust and a user base where you can dominate for a while.

Is MtGox the best exchange out there? That is debateable. It is up to the other exchanges to provide something better and more useful to attract those customers who flock to MtGox. And it is up to MtGox to stay ahead of the curve.

No monopoly can live without government interference. Other exchanges will start to grab more market share.

Look at Internet Explorer. When I first started doing any web development, I had to conform to Internet Explorer's standards because 95% of web browser use was in IE. Now they are at less than 40%.

With new technology there tend to be a limited amount of companies providing services. The same thing happened with the Internet and web pages. Pets.com jumped out of the gate as the place to go on the Internet for your pet needs. Now it is not so centralized.

[grondilu]

MtGox is giving a good example of why patents and copyrights are not as necessary as one would think.

Come out of the gate early, with a new idea that is useful and in demand and you will build a level of trust and a user base where you can dominate for a while.

Never seen this exactly like this.  Quite an interesting point of view.  Thanks.