Bitcoin should be decentralized even further

[Abiky]

China having most of the Bitcoin's hashrate is a bad idea for its decentralization. Since Bitmain is one of the largest ASIC mining hardware manufacturers in the world, it is one where it holds the majority of the pioneer cryptocurrency's hashrate.

As a result of this, due to Bitcoin's mining becoming more centralized each day, it is getting harder to reach consensus among the miners, especially with the acceptance of scalable solutions like SegWit. Since miners are mostly in for the profit, they don't care much about expanding Bitcoin's transaction capacity, but rather prefer for the same to keep increasing in transaction fees, so they could earn more money per block mined.

That is why, in my own opinion, Bitcoin's mining scheme should be decentralized even further to prevent big mining companies from taking over the important decisions of Bitcoin, and give the power back to average every day people. Perhaps a switch to a new mining algorithm which would be more resistant to ASIC will be the most viable solution to this problem.

What do you think? 

[iluvpie60]

People can create their own pools and join together. More people should do this. We shouldn't be joining into a huge pool unless they align with progress of increasing block size and segwit.

[European Central Bank]

People can create their own pools and join together. More people should do this. We shouldn't be joining into a huge pool unless they align with progress of increasing block size and segwit.

i wouldn't say pools are necessarily the problem. if something bad was developing with one pool then the miners can switch easily enough.

the problem is the quantity of miners in a small number of hands. bitmain makes most of the machines and also owns farms of their own. bitfury mines for itself as well.

but even if you go back to cpu mining, there are pockets that are deeper than everyone else who'll create cpu farms instead. 

[Wind_FURY]

OP, that is very easy to say but maybe very hard to implement in practice. You will start a war with the miners that could end up very badly on the chain with the upgraded POW algorithm. The miners have reached a level where it has money and power as shown in the scaling debate. You do not want to mess with them. A compromise to the compromise would be a better proposal.

[Sadlife]

I think that is one of the reasons why Segwot is having hardships to get implemented because of Chinese owning most of the hashrate this chinese miners is preventing bitcoin to innovate because jihan wants bitcoin all for himself.
I hope people should join up and made their own pool to fight against this.

[White sugar]

Where can you find cheap slave work to produce cheap ASICs, and cheap electricity?

Things can't be totally decentralized in the world, and Bitcoin is no different. Sadly for us China has a great advantage related to Bitcoin mining

[Pursuer]

People can create their own pools and join together. More people should do this. We shouldn't be joining into a huge pool unless they align with progress of increasing block size and segwit.

the problem is not pools, it is mining power/equipment. it is not easy to invest in mining equipment when the manufacturer is also in China and also you needing a cheap electricity (although I think that is no longer the case with nearly $2000 price) and also it may not be allowed in some countries to do so.

[mrcash02]

How to forbid people to create big mine businesses as it's decentralized? The decentralization allows people to create businesses strong enough to control the decentralized world... If there is someway to forbid/don't allow this, it's because it's not 100% decentralized...

To say the truth, I never saw anything really decentralized, Bitcoin is the first thing I'm seeing, it's a experiment for the world history to test if it really works or not.

[RoommateAgreement]

How to forbid people to create big mine businesses as it's decentralized? The decentralization allows people to create businesses strong enough to control the decentralized world... If there is someway to forbid/don't allow this, it's because it's not 100% decentralized...

To say the truth, I never saw anything really decentralized, Bitcoin is the first thing I'm seeing, it's a experiment for the world history to test if it really works or not.

you don't have to forbid it to prevent centralization.
it can be the other way too, like having mining power coming from other places. for example i know that Georgia has started to show a lot of mining power lately and has been becoming big.
imagine if we had mining farms coming from a couple more countries in the world, that would automatically spread things. and it is like this now but the others are small compared to mining farms in China and they need to get bigger.

[pooya87]

we are moving towards that day. it won't be easy since mining bitcoin is not a simple low risk job, there are a lot of things apart from costs that they need to consider.

here is what i mean we are headed that way:

[mrcash02]

How to forbid people to create big mine businesses as it's decentralized? The decentralization allows people to create businesses strong enough to control the decentralized world... If there is someway to forbid/don't allow this, it's because it's not 100% decentralized...

To say the truth, I never saw anything really decentralized, Bitcoin is the first thing I'm seeing, it's a experiment for the world history to test if it really works or not.

you don't have to forbid it to prevent centralization.
it can be the other way too, like having mining power coming from other places. for example i know that Georgia has started to show a lot of mining power lately and has been becoming big.
imagine if we had mining farms coming from a couple more countries in the world, that would automatically spread things. and it is like this now but the others are small compared to mining farms in China and they need to get bigger.

Hmm, that is good. If every country has interest in starting a business like that, the decentralization can work well.

But there is still the possibility of all or most mine businesses continue without reach to a consensus to solve the issues that must be solved soon as possible. If they want only profit, things will continue like now, they won't be worring very much about the functionality and the impasse continues.

[ekoice]

I think that is one of the reasons why Segwot is having hardships to get implemented because of Chinese owning most of the hashrate this chinese miners is preventing bitcoin to innovate because jihan wants bitcoin all for himself.
I hope people should join up and made their own pool to fight against this.

Definitely,the miners have an upper hand today and they dont want to loose their profits by any means.thats why segwit has not been implemented so far.
     Its very difficult for people to join to form pools and fight against such gigantic pools.Any way,its tim e for the miners to fill up their pockets and they are doing it vigorously.

[Wind_FURY]

What does everyone think of Barry Silbert's proposal of Segwit with a 2mb blocksize? Would that be a start for the big blockers to start listening and start cooperating?

[dinofelis]

To say the truth, I never saw anything really decentralized, Bitcoin is the first thing I'm seeing, it's a experiment for the world history to test if it really works or not.

Bitcoin has never really been decentralized, until recently.  Bitcoin was centralized, first in Satoshi's hands.  Then in Core's hands.  These were the deciding entities over bitcoin, until recently.  With the advent of several pools, and their own ideas of self interest, and Core being over-confident in their central power (Vitalik style), the central line of command has been put into doubt.   This is why Core cannot impose its modifications any more in an evident way, in the same way that Vitalik could impose his "rewinding" of the DAO onto the ethereum ecosystem (be it with a split of a minority of non-sheep).

However, economies of scale make that the central authority is potentially formed by a cartel of mining pools, eventually with some Core devs, like what happened on Litecoin: from the moment that "important people" can "sit in a room and come to an agreement" the system is obviously centralized.  From the moment there is a charismatic "leader" that can motivate people to change something, the system is obviously centralized, in the same way that states are politically centralized, that the banking system is centralized, and that most other systems are centralized with "leadership".

I know of a few truly decentralized systems: science, and evolutionary biology.  No central authority/leader/cartel/... can change the rules of science or the contents of science.  No central authority/leader/cartel/.... can change the rules of evolutionary biology.

And there used to be an old, decentralized internet discussion system: usenet.

Bitcoin is close to that, but no cigar.  We are maybe witnessing a short period, right now, where bitcoin IS decentralized, when core lost its central power, and miners don't have it yet completely.

[Nagadota]

The good thing is that people can start moving out of Antpool once they realise just how much of their revenues Antpool is robbing from them. 

The bad thing is that people like an extremely steady stream of income and some people can't handle significant variance.

However, as people's margins of profits get tighter, pools will become more competitive with the fees they take and people will start moving to pools with less than 1% fees like Kanopool.  Fortunately, a block every ten minutes is good enough for a pool with 1% of the hashrate to mine 1.44 blocks per day on average, so eventually people will stop conforming to whichever pool is biggest at the time.

[dinofelis]

The good thing is that people can start moving out of Antpool once they realise just how much of their revenues Antpool is robbing from them. 

The bad thing is that people like an extremely steady stream of income and some people can't handle significant variance.

However, as people's margins of profits get tighter, pools will become more competitive with the fees they take and people will start moving to pools with less than 1% fees like Kanopool.  Fortunately, a block every ten minutes is good enough for a pool with 1% of the hashrate to mine 1.44 blocks per day on average, so eventually people will stop conforming to whichever pool is biggest at the time.

Indeed, it is bitcoin's 10 minute block rate that determines grossly the number of pools that will share the market.

If you want an income stability of less than 10% standard deviation per month, then the pool you adhere to should mine on average about 100 blocks per month (if you mine 100 blocks on average, then Poisson statistics give you a 10% standard deviation on that realisation).
In one month, there are 4000 blocks to be mined more or less, so this means that there will be of the order of 40 pools at most that can offer you a 10% variation per month.  (note that 10% standard deviation will give you sometimes a variation of 30% or so).

Knowing that a market never gives uniform shares, but rather power law shares, the current pool distribution doesn't seem too remote from what a normal market would do, with 5 market leaders having in total the majority share, and about 20 pools having almost all of the market.
The orders of magnitude are in agreement with what is to be expected with 10 minute blocks.

[dinofelis]

I think the best solution isn't only change algorithm once, but change/update algorithm regularly every few years to prevent company from creating new ASIC. But, i think this won't happen.

Indeed.  But that's not bitcoin any more.  This is a new cryptocurrency, that needs a central hard fork policy.  Ethereum, DASH and monero are such central hard forking currencies.  Bitcoin has no central hard forking tradition and hence has no mechanism in place to "change the constitution", but of course nobody stops anyone from making an alt coin forking off bitcoin.

[RoommateAgreement]

I think the best solution isn't only change algorithm once, but change/update algorithm regularly every few years to prevent company from creating new ASIC. But, i think this won't happen.

Indeed.  But that's not bitcoin any more.  This is a new cryptocurrency, that needs a central hard fork policy.  Ethereum, DASH and monero are such central hard forking currencies.  Bitcoin has no central hard forking tradition and hence has no mechanism in place to "change the constitution", but of course nobody stops anyone from making an alt coin forking off bitcoin.

it has already happened a couple of times actually!
there is one active one currently in altcoins that has forked from bitcoin, the name is even similar it was "bitcoin something that i forgot"
and the funny thing is that they all fail to exist for any meaningful time.

[7788bitcoin]

This is not a worry as we are actually moving towards decentralization.

This is because the current China-centralized mining pools was caused by the extremely fast evolution of mining ASIC. China has the factories and they are able to make these ASIC fast. It was more profitable to use the ASIC they made to mine bitcoin than selling the ASIC.

Therefore, manufacturers = miners => more China miners


However, as the best technology is now being used to make ASIC, the increase in hashing power for given unit of energy is slowing down, it gradually turns out that selling ASIC might be more profitable than using them for mining.

Therefore, manufacturers  =/= miners => buyers from all over the world => decentralization.

[deisik]

As a result of this, due to Bitcoin's mining becoming more centralized each day, it is getting harder to reach consensus among the miners, especially with the acceptance of scalable solutions like SegWit. Since miners are mostly in for the profit, they don't care much about expanding Bitcoin's transaction capacity, but rather prefer for the same to keep increasing in transaction fees, so they could earn more money per block mined

I certainly agree with the essence of your post

But I still should point it out that Bitcoin mining becoming more centralized actually makes it easier to reach a consensus, though likely not the consensus that you personally may be hoping and looking for. In other words, miners can force their agenda through their monopolistic position even if the whole world is against them. Other than that, miners are vitally interested in preserving the current status quo, so all talks about hard forks are aimed only at distracting out attention from the real issue