Bitcoin’s value proposition is based on its ability to resist any type of censorship. Without this advantage, Bitcoin loses its ability to challenge and resist any authority that wants to subject Bitcoin to the same rules applied in the traditional world. With this in mind, it is crucial that Bitcoin has no central points of failure at all. If there is a gatekeeper, there is a vulnerability. If there is a vulnerability, it will be exploited. At that point, Bitcoin ceases to be an exercise in free, decentralized digital money.
To ensure the network is decentralized, robust and anti-fragile, we need to preserve the same components that, through time-tested battles, confirm these same properties to us. No entity in the world could possibly feel that attacking Bitcoin would be a successful attempt. The best way to do this is to spread Bitcoin as far as possible around the world by running nodes. Just like the cash virus. The more widespread it is, the greater the chance of success.
Satoshi stated several times that all previous e-money projects failed due to their centralized features. The monopoly of the money supply is a power that governments and the financial system will not give up easily. To make sure that Bitcoin will not be stopped by any bad actor, it is our duty to ensure that the decentralization of Bitcoin increases all the time. Forever.
Many people automatically dismiss cryptocurrencies as a lost cause because all the companies have failed since the 1990s. I hope it is clear that it was the nature of centralized control of these regimes that doomed them. I think this is the first time we’ve tried to create a decentralized, non-trust-based system.
Bitcoin is an open source P2P application
https://www.fbi.gov/charlotte/press-releases/2011/defendant-convicted-of-minting-his-own-currencyhttps://www.indianapolismonthly.com/news-and-opinion/business/mad-money/
Looking closely at what Bitcoin has accomplished so far and where it is now as a global network, the truth is that the network is highly decentralized. However, just as one could argue that Bitcoin’s purchasing power has no peak, Bitcoin’s level of decentralization also has no peak. The more the better! Beyond a certain level of decentralization, any attack on Bitcoin is not only useless to the attacker, but also harmful, as the failure of the attacker results in strengthening Bitcoin’s ability to resist an attack, strengthening the network in the process, while reducing the perceived success of any attack. Trying to attack Bitcoin. Anti-fragility in its purest form!
Hydra – a mythical character from the Book of Revelation. Every time a head is cut off, two hydra heads grow again. Every time the hydra is attacked, the hydra becomes stronger. Hydra is anti-fragile. Bitcoin is a cash hydra.
What level of decentralization would ensure that any potential attacker would be completely discouraged from attacking the network? No one knows for sure. We can’t help but appreciate that. However, the best strategy is to decentralize Bitcoin as much as possible. The most important tool we have is to run as many nodes as possible around the world.
Nodes play one of the most important, if not the most important, roles in Bitcoin. By following the rules of the protocol, they verify and validate all transactions and all blocks that are propagated across the network. They also transfer all this information to other nodes and store all the blocks published by the miners. If a transaction, block, or other piece of information violates the protocol’s consensus rules, the nodes automatically reject it. Nodes are essentially the referees of the Bitcoin game, making sure that everyone is playing as fair as they are supposed to.
Bitcoin nodes work
If more nodes join the network, more arbiters will check everything that happens in Bitcoin. If more nodes join the network, there will be more copies of the entire blockchain. If more nodes join the network, there will be more guarantees that each actor is behaving the way they should. Every time a node joins the Bitcoin network, anyone who wants to attack it will have to cut off an additional head in order to kill this cash hydra called Bitcoin. If you haven’t run a node yet, it’s time to do your part.
Unfortunately, and unbeknownst to the majority of Bitcoin users, the vast majority are miners no Running a node at present. Providing valid shares to the pool operator is all that is necessary to get paid for their work. It is commonly said that miners are paid by the network to protect it from all hostile attacks by building a wall of energy that is so dense that it is impossible to penetrate. However, if we were to continue with this analogy, what we notice is that miners are employees of the pools, not of the Bitcoin network. There is no direct connection between miners and the network. Miners effectively sell computing power in the form of hash rate to pools. The responsibility for choosing which transactions take place in a block, creating the blocks themselves, publishing said existing blocks throughout the network and receiving all necessary information is delegated to the pools. This effectively means that pools are either monitoring the network or not, thus undermining Satoshi’s original vision of an open, permissionless protocol for value transfer.
Moreover, if the level of decentralization is not reduced enough because of this, there are proxy groups. Proxy pools are basically a wolf in sheep’s clothing. Same pool but different brand This means that if some large pool A has 20% of the hash rate, but 3 smaller pools B, C, and D have 5% each, then pool A effectively controls 35% of the hash rate. That would be enough to carry out a selfish mining attack and damage the network. Thus, what we end up with is just a few “master” aggregator nodes that determine the transactions that reach the blockchain. This situation does not seem very decentralized. That’s because it’s not. Fortunately, there is a way to fix this. It is called class V2.
Stratum V2 is a new mining protocol that hopes to introduce a series of new features that make Bitcoin mining safer, more efficient, and of course, more decentralized. Its open source reference implementation was developed by an independent community of over 15 developers over the past three years, and tested with over 30,000 downstream users. With this new protocol, Bitcoin decentralization can reach new heights. How, you may ask? By giving miners the ability to create their own block templates and choose which transactions are included in the blocks. To obtain this ability, miners must run a node. More nodes means a more decentralized and robust network. Once all miners become building blocks and not pools, we could finally see Bitcoin take another step towards invincible decentralization.
The DEMAND pool is the first mining pool to implement the reference implementation of the Stratum V2 protocol. Our mission is first and foremost to contribute to the decentralization of the network and end the threat of censorship to Bitcoin. If you’re a miner and want to be in the driver’s seat, consider joining our group. Special lifetime terms and other benefits will be available to founding members of our group.
It’s time to improve Bitcoin’s decentralization. Are you coming?
This is a guest post by Francisco Montero. The opinions expressed are entirely their own and do not necessarily reflect the opinions of BTC Inc or Bitcoin Magazine.