Bitcoin centralization and governmet control

[Argoo]

As long as there is a decentralized cryptocurrency, governments will try to control it as much as possible. This process of confrontation will last for a very long time, since, indeed, the cryptocurrency has many opportunities to resist such control.
Over time, a certain golden mean should be worked out in this matter, which should generally suit both cryptocurrency owners and the government.

But what form this golden mean will have? What do you think ?

I think that state control over cryptocurrency can be organizational, without interfering with the nature of its functioning. States may well determine the conditions and procedure for the circulation of cryptocurrency in society, determine its legal status, the procedure and amount of taxes on profits when using it. However, the conditions of circulation and the amount of the determined tax may also be different, and here states, if they wish, can abuse their position.

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[Streets 2.0]

Nothing has changed on the issue of decentralization. Bitcoin and other cryptocurrencies being legalized is a natural reaction of the government to the fact that it cannot change or control. If they cannot lead this process, all that remains is to join it, become a part of it and thus influence at least to some extent. We see the decline of the existing system of world finance, what its configuration will be in the future, no one will say today. But! What can be said with a high degree of confidence - bitcoin will take its place in this future system of world finance, and perhaps cryptocurrencies will play a key, main role there.

[yhiaali3]

Whenever the power of the hashers gathers in the hands of one central authority or one company, it is certain that we will move towards centralization, for some time there has been a lot of criticism about the Binance platform because it tries to collect all crypto services in its hand and this will turn crypto into centralization, this risk is already possible, but it does not exist at present.
Certainly, governments will try to work to centralize Bitcoin by accepting it and working to regulate it according to its central rules. This risk does exist, but is currently elusive because fans of Bitcoin decentralization will try to keep Bitcoin decentralized.

[cabron]

What will prevent a government to set its own mining farm?

A government has a good amount of money to buy devices to have a good hash rate too to compete with the pools and then spark the idea that all governments will try to do the same. They can build hydro or powerful solar generators for it or even create their own pool as well which is better for the government actually and then process the BTC transactions in their country.

[willoweb]

I am absolutely sure that nothing prevents you from doing this, and the governments of most countries are already mining cryptocurrencies, investing in bitcoin and other alternative cryptocurrencies, including (possibly) investing money from the state budget that were previously invested in gold or other common currencies - in cryptocurrency. This is all doing nothing strange now. Those countries that will not do this will simply lose the opportunity to increase their budgets and improve the lives of citizens as a result.

[a_6apcyk]

The "first robin" is already here  

Marathon Digital Holdings, Inc. (NASDAQ:MARA) (“Marathon" or "Company"), one of the largest enterprise Bitcoin self-mining companies in North America, today announced that the Company will be launching the first Bitcoin mining pool based in North America that is fully compliant with U.S. regulations, including anti-money laundering (AML) and the Office of Foreign Asset Control’s (OFAC’s) standards.

...

To set up its pool, Marathon has exclusively licensed technology from DMG Blockchain that allows the Company to filter transactions. Marathon intends to leverage this technology to ensure that its mining pool adheres to AML regulations and that all transactions are compliant with OFAC’s standards. As such, the pool will refrain from processing transactions from those listed on the U.S. Department of Treasury’s Specially Designated Nationals and Blocked Persons List (SDN). By excluding these transactions, all bitcoin Marathon mines will be compliant with U.S. regulatory standards.

http://www.globenewswire.com/news-release/2021/03/30/2201996/0/en/CORRECTION-Marathon-Digital-Holdings-to-Launch-the-First-North-American-Based-Bitcoin-Mining-Pool-Fully-Compliant-with-U-S-Regulations.html

[zasad@]

Wouldn't these actions trigger the creation of a shadow market for paid transactions?
Some pools will fight and block addresses, while other pools will add transactions from prohibited addresses to their blocks for money.
As long as mining is decentralized, small government mining pools will not be able to block transactions on the bitcoin network.

[a_6apcyk]

Wouldn't these actions trigger the creation of a shadow market for paid transactions?
Some pools will fight and block addresses, while other pools will add transactions from prohibited addresses to their blocks for money.
As long as mining is decentralized, small government mining pools will not be able to block transactions on the bitcoin network.

All written below is just an assumption and it's purpose is discussion!

First of all let's just imagine that rejecting transactions from "black" addresses will become a global trend that have just begun.

Initially big countries (USA, China) will compel  pools that are under their juristdictions  to exclude "black" transactions accordingly their national blacklists. Because of geopolitical reasons big pools of one country will process transactions form addresses prohibited by other country. For example China will not be care about US SDN and OFAC and will process transactions from these addresses. In this case the circulation of bitcoins will not be more complicated in global scale.

But I think no country will want to process stolen bitcoin or terrorist's bitcoin. That's why it is possible that some day will be created some regulatory international organization, whose purpose will be managing international blacklists of addresses.
If this happens all bitcoin will be splitted to really "black" and "white". In this case, I think, there will not be sense to create "shadow market for paid transactions" because if some miners will process "black" bitcoin it whatever stay "black" and no one will need such bitcoin, because if you receive it, you will have great problems to send it or change it to fiat.

[Streets 2.0]

I think the moment has passed on the issue of control. Regulation and strict prohibitive measures can only lead to a negative effect in the cryptocurrency field and, as a consequence, from there such capital somewhere where there are softer laws and clear rules of the game. As for the governments, but more often than not people are sitting there who are far enough from the idea of ​​how it works and how it works, so they often make the wrong sharp steps, instead of detailed comprehension.

[a_6apcyk]

I think the moment has passed on the issue of control. Regulation and strict prohibitive measures can only lead to a negative effect in the cryptocurrency field and, as a consequence, from there such capital somewhere where there are softer laws and clear rules of the game. As for the governments, but more often than not people are sitting there who are far enough from the idea of ​​how it works and how it works, so they often make the wrong sharp steps, instead of detailed comprehension.

In my opinion the level of control of bitcoin ecosystem grows every day and one day it will become almost fully controlled. Moreover it is necessary for Bitcoin to be controlled to become legal everywhere and   to collect its full cost. There are some introductory points I believe in:
1. Nowadays, Bitcoin is first of all money, not technology.  I mean that some when in 2009-2012 it was just technology, later it got its cost, later in 2013-2014 it's cost grew about 100 times and Bitcoin began its movement from world of  "computer geeks" to world of money. Later in 2017-2018 where was one more crucial moment. After that world bank system began to assume Bitcoin as money entity.
2. The fiat monetary system is fully controlled by world bank system and governments. This system is based on Bretton Woods system with USD as main world's currency.
3. These institutions have great (I believe - the greatest in the world) power and they will never allow any uncontrolled money to exist.

From the other hand let's take a closer look at Bitcoin technology.
1. Decentralization (especially for Bitcoin) is myth. Because:
    a) Since 2016-2017, when Antminer S9 was produced, Bitmain became the monopolist in mining chip development. Their chips were built on top of technology and were the most energy effective and as far as I know nothing changed today from point of view mining chip development. We have only one company that produces economic effective mining chips.
    b) Today hashrate is so big that you are unable to launch any significant hashing power if you are not great player with great money. Let's make simple calculations with the most optimistic (cheap) scenario. Today hashrate is about 180 EH/s = 180 000 000 TH/s. The newest Antminer S19 PRO has hasrate 110 TH/s and its price was 2600$ (today it's more than 5000$). And its electrical power is 3250 Watt.  Lets assume that all hashing power is based on this model of ASIC (chip). So the cost of all mining equipment is 180 000 000 / 110 * 2600 = 4 254 543 800$ (4,2 billion USD). Summary electrical power is 180 000 000 / 110 * 3250 = 5318179750 (5.3 GWatt). And it is the most optimistic scenario for energy consumption, and I'm sure not bad scenario by equipment price.
So if you want to launch 10% hashrate farm you'll have to buy  equipment for 420 million USD, and you'll need a power plant with power of 530 MegaWatt.
I know these calculations are not accurate, but they can help us just to estimate the scale of mining process.

2. Anonymity is myth. All transactions can be seen by everybody. All you need is to map addresses to persons. I understand that it is impossible to map 100% addresses, but I'm sure it is not necessary. In statistical terms if you can map for example 30% of addresses it will be enough. And all is going to it:

A federal court in the United States has authorized the Internal Revenue Service (IRS) to serve a "John Doe Summons" on the crypto exchange Kraken, seeking identities of U.S. taxpayers who have used cryptocurrency, the Department of Justice said on Wednesday....
https://www.reuters.com/world/us/us-court-authorizes-irs-seek-identities-taxpayers-who-have-used-cryptocurrency-2021-05-05/

3. There are many systems like crystalblockchain (https://crystalblockchain.com/) are under development. Their purpose - deanonymize addresses

4. Lightning technology makes Bitcoin similar to classic monetary system - there can be "banks" with their lightning channels for inner transactions.

All of these make me believe that today is the beginning of control era. And control is not a bad thing for Bitcoin as money entity. Because without control it can not become "real" money

[Streets 2.0]

I think that the community will be divided into two camps. Some will want to leave everything as it is and not change anything, while others, in order to increase the capitalization of their savings, will readily meet control and fall into the same trap as all services that pay with their principles in exchange for money or privileges. In my opinion, decentralization has long been the salvation of bitcoin from the enslavement of financial centers. If this changes, it is unlikely that it will remain the same popular and trustworthy asset.

[stompix]

Wouldn't these actions trigger the creation of a shadow market for paid transactions?
Some pools will fight and block addresses, while other pools will add transactions from prohibited addresses to their blocks for money.
As long as mining is decentralized, small government mining pools will not be able to block transactions on the bitcoin network.

And how is the shadow market compared to the normal market? More expensive, and it gets targeted every day...
And unlike back market dealers that are mobile persons with distribution chains mining pools are sitting ducks, one letter and the datacenter cuts the pool's servers and that's all. Remember Mega?

Besides, people underestimate the power of a government that wants, and how much they want is the key in all this, to enforce something, what could the network do when a few pools even with 10-20% start this shit? Remember what happened when we went 30% down because of the hashrate drop, it will be the same as those blocks will probably been half-filled or even empty in some cases, as a government will want their pool to confirm only whitelabel addresses. This is one of the weaknesses of a decentralized system, you can't run from the people that play dirty and you have no one to turn to.

1. Decentralization (especially for Bitcoin) is myth. Because:
    a) Since 2016-2017, when Antminer S9 was produced, Bitmain became the monopolist in mining chip development. Their chips were built on top of technology and were the most energy effective and as far as I know nothing changed today from point of view mining chip development. We have only one company that produces economic effective mining chips.

The M30S++ does 112 at 3470, the S19pro 110 at 3250, Bitmain is not that far ahead at the moment, right now if MicroBT would be able to produce 100k miners they would sell them in a matter of hours.

If you want to look at a monopoly there is TSMC.

[oilton16]

I'm not use to think about it in all the countries I have ever lived government was never interested in my crypto, cause I have had relatively small amount, I read in article on medium from ownr wallet where they said US still has a great missout even they are trying to control crypto a lot 

[a_6apcyk]

And how is the shadow market compared to the normal market? More expensive, and it gets targeted every day...
And unlike back market dealers that are mobile persons with distribution chains mining pools are sitting ducks, one letter and the datacenter cuts the pool's servers and that's all. Remember Mega?

One more thing about shadow market. The miner's reward is the sum of differences between output and input values of all transactions included in a block. In this way if all transactions are "black" then all miner's reward is "black" too.
If we imagine that bitcoin will be split to "black" and "white", it's obvious that "black" will be cheaper due to the difficulties to change it to other currency. That's why even if fees in black pools are bigger it will be hard for "black miners" to implement the economic profitability of the process.
Thus, I can't see any conditions for such shadow markets to exist too.