Gary Gensler: "Bitcoin is not that decentralized"

[yazher]

That's why most people want to return back to the old way of trading which is using decentralized exchanges and some exchanges that didn't require KYC. I missed those days when you didn't really need to send exchanges your personal info just to trade bitcoins but right now, you have to, especially for local exchanges that didn't require this method before, they need to ask their users for it because the government is also monitoring their activities. this all happened due to the recent incidence of multi-million scams across the country and the result was tight security of all exchanges. Nevertheless, if you don't do anything wrong, then you have nothing to worry about because you are clean, but if we have another good choice like some exchanges offer full anonymity, that would be good.

[DanWalker]

That's why most people want to return back to the old way of trading which is using decentralized exchanges and some exchanges that didn't require KYC. I missed those days when you didn't really need to send exchanges your personal info just to trade bitcoins but right now, you have to, especially for local exchanges that didn't require this method before, they need to ask their users for it because the government is also monitoring their activities. this all happened due to the recent incidence of multi-million scams across the country and the result was tight security of all exchanges. Nevertheless, if you don't do anything wrong, then you have nothing to worry about because you are clean, but if we have another good choice like some exchanges offer full anonymity, that would be good.

You can still use decentralized exchanges and don't need KYC, many DEX are still active and you can use them these days. No one has the right to force you to use CEX and provide KYC to buy bitcoin. It's simply your choice. Furthermore, we should also adapt and accept what is happening because if we want bitcoin to become popular and increasingly valuable, having to face what is happening is inevitable. How can bitcoin gain popularity and become big without government recognition and without the participation of large financial institutions? That's the price we have to pay.

[Troytech]

While I agree partly that in the current reality in early 2024 "investment" (aka speculation) is the main goal most people follow when they buy Bitcoin, I disagree that there is some hard technical limitation which makes Bitcoin qualify as an investment asset only, forever. This only applies to on-chain Bitcoin transactions.

There are challenges in the scaling issue, yes, but there are also solutions. Lightning is struggling a bit with adoption currently, but there is finally some movement with sidechains (ZK rollups etc.) and other L2 solutions, where slowly more decentralized concepts appear. As on Ethereum there is already more variety, and the concept seems viable and popular, I don't see why this shouldn't be achievable with Bitcoin too.

If you were right this would actually be a quite pessimistic stance. As an "investment" vehicle alone, Bitcoin would not have any real value. Bitcoin has USPs like censorship resistance and worldwide availability. While these characteristics can also appeal to "investors", if they "invest" using their own wallet, investing in a Bitcoin ETF or "exchange bitcoin" does actually not make use of them.

IMO you're seeing the crypto world a bit black and white. Some of your forum contributions are interesting and valid but others are not.

(And if you want to direct the focus to altcoins: all cryptocurrencies face the same challenge between node decentralization and on-chain throughput. If there was any breakthrough there, Bitcoin could adopt it.)

They've been working on the scalability problem for 13 years now, which in the realm of high-tech might as well be a thousand years. It's not a problem that's going to get solved. The idea that every daily worldwide transaction that occurs in the whole world gets copied thousands of times to thousands of servers is simply not viable.

And Lightning is both not a solution at high scale and it is also centralized. Same with the L2 solutions. They are no different than any standard bank or Paypal transaction. If you are going to use a centralized architecture, Haypenny is the way to do it since it's a paradigm that is centralized from the very beginning. "Centralized blockchain" is like alcohol-free vodka: it's a waste of time. Regardless, even centralized blockchain won't get you the scale necessary to be a real alternative to today's bank and physical cash transactions, and it's needlessly complicated for the end-user.

And if Bitcoin isn't valuable purely an investment vehicle, that is... news to most retail Bitcoin investors who don't hold their own physical private key and probably don't even know what that is . Millions of people clearly love the idea of an investment vehicle and don't care about the technical details. I don't think that's... pessimistic...

Speaking of scalability, this same issue lead to a hard fork that created bch, even with segwit increasing the block size to 4mb we still have high gas fees on time of network congestion, so many Companies and developers has been working on this same issue, lighting network was introduced and its so complex to run a node that my dad wouldn't be able to understand shit, I don't think bitcoin would ever get passed the issue of scalability in the next 10 years, but we still have to be optimistic about it.

So for now we have no choice than to use bitcoin as an investment asset that it is Currently playing a perfect role at beign.

[d5000]

They've been working on the scalability problem for 13 years now, which in the realm of high-tech might as well be a thousand years. It's not a problem that's going to get solved. The idea that every daily worldwide transaction that occurs in the whole world gets copied thousands of times to thousands of servers is simply not viable.

Ehm, do you know what "scaling" means? It doesn't mean increasing the block size (Of course they could go the BSV way but that would lead to massive centralization). The whole point of scaling solutions is that the smaller transactions should be only stored by a subset of the nodes.

And as I wrote, solutions are already there. LN is such a solution, only that it is still in its infancy. If you think that a couple of years (LN is developed since 2016 but usable since 2018) is enough in the case of an extremely difficult problem, you're wrong. Lightning is not centralized, or why do you think so? The only drawback is that it is only trustless if you monitor your payment channels carefully and are ready to close the channel in case of misbehaviour. And yes, I think this makes it not ideal and not a solution for big amounts, at this moment.

I agree that current sidechain models have still centralization problems, but if the 2-way peg for example of Nomic works, then there could be decentralized derivatives soon (And Paul Sztorc a long time ago has proposed a really decentralized sidechain/L2 paradigm with Drivechain.)

By the way, your currency platform seems to be similar to 90's and early 00's "web currencies".

[legiteum]

They've been working on the scalability problem for 13 years now, which in the realm of high-tech might as well be a thousand years. It's not a problem that's going to get solved. The idea that every daily worldwide transaction that occurs in the whole world gets copied thousands of times to thousands of servers is simply not viable.

Ehm, do you know what "scaling" means? It doesn't mean increasing the block size (Of course they could go the BSV way but that would lead to massive centralization). The whole point of scaling solutions is that the smaller transactions should be only stored by a subset of the nodes.

And as I wrote, solutions are already there. LN is such a solution, only that it is still in its infancy. If you think that a couple of years (LN is developed since 2016 but usable since 2018) is enough in the case of an extremely difficult problem, you're wrong. Lightning is not centralized, or why do you think so? The only drawback is that it is only trustless if you monitor your payment channels carefully and are ready to close the channel in case of misbehaviour. And yes, I think this makes it not ideal and not a solution for big amounts, at this moment.

I agree that current sidechain models have still centralization problems, but if the 2-way peg for example of Nomic works, then there could be decentralized derivatives soon (And Paul Sztorc a long time ago has proposed a really decentralized sidechain/L2 paradigm with Drivechain.)

By the way, your currency platform seems to be similar to 90's and early 00's "web currencies".

LN is nine years old this month. It hasn't solved anything because like every decentralized architecture, it will never scale to mainstream transaction volume. These architectures can only be viable for that purpose if somebody figures out how to increase the speed of light. LN is an improvement because its "more centralized" than Bitcoin, but is still not centralized enough to solve the problem. Of course you can make it even more centralized to increase the scalability, but then you are not meaningfully differentiating yourself from a centralized architecture--at which point the use of blockchain is superfluous and indeed a hinderance to both scalability and usability.

Haypenny is the only digital currency paradigm out there that will truly scale to the millions of transactions per second required to handle worldwide daily demand, replacing credit cards and physical cash. Nothing else comes close.

And the block-split-combine paradigm is unique, and there has never been a simpler form of numerically-delineated value transfer ever invented. It's a game-changer. And it's more private than cryptocurrency could ever be since it doesn't rely on a private key, and it enables instant adoption since it doesn't require the user to have a key pair. And currencies are locked in at the same minting amount (100T), meaning that all currencies are the same, making it much more transparent for end-users (fixing the problem NFTs have).

(And yes, using Haypenny as Bitcoin's defacto L2 network is one way people are looking at using the platform).

[franky1]

And as I wrote, solutions are already there. LN is such a solution, only that it is still in its infancy. If you think that a couple of years (LN is developed since 2016 but usable since 2018) is enough in the case of an extremely difficult problem, you're wrong. Lightning is not centralized, or why do you think so? The only drawback is that it is only trustless if you monitor your payment channels carefully and are ready to close the channel in case of misbehaviour. And yes, I think this makes it not ideal and not a solution for big amounts, at this moment.

so its not a solution.. its a niche with risks.. cheers for confirmation.
and lightning is centralised
just check out who owns majority of its <5k coin(~4600 at time of post)

LNB=fg ~962(over 20% in 1 entity)
bfx ~629 acinq ~460  (over 23% in 2 entities)
kraken ~260
[ list above is 50% of LN capacity.. 4 entities]

then we have others
okx ~257 riverfinancial ~237 binance ~250  walletofsatoshi ~229 nicehash ~185  
[above is another 25% is in 5 entities]

yep 75% of capacity is in 9 entities


if 75%+ (i did not list all) of LN capacity is locked into 9 SERVICES, its not really the solution of independent 'own your coin' network for easy transaction peer to peer it proposes as being the solution of

[Antotena]

I'm afraid he's right, especially when CEXs hold most of BTC's circulating supply (eg: Binance). It's even worse now with the recent approval of spot Bitcoin ETFs by the SEC. Institutional investment companies like BlackRock, VanEck, and MicroStrategy are accumulating large amounts of the cryptocurrency.

We're essentially selling our BTC to companies driven by mainstream governments' own interests. With this, Bitcoin's true value proposition has failed (banks win). At least, the code is open source. If BTC becomes compromised, what's stopping us from moving to a more decentralized chain in the future (Litecoin, Monero)?

Your input would be greatly appreciated. Thank you.

I have noticed a pattern of attack from high profile people and what they does is that they attack Bitcoin on any given opportunity, they don't like Bitcoin and they are always the big guys that has heavily investment else where and don't have Bitcoin and why they do this is because they are afraid, they fear that Bitcoin is going to become exactly what they fear and whether they like it or not, it will achieve what Satoshi created it for purposely.

Gary Gensler hasn't keep quiet since last year, since December he always has different things to say as if his opinion really matter. Bitcoin is this, Bitcoin will not do that, Bitcoin is not what people think, yes we agreed but he should face his work than always making comments on something he can't control. Instead of him to worry about losing his job if Trump win the next election, he is busy squatting with Bitcoin hate.

[Troytech]

That's why most people want to return back to the old way of trading which is using decentralized exchanges and some exchanges that didn't require KYC. I missed those days when you didn't really need to send exchanges your personal info just to trade bitcoins but right now, you have to, especially for local exchanges that didn't require this method before, they need to ask their users for it because the government is also monitoring their activities. this all happened due to the recent incidence of multi-million scams across the country and the result was tight security of all exchanges. Nevertheless, if you don't do anything wrong, then you have nothing to worry about because you are clean, but if we have another good choice like some exchanges offer full anonymity, that would be good.

Full anonymity lead to the ban of one of our best black markets the silk road market place, it functioned fine as a back Market and what happened, so many criminals found a new way to hide their crimes and some government officials used it to steal funds without a trace, I can't blame the government for their resentment towards bitcoin even if I know they want to have control over it in a way, but that's what they do, control people.

And how can we regulate and stop crimes with full anonymity of  users, not everyone is genuine like you and me, I think some actions has been necessary up to date, even the creation of centralized exchanges and it doesn't stop you from holding your bitcoin or digital asset yourself.

[legiteum]

Full anonymity lead to the ban of one of our best black markets the silk road market place, it functioned fine as a back Market and what happened, so many criminals found a new way to hide their crimes and some government officials used it to steal funds without a trace, I can't blame the government for their resentment towards bitcoin even if I know they want to have control over it in a way, but that's what they do, control people.

And how can we regulate and stop crimes with full anonymity of  users, not everyone is genuine like you and me, I think some actions has been necessary up to date, even the creation of centralized exchanges and it doesn't stop you from holding your bitcoin or digital asset yourself.

As I've said before, The Anon Paradox, says that most people don't want the kind of anonymity that tries to protect you from the legal authorities, but rather they want anonymity from other citizens, companies, marketers, and criminals. And the paradox here is that people want their largest holdings like their home, car and life savings held the exact opposite of anonymously: they want these things in their own name so they can never lose them.

[franky1]

bitcoin is not full anonymity

its a PUBLIC LEDGER (emphasis public)
bitcoin does not ask for names nor needs to know names to prove ownership claims..

however when people use services and talk about it on forums they associate their own identities to addresses via their own admissions publicly
which is why the term pseudonymous was used instead of "full anonymity"

bitcoin doesn't require your name,  but it also wont scrub the internet to remove reference, if you divulge your name in association to bitcoin

[Abiky]

And as I wrote, solutions are already there. LN is such a solution, only that it is still in its infancy. If you think that a couple of years (LN is developed since 2016 but usable since 2018) is enough in the case of an extremely difficult problem, you're wrong. Lightning is not centralized, or why do you think so? The only drawback is that it is only trustless if you monitor your payment channels carefully and are ready to close the channel in case of misbehaviour. And yes, I think this makes it not ideal and not a solution for big amounts, at this moment.

The LN is still experimental and not ready for mainstream use. There are many bugs/issues that need to be fixed before it can be considered a "good scaling solution". I wouldn't call it "decentralized", but rather "partially-centralized" because of the way it was designed. With LN, you'd need to trust payment channels before transacting on it. What if the one opening the channel is a bank or a government institution? Then we would be introducing the very concept of a "middleman", which Bitcoin was meant to avoid in the first place. To enlighten you, please read the following article: https://bitcoinmagazine.com/culture/is-the-bitcoin-lightning-network-centralized

I believe the threat of centralization within the Bitcoin ecosystem is growing at an alarming rate. Unless we do something about it, things are going to get worse in the long run. Remember when the Internet was once truly-decentralized and now it's controlled by "big tech" companies? The same future awaits BTC if we fail to protect its decentralized and censorship-resistant design. Maybe there's "light at the end of the tunnel"? 

[legiteum]

bitcoin is not full anonymity

its a PUBLIC LEDGER (emphasis public)
bitcoin does not ask for names nor needs to know names to prove ownership claims..

however when people use services and talk about it on forums they associate their own identities to addresses via their own admissions publicly
which is why the term pseudonymous was used instead of "full anonymity"

bitcoin doesn't require your name,  but it also wont scrub the internet to remove reference, if you divulge your name in association to bitcoin

Well, yeah  .

I was going to try to make that point in the Anon Paradox, but I couldn't figure out how to express that in an elegant and compact way.

Bitcoin, and other public ledger cryptos give you the very worst kind of non-anonymity in that they only expose your PK those who really really want to find out who you are, which means the biggest targets for hackers (i.e. they expose those who the hackers really want to spend the time triangulating).

I suppose you could say Bitcoin is effectively anonymous if you are careful... but most people aren't careful (and most consumers don't want to have to be careful all of the time). Hence, in everyday practicality, Bitcoin probably represents a big security/privacy issue for most average consumers.

Once again the paradox is that the decentralized public ledger approach is actually less private than a centralized company that legally commits to protecting your privacy/anonymity like DuckDuckGo, NordVPN or Haypenny...

[d5000]

LN is nine years old this month.

That's the paper, but not the implementation. And what do you want to say with that?

Your 90's centralized web currency concept is even older, regardless of the minimal improvement it may provide over some existing solutions .

It hasn't solved anything because like every decentralized architecture, it will never scale to mainstream transaction volume.

First, it does solve "something": you can already transact much cheaper and faster on it. Even if it's currently not providing "VISA levels of TPS", because of the adoption problem (channels have to be created with on-chain transactions). But: Do we need "VISA levels of TPS"? Currently not. There is VISA, there are fiat currencies, there are altcoins. They can coexist with Bitcoin for some decades (and maybe forever, I'm not an "absolute maxi").

I know the theory you're referring to (decentralization-scalability-security trilemma) but it isn't a law of nature. It's simply based on the experience that all three characteristics are difficult to achieve at the same time.

However, there is a never ending progress in the scaling area. LN is being adopted by mainstream exchanges. On ETH you have already working rollups, Bitcoin probably will get them soon too. The progress is gradual and it's unlikely that the current scaling tech can lead to an adoption by 8 billion people in the coming 5 years. But we're already in the hundreds of millions and getting closer to the goal. It is also likely that the progress regarding latency/bandwidth and storage will be faster than population growth, so at most in a couple of decades the problem should be completely solved.

The most likely "vision" for a Bitcoin which can scale for billions of users is a variety of different solutions working in parallel. LN could be used for small payments, on-chain only for big transactions ("settlement") and sidechains, pegged chains and rollups for everything in-between. And this variety makes the whole system more decentralized and complex.

[franky1]

d5000 is part of the crowd OBSESSED with thoughts that everyone migrating in their billlions of population over to a flawed buggy subnetwork that doesnt even have its own network wide audit/security model, called LN

its like he wants to use tech that is pre 2009

LN can open channels and display balance that is not funded by a bitcoin utxo
(all the services that 'open channel instantly' or 'offer inbound balance') using temp ID instead of TXID proven this fact is possible

heck there is no network wide audit/security so channels can open using the same TXID more then once (aka double spend)
thats how bad LN is

what d5000 needs to realise is, yes next gen subnetworks will be utilised for different niche requirements and they will have niches, but the failed sandbox experiment known as LN is not the solution, epecially when it has had years of opportunity to fix the issues even LN devs admit it has

but lets just list some of the user experience issues
they have bottleneck issues of liquidity, rebalance snowballing effects, path not found, unco-operative partners.
plus many other bad issues let alone the weak code and bugs and other flaws dev admit to aswell

even now LN has stalled on adoption only peaking at 5.4k btc top capacity.. and now at 4.7k
heck even bitcoin ETF managed to lock up 5k IN ONE DAY

but i do laugh that d5000 is stuck advertising tech pre2009(non blockchain decentralised audited/secured) using out of date utopian PR wordage from 2018.. trying to scream to the masses of wanting billions of people to migrate over to the crappy subnetwork..

but as i said, other new(yet to be designed from scratch) subnetworks that will learn from the mistakes of LN will come about, but it wont be one solo subnetwork, but multiple bridged subnetworks for different niches

[legiteum]

LN is nine years old this month.

That's the paper, but not the implementation. And what do you want to say with that?

What I want to say with that is that they've been working on LN for a very long time--might as well be centuries in the realm of technology--and yet it doesn't come even within several orders of magnitude of being able to handle worldwide transaction volume.

It hasn't solved anything because like every decentralized architecture, it will never scale to mainstream transaction volume.

First, it does solve "something": [...]

Well, yeah, of course it does. I guess I should have more carefully defined my context with that statement. It doesn't solve the problem I was talking about solving...

The most likely "vision" for a Bitcoin which can scale for billions of users is a variety of different solutions working in parallel. LN could be used for small payments, on-chain only for big transactions ("settlement") and sidechains, pegged chains and rollups for everything in-between. And this variety makes the whole system more decentralized and complex.

I agree. I think blockchain-based cryptos are perfectly fine as investment instruments or large-scale value stores. But they will never be, themselves, actual mainstream currencies. For that you will need a system like Haypenny, which can support currencies based on whatever value store you want in the backend, but do so in a way that supports worldwide transaction volume.

[Ale88]

Your input would be greatly appreciated. Thank you.

I've seen a lot this misconception about Bitcoin decentralization. Actually I've just answered in another topic about this.
Gary Gensler doesn't understand that the decentralization of bitcoin is about the full nodes and the miners involved, not about the number of wallets containing big funds (and frankly, those are still plenty too).

Oftentimes people confuse decentralization with distribution, or maybe I would say fair distribution in this case. Let's also not forget that his final intent is to discredit and take bitcoin down, and this type of declaration are pretty smart because they can actually confuse people when you think about.

And allow me to be a bit mean: maybe he confused it with Ethereum.

I'm pretty sure that he knows exactly what he's doing and saying, he's just saying stuff in his own interest, that is the difference.

[NeuroticFish]

And allow me to be a bit mean: maybe he confused it with Ethereum.

I'm pretty sure that he knows exactly what he's doing and saying, he's just saying stuff in his own interest, that is the difference.

Indeed, his confusion is almost certainly intentional and possibly just faked, so he can confuse others.
I completely agree that his statement is in line with his interest, not with the reality. I've said it many times that we should never trust personalities' declarations.

[d5000]

d5000 is part of the crowd OBSESSED with thoughts that everyone migrating in their billlions of population over to a flawed buggy subnetwork that doesnt even have its own network wide audit/security model, called LN

You're funny (...not). I suggest you to read my posts in this thread again
For me LN is the equivalent of a prepaid card in Bitcoin's world. It's good enough for small payments. Sounds lame, but small payments are 99% of all payments.
It is not centralized per se, although of course as it's a neutral technology it could happen that its topology is centered in some big hubs, but that can be fixed as barriers to enter LN are quite low.
The solution you seem to be obsessed with, however, has just this problem: big block coins have extremely high barriers for new node operators, due mostly to bandwidth requirements.
And legiteum is completely right about that not every payment has to be recorded by the whole network forever, even if the solution he proposes is ... even more lame than big block coins in my opinion.

(btw, the solutions I'm probably most "OBSESSED" about are sidechains, rollups and similar tech. )

but as i said, other new(yet to be designed from scratch) subnetworks that will learn from the mistakes of LN will come about, but it wont be one solo subnetwork, but multiple bridged subnetworks for different niches

Compare this sentence with my conclusion in my answer to @legiteum, finally something we (almost) agree

[franky1]

d5000 is part of the crowd OBSESSED with thoughts that everyone migrating in their billlions of population over to a flawed buggy subnetwork that doesnt even have its own network wide audit/security model, called LN

You're funny (...not). I suggest you to read my posts in this thread again
For me LN is the equivalent of a prepaid card in Bitcoin's world. It's good enough for small payments. Sounds lame, but small payments are 99% of all payments.

analogy
bitcoin is the debit card bank account you own for your funds, takes a bit of time to confirm minutes-one day
LN is the IOU game of buy now settle later.. basically credit card.. you need to settle up at end of month-year
majority of LN services offer instant balance.. (meaning no funding lock created to take in your funds to be in your control)
where you then have to pay down that IOU balance at a separate time.. yep LN is mostly more resembling credit card

It is not centralized per se, although of course as it's a neutral technology it could happen that its topology is centered in some big hubs, but that can be fixed as barriers to enter LN are quite low.

when over 75% of that 4600 capacity is held by only a dozen services... its definitely more centralised than funds on the bitcoin network

The solution you seem to be obsessed with, however, has just this problem: big block coins have extremely high barriers for new node operators, due mostly to bandwidth requirements.

oh here you go again repeating crappy old narratives of a group promoting stupidity and you just blindly repeating it
im not a "big blocker" because the group that push the term "big blocker" are pushing it to mean GB blocks asap extremes

my actual opinion is:
a. de cludging the 4mb block code to not be 1mb base 3mb witness and instead a open 4mb space that can be fully utilised by even legacy and or the other tx formats
    thus allowing more transactions, rather then junk unrelated to transacting
b. penalising the spammers and bloaters(not everyone) so that less spam/bloat = more room for genuine transactions
c. re-implementing hard validation code that counts and validates all bytes to have a purpose and lean preference = more transactions
d. not LEAPING blocksize, nor moving blocksize via core dev politics, but SCALING in adjustments based on fill rate and fee of a math formulae that if reaching a threshold of prolonged congestion, then the blocksize can increase at a set milestone all nodes know the formulae of(much like node know difficulty formulae), a rule in nodes to be in consensus to agree on. without dev politics(god mode) decisions

emphasis scaling not leaping.. (and no dont mis interpret it as "big blocker" narrative of quick climbs to extremes via words you heard from the idiot brigade which you seem to be repeating your many points from
there is more to it then the silly narrative of leaps to GB blocks your crew suggest as the only alternative to LN

And legiteum is completely right about that not every payment has to be recorded by the whole network forever, even if the solution he proposes is ... even more lame than big block coins in my opinion.

funny thing is the idiot brigade group you got most of your talking points from.. are the ones that want the blockchain bloated up with hundreds of millions of unspendable dust utxo with a meme attached, which they dont want stopped
YET
then want real purchases of real goods and services to be removed/stopped from utilising bitcoin and instead done on their preferred(flawed) subnetwork of middle men taking a fee per routed payment

if you had a level head. and a actual inclination to think for yourself about whats best for bitcoin
you would not be following the idiot brigade diatribe of trying to get everyone else off bitcoin and whilst saying that the junk should not be stopped

and yes they want bitcoin to have high fee's because they dont want bitcoin to be used everyday by people, they want people to leave bitcoin and be locked into partnerships on the other system you falsely think is the only solution

[3kpk3]

Who the heck is Gary Gensler? Is he Satoshi Nakamoto himself? Nope. This is why I find it silly when some people care about some random person's opinions instead of using their own heads properly.

Fact is that BTC itself is decentralised, but some stuff related to it like exchanges etc that require KYC are centralised. They are different.