Bitcoin is no longer decentralized in any meaningful way

[legiteum]

Bitcoin started off as a decentralized system because it would not have existed otherwise: in 2010, digital currencies were illegal and in order to escape prosecution, the network could not have any defined center, even if it was a small group of identified individuals, lest the system be shut down by the authorities.

Digital currencies are legal now, which is a good thing for Bitcoin because it's not, in any meaningful way, decentralized anymore.

How did it get here? Ultimately the driver is profits: Bitcoin started out as a means of value transfer, but today its use is almost entirely that of a speculative instrument. In other words, today, 99% of Bitcoin users buy it for one reason: Number Go Up.

Imagine there was a proposal to significantly change the Bitcoin codebase, for instance to the thought experiment I laid out in this thread which would change Bitcoin's architecture to be faster, cheaper to transact, and served by an identified and trusted set of servers, dropping the proof-of-work approach among other changes.

While the majority of posters here on Bitcointalk would oppose this change (a strong majority, but by no means everybody), imagine if Michael Saylor, CoinBase, Binance, Donald Trump, Blackrock, the ETF companies, and a few other large players all agreed to this change, and vowed to only recognize Bitcoin from this fork.

In other words, imagine if (say) 60% of Bitcoin holders by market value--and 90% by marketing power--all agreed at once to a particular change.

The rest of the market would have no choice but to follow these leaders. It wouldn't even be close, especially when you consider that smaller brokers and holders would panic and vow to support the new network as well. The would be forced to protect their investments.

So while it's true that, currently, the Bitcoin technical architecture allows the network to be controlled by thousands, what really matters is the price, and the price can be controlled by a relatively tiny group of companies and individuals.

And of course it could be changed by a single law passed by the US Congress for instance (which would probably be in coordination with the top Bitcoin holders of course).

Bitcoin is to decentralization as the modern commercial Christmas is to Jesus Christ: where it started has nothing to do with where it is.

[Ambatman]

Bitcoin started off as a decentralized system because it would not have existed otherwise: in 2010, digital currencies were illegal and in order to escape prosecution

So you saying that Bitcoin was made decentralized because digital currency were illegal and having a center would have painted a target?
I believe I'm the one not understanding your sentence since I want to believe you smarter than that.

imagine if Michael Saylor, CoinBase, Binance, Donald Trump, Blackrock, the ETF companies, and a few other large players all agreed to this change, and vowed to only recognize Bitcoin from this fork.

In other words, imagine if (say) 60% of Bitcoin holders by market value--and 90% by marketing power--all agreed at once to a particular change.

Remember what happened with Bitcoin Cash?
And what happened?
Bitcoin isn't proof of stake where how much you own determine consensus
Ever heard of Full node users?

The rest of the market would have no choice but to follow these leaders

Lol to have a choice was the reason Bitcoin was created so stop confusing it for centralised currency.

what really matters is the price, and the price can be controlled by a relatively tiny group of companies and individuals.

Yeah because the codes and consensus are just there to make it look fancy
Price control isn't same as controlling Bitcoin.

where it started has nothing to do with where it is.

True and complete decentralized is not easy to find in a centralised world we are today
But Bitcoin is the closest thing we have to a decentralised money.
Price may be centralised
Mining may be centralised
Doesn't mean Bitcoin itself is centralised.
Bullet in itself can't kill
Margarine can't kill
Doesn't mean a loaded gun can't.
Stop tying Bitcoin to just price.

[legiteum]

Bitcoin started off as a decentralized system because it would not have existed otherwise: in 2010, digital currencies were illegal and in order to escape prosecution

So you saying that Bitcoin was made decentralized because digital currency were illegal and having a center would have painted a target?

Yes. Before Bitcoin, there were other projects like it, and they were shut down by various governments. Then several projects started to solve the problem by using a disconnected federation of actors--i.e. peer-to-peer--in order to create their networks. These networks were easily taken over by 51% attacks, so in came Satoshi's architecture with Bitcoin, e.g. the proof-of-work concept.

Today, since digital currency is essentially legal, it no longer needs this and many very large businesses out there (ETH, SOL, XRP, etc.) have products that are essentially controlled by a single entity with no problems at all.

Remember what happened with Bitcoin Cash?

I remember there was absolutely nothing remotely like the scenario I am describing. Bitcoin cash was a small group of developers with a tiny (and unidentified) stake in BTC.

Price control isn't same as controlling Bitcoin.

I'm saying that it is. Since 99% of Bitcoin holders only care about the price, anybody who controls the price controls the actions of 99% of Bitcoin holders, and thus controls Bitcoin.

As a side note, I would warn people here that Bitcointalk, as much as we love it, isn't the real world. Many people here hope the price of BTC goes lower so they can afford to buy a lot more coins, because for them owning Bitcoin is an end in itself.

For the other 99.9% of the world, however, they want BTC to go UP in price so they can sell it and buy nice things or feed their family. For most, Bitcoin isn't a fetish, it's an investment.

[Ambatman]

Today, since digital currency is essentially legal, it no longer needs this and many very large businesses out there (ETH, SOL, XRP, etc.) have products that are essentially controlled by a single entity with no problems at all.

It was made decentralized because of the financial crisis
An alternative.
They are legal doesn't mean they don't face same issues centralised system face
Relying on a third party
Having no control over your funds and hoping that they would implement integrity.

Bitcoin cash was a small group of developers with a tiny (and unidentified) stake in BTC.

Coinbase were in support of larger size as well as some exchanges.

Since 99% of Bitcoin holders only care about the price, anybody who controls the price controls the actions of 99% of Bitcoin holders, and thus controls Bitcoin.

Since majority of people that use Coke (cocaine) abuse it
Does that change the fact it can be used for anethestic?
There's no magic button to click that the price would go up
Even if we scream Bitcoin to a million dollar
We understand that the it has to be true to its code and that's the trust.

[bitmover]

In other words, imagine if (say) 60% of Bitcoin holders by market value--and 90% by marketing power--all agreed at once to a particular change.

Bitcoin holders have no say in the protocol. Miners do.

This is not proof of stake. This is proof of work.

Miners decide which block to mine, which chain to follow. Not holders.

[legiteum]

Today, since digital currency is essentially legal, it no longer needs this and many very large businesses out there (ETH, SOL, XRP, etc.) have products that are essentially controlled by a single entity with no problems at all.

It was made decentralized because of the financial crisis

Um, what? That couldn't possibly have anything to do with the PoW architecture, that's for sure. And given that Bitcoin is now a mainstream investment just like the rest, it makes even less sense now.

Since 99% of Bitcoin holders only care about the price, anybody who controls the price controls the actions of 99% of Bitcoin holders, and thus controls Bitcoin.

Since majority of people that use Coke (cocaine) abuse it
Does that change the fact it can be used for anethestic?

Can you, um, clarify that? I don't understand what you are trying to say here.

In other words, imagine if (say) 60% of Bitcoin holders by market value--and 90% by marketing power--all agreed at once to a particular change.

Bitcoin holders have no say in the protocol. Miners do.

This is not proof of stake. This is proof of work.

Miners decide which block to mine, which chain to follow. Not holders.

The people who have actual control of the Bitcoin code base is the Bitcoin core development team--although anybody could fork them if they wanted. While I could probably include the two US companies who currently execute the majority of the hash rate in my small list of companies who'd have to agree to the change. I would imagine those companies would go where the money is though.

Regardless, my point that Bitcoin isn't defacto decentralized anymore still stands. A small group of companies/individuals could agree to change it however they want, and the US government could compel them to agree to any change as well.

[adultcrypto]

Bitcoin started off as a decentralized system because it would not have existed otherwise: in 2010, digital currencies were illegal and in order to escape prosecution, the network could not have any defined center, even if it was a small group of identified individuals, lest the system be shut down by the authorities.

Bitcoin is still decentralized and will always be because that is an intrinsic property of bitcoin. I perceive that you are mistaken decentralization of bitcoin with privacy and anonymity, if my guess is right, then you are right to a large extent because recent happenings have shown that the privacy and anonymity can no longer be trusted. This is the reason for the creation of mixers and other tools that ensure bitcoin remain private and anonymous but that doesn't seem to sit well with the authorities which is why you see the crackdowns on such infrastructures.

[rat03gopoh]

While the majority of posters here on Bitcointalk would oppose this change (a strong majority, but by no means everybody), imagine if Michael Saylor, CoinBase, Binance, Donald Trump, Blackrock, the ETF companies, and a few other large players all agreed to this change, and vowed to only recognize Bitcoin from this fork.

A forked Bitcoin isn't Bitcoin; so if all these figures agree to the changes, they're essentially opposing the pure Bitcoin protocol, which has been so closely guarded against ideological and philosophical changes. It wouldn't be a problem for us if they were more acknowledging the new "Bitcoin" entity. Ultimately, they would put their idealistic views on Bitcoin into practice, and more forks would likely occur.

[legiteum]

Bitcoin started off as a decentralized system because it would not have existed otherwise: in 2010, digital currencies were illegal and in order to escape prosecution, the network could not have any defined center, even if it was a small group of identified individuals, lest the system be shut down by the authorities.

Bitcoin is still decentralized and will always be because that is an intrinsic property of bitcoin.

I guess it depends on what you mean by "decentralized" is. If you mean Bitcoin is not controlled by any identifiable group of entities, then it's not decentralized. If you mean it's technical architecture splits its computing among servers that are not near each other, then it is.

I perceive that you are mistaken decentralization of bitcoin with privacy and anonymity, if my guess is right, then you are right to a large extent because recent happenings have shown that the privacy and anonymity can no longer be trusted. This is the reason for the creation of mixers and other tools that ensure bitcoin remain private and anonymous but that doesn't seem to sit well with the authorities which is why you see the crackdowns on such infrastructures.

Bitcoin has never been private nor anonymous...

While the majority of posters here on Bitcointalk would oppose this change (a strong majority, but by no means everybody), imagine if Michael Saylor, CoinBase, Binance, Donald Trump, Blackrock, the ETF companies, and a few other large players all agreed to this change, and vowed to only recognize Bitcoin from this fork.

A forked Bitcoin isn't Bitcoin; so if all these figures agree to the changes, they're essentially opposing the pure Bitcoin protocol, which has been so closely guarded against ideological and philosophical changes. It wouldn't be a problem for us if they were more acknowledging the new "Bitcoin" entity. Ultimately, they would put their idealistic views on Bitcoin into practice, and more forks would likely occur.

The Bitcoin codebase gets updated all of the time, and the last rev was released only a few weeks ago and all major important players accepted it. Every new rev of the Bitcoin codebase is a "fork" in the Github sense.

I agree that lots of people might have other opinions about what Bitcoin should be, but the point of this thread is that they don't matter, only the small group of people who control most of the supply of Bitcoin actually matter. They are a very small group of people, and they are the ones who realistically controlled the future of Bitcoin. Everybody else opinions don't really matter.

[ertil]

Every new rev of the Bitcoin codebase is a "fork" in the Github sense.

Not really. If that would be the case, then we would have a new altcoin each time, when the new client version is released. Which is not the case. If you run a full node, then you can see different client versions, used by different peers. And they all follow the same chain.

In practice, only when consensus rules are changed, then we can have some "potential forks", and only if new rules are activated by some minority (which is why soft-fork enthusiasts usually want to get 90% miner support, to not end up in a minority fork, which could quickly turn into an altcoin).

only the small group of people who control most of the supply of Bitcoin actually matter

It is more complicated than that. If you assume, that one group can control everything, then who it is, exactly?

Developers? They can release a new version, but it can be rejected, and it takes time for people to upgrade. A lot of them still run the old version, it takes months to upgrade, and if they would release something incompatible, then the new version would be in a minority, and would quickly lose. Also, Bitcoin Core is not the only client in use.

Miners? They can push the chain forward, but they have to stick to the rules. If they would want to stop halvings, or do other things they would want, which would be incompatible, then their blocks would be rejected by the rest of the network. Mainnet is not signet, where miners can control everything.

Whales? They can control their own coins, and nothing else beyond that. By having thousands of BTCs, you won't force some other coins to move in a certain direction, if their owners won't make a valid signature. It is not a Proof of Stake, where whales can control new coins, by staking the old ones.

Bitcoin has never been private nor anonymous...

It is, if you use it correctly. Of course, many people for example reuse addresses, and then, it is normal, that if you can connect a single address to a single person, then you can trace the whole history. However, this is not how the system was designed. By default, the client will use a different address each time.

If it would be fully transparent, then you would see real people's names, instead of addresses. But even chain analysis companies cannot do it that well, a lot of time they simply guess, because the transaction "looks like that". Historically, a lot of ways to identify individuals were proven to be ineffective, for example when people assumed, that all inputs of the same transaction are owned by the same person, then CoinJoin broke that assumption.

If you think, that Bitcoin is transparent, then good luck finding out, who sent what to whom in transactions like that: https://mempool.space/pl/tx/9074d3eb88bc87b8bfc636b0b6d62e8a1bd756cbd8e450ceb7256e4e8fa3e909

[Exitoral]

Bitcoin hasn't lost its decentralisation. I think where you you are pointing at is how centralised platform are more preferred to decentralised platforms. The increasing number of individuals using centralised platforms is alarming after the preaching of cryptocurrency goal is to be decentralised.
You won't blame them cause decentralised platforms haven't created ease of use. And centralised platforms are winning everyday.

You're right about individuals adopting bitcoin just to make profit. No doubt. Bitcoin is slowly or maybe it has and it's becoming an asset controlled by the wealthy. It's heartbreaking. Even if the wealthy someone controls the price. It will always go up. In the sense that, there is a fixed supply. That scarcity alone creates more value than any other thing.

[legiteum]

Every new rev of the Bitcoin codebase is a "fork" in the Github sense.

Not really. If that would be the case, then we would have a new altcoin each time, when the new client version is released. Which is not the case. If you run a full node, then you can see different client versions, used by different peers. And they all follow the same chain.

What I meant was that every new rev of the Bitcoin core by its team is a new version of the software. It can be adopted by the major players or not.

Also, wallets choose nodes, and that decision basically dictates what rev of the software is running.

If your BTC is worth $150k on one wallet and $1.98 on another wallet, guess which one the user will choose?

In practice, only when consensus rules are changed, then we can have some "potential forks", and only if new rules are activated by some minority (which is why soft-fork enthusiasts usually want to get 90% miner support, to not end up in a minority fork, which could quickly turn into an altcoin).

Correct, and the question would be, which is the "altcoin" and which is Bitcoin? The US government along with top Bitcoin-holding cronies could dictate the answer to that question. That's what I'm saying here.

If you want to say, "the community" wouldn't accept it, perhaps the way to say it is, "the community" would be those individuals and companies because small holders will never matter.

only the small group of people who control most of the supply of Bitcoin actually matter

It is more complicated than that. If you assume, that one group can control everything, then who it is, exactly?

I put the partial list in the OP, but it includes major and influential holders like Michael Saylor and Donald Trump, brokers like CoinBase and Binance, the ETF companies, the major minors who own >60% of the hash rate, and a few others.

If the US government got to those people--which would be pretty easy--then Bitcoin would do whatever those people said because they would dictate whether you are going with the bulk of the market or not.

Developers? They can release a new version, but it can be rejected, and it takes time for people to upgrade. A lot of them still run the old version, it takes months to upgrade, and if they would release something incompatible, then the new version would be in a minority, and would quickly lose. Also, Bitcoin Core is not the only client in use.


Miners? They can push the chain forward, but they have to stick to the rules. If they would want to stop halvings, or do other things they would want, which would be incompatible, then their blocks would be rejected by the rest of the network. Mainnet is not signet, where miners can control everything.

Whales? They can control their own coins, and nothing else beyond that. By having thousands of BTCs, you won't force some other coins to move in a certain direction, if their owners won't make a valid signature. It is not a Proof of Stake, where whales can control new coins, by staking the old ones.

Again, all of these people are in the ecosystem for one reason: to make money. Threaten that, and they will do whatever the government wants.

And yes, the whales don't "have to" do anything, but imagine a Whale can be worth either $1,000 or $1 billion. Guess which one he will choose?

Bitcoin has never been private nor anonymous...

It is, if you use it correctly. Of course, many people for example reuse addresses, and then, it is normal, that if you can connect a single address to a single person, then you can trace the whole history. However, this is not how the system was designed. By default, the client will use a different address each time.

I guess it depends on what you mean by "correctly". If you use it the way Satoshi envisioned, it's very intentionally not anonymous because it's an open ledger. Obviously there are tools on top of Bitcoin that can change that equation, but that's not Bitcoin.

And yes, it's not like people's names are on the chain, but chain analysis is pretty good--and good enough to make it so you cannot be sure. And the way most people use Bitcoin is easily tracked if somebody wanted to.

Bitcoin hasn't lost its decentralization. I think where you you are pointing at is how centralised platform are more preferred to decentralised platforms. The increasing number of individuals using centralized platforms is alarming after the preaching of cryptocurrency goal is to be decentralized.

You won't blame them cause decentralized platforms haven't created ease of use. And centralized platforms are winning everyday.

You're right about individuals adopting bitcoin just to make profit. No doubt. Bitcoin is slowly or maybe it has and it's becoming an asset controlled by the wealthy. It's heartbreaking. Even if the wealthy someone controls the price. It will always go up. In the sense that, there is a fixed supply. That scarcity alone creates more value than any other thing.

I'm pointing that out too (and point it out a lot ), but I'm also trying to make people think about what they mean by "decentralization". If you mean, "it runs on a bunch of servers in geographically separated data centers", then yeah, Bitcoin is "decentralized" but then again a lot of things are like that.

The original definition of "decentralized" in the context of Bitcoin was a network that could not be easily controlled by the US government because there was no central legal entity or small group of entities to prosecute.

By that definition, Bitcoin is no longer decentralized.

[Ucy]

If your claim that minority Bitcoin holders who have the majority stakes, or wealthy oligarchs could call the shots, or have a final say on Bitcoin consensus, because they could determine the price of Bitcoin, which consequently makes Bitcoin centralized, they would have done that by now. Ofcourse, they tried in the past but the market has proven time and time again that Bitcoin ideals by far matter more than the number of people who control majority stake.
Besides, the market is in its current state because people tried to attribute the recent bull run to wealthy people, so the market moved against that sentiment to prove them wrong.
The price of Bitcoin is tied to a factor beyond human control and fundamentals such as decentralization, transparency, immutablity, censorship resistant, privacy, trustlessness, permissionless, deflation, etc.. Everyone is subject to these factors, and anyone can obey the factors to get the price move to the extent of their loyalty and alignment to the factors.  Decentralization is maintained in this regard since anyone can do that to get the price move unlike having the minority with major stakes calling the shots.

This statement was proven right on Steem Network which was taken over by a big investor, in similar manner you described, but the majority or community protested the decision and ended up creating Hive from steem. The price of Hive overtook steem and almost doubled it. Unfortunately, the minority with major stake on Hive could not resist the temptation of steem even after several warnings, and the price nosedived but probably still higher than the price of steem.
What happened is that certain people/things failed to realize or deliberately ignored the fact that a crypto network, if unique, will derive its value from strong fundamental like decentralization, privacy, censorship resistance, trustlessness, permissionless, deflation, etc. Tying the value only to stake will crash the price or create a bubble that will eventually burst

[Exitoral]

I'm pointing that out too (and point it out a lot ), but I'm also trying to make people think about what they mean by "decentralization". If you mean, "it runs on a bunch of servers in geographically separated data centers", then yeah, Bitcoin is "decentralized" but then again a lot of things are like that.

The original definition of "decentralized" in the context of Bitcoin was a network that could not be easily controlled by the US government because there was no central legal entity or small group of entities to prosecute.

By that definition, Bitcoin is no longer decentralized.

I am very impressed on your distinctive definition of decentralisation and how you used that you make a sharp point. But with all that, there's one thing that still holds the decentralisation definition correctly which is having a market cap of 21 million and that can't be unchanged. Even if the US government has somehow have a strong hold and control of bitcoin, that does not change the fact that it is of strong value based on its scarcity.

[Findingnemo]

Bitcoin forking will change it into another shitcoin and it is not bitcoin so we can't say what it is going to be or even if it becomes centralized will not make bitcoin centralized because it isn't even bitcoin at all.

With the evolution of KYC, it loses the anonymity but it was not supposed to be a privacy coin in the first place.

[legiteum]

If your claim that minority Bitcoin holders who have the majority stakes, or wealthy oligarchs could call the shots, or have a final say on Bitcoin consensus, because they could determine the price of Bitcoin, which consequently makes Bitcoin centralized, they would have done that by now.

I don't think they've had any reason to. Also, I think this situation is fairly new, as the Bitcoin market has matured greatly in the past few years. ETFs are still relatively new for instance.

[quote[
The price of Bitcoin is tied to a factor beyond human control and fundamentals such as decentralization, transparency, immutablity, censorship resistant, privacy, trustlessness, permissionless, deflation, etc..

[/quote]

It has nothing to do with any of that. Bitcoin is valuable because a lot of people buy it. Most investors in Bitcoin aren't exposed to any those factors you listed since they invest in Bitcoin through a broker or an app or the ETF, and all they care about is Number Go Up. As we discussed in another thread, you could centralized Bitcoin's architecture and the price would probably go up, not down--and the price is the only thing anybody cares about.

I get that many people here literally hope the price of BTC goes down because then they can afford more Bitcoin, which they buy as an end in itself, but that's not most investors.

I'm pointing that out too (and point it out a lot ), but I'm also trying to make people think about what they mean by "decentralization". If you mean, "it runs on a bunch of servers in geographically separated data centers", then yeah, Bitcoin is "decentralized" but then again a lot of things are like that.

The original definition of "decentralized" in the context of Bitcoin was a network that could not be easily controlled by the US government because there was no central legal entity or small group of entities to prosecute.

By that definition, Bitcoin is no longer decentralized.

I am very impressed on your distinctive definition of decentralisation and how you used that you make a sharp point. But with all that, there's one thing that still holds the decentralisation definition correctly which is having a market cap of 21 million and that can't be unchanged. Even if the US government has somehow have a strong hold and control of bitcoin, that does not change the fact that it is of strong value based on its scarcity.

Absolutely correct. While I can imagine the US government and/or the big players making technical changes to Bitcoin in order to grow their bags, they will obviously not want to change things like the 21M cap because that would make them lose money.

If you think of Bitcoin as a private casino it starts making more sense  .

Bitcoin forking will change it into another shitcoin and it is not bitcoin so we can't say what it is going to be or even if it becomes centralized will not make bitcoin centralized because it isn't even bitcoin at all.

With the evolution of KYC, it loses the anonymity but it was not supposed to be a privacy coin in the first place.

What codebase is or is not "Bitcoin" will be determined by what network the majority of holders use to recognize their keys. Hence if the US government and/or key Bitcoin holders and companies decided a certain codebase is "Bitcoin", then that will be Bitcoin and every other codebase will be the shitcoin.

And imagine, for instance, that the US passed a law saying that you cannot call a codebase "Bitcoin" unless it's the one they have blessed. Indeed, if a company created a coin and called it "Bitcoin" and used the Bitcoin symbol, they would be prosecuted by... the US government (among others).

(This shows how silly the notion that a pile of code could be more powerful than governments always was).

[Findingnemo]

~
What codebase is or is not "Bitcoin" will be determined by what network the majority of holders use to recognize their keys. Hence if the US government and/or key Bitcoin holders and companies decided a certain codebase is "Bitcoin", then that will be Bitcoin and every other codebase will be the shitcoin.

Let's say if US government or the majority of the Bitcoin Cash holders define that BCH is the new bitcoin will that make it Bitcoin? Hell NO, the bitcoin we use today will remain as it is and any changes in the code level will result into forking that means a shitcoin and if 99% of the holders consider that as bitcoin then it is their problem but AFAIK the bitcoin we use will remain the same.