Bitcoin Is The Most Decentralized Cryptocurrency - This Is Extremely Important - The Power Of Decentralization
In THIS previous article I wrote that Bitcoin is by far the most interesting cryptocurrency and that everyone who wants to learn about or invest in crypto should start with Bitcoin. One of the main properties that makes Bitcoin extremely strong is the high (est) level of decentralization. It is even fair to say that the reason that Bitcoin still exist IS decentralization.
The power of decentralization
Bitcoin is the most decentralized crypto and this is a HUGE advantage!
Levels and layers of decentralization
Bitcoin is the most decentralized cryptocurrency, this means that the influence of everyone involved is spread out properly and one single entity does not have the power to force his will on others involved.
However, even Bitcoin has pockets of centralization and the level of centralization is variable and changes over time. It can be risky when centralization in one area becomes to high, but happily there are multiple layers of decentralization that will regulate each other:
Developers
Developers write code to change the network in a way that they think is good. However, new code will only be implemented in the network when a majority of the miners start to run the new software. This means that an entity that want to control BTC and creates centralization among the devs can’t push their code, because miners won't mine it and businesses and users won’t use it.Miners
When the mining industry becomes centralized and hire a dev to create code to change the network for their will, it will only be successful when exchanges and businesses accept the coin that is backed by the new software. When the businesses reject to accept this new coin the old version has more value and it will cost miners a lot of money to keep using the new software.Exchanges and businesses
When exchanges and businesses want to use the new software the users have to agree first. When the users stop using the businesses that are involved in the new software and move to the businesses that keep using the old software it will cost the businesses so much money that they probably will drop their choice.Users
Users have the final say, but centralization among users doesn't really exist and the purpose of the coin is to serve the users anyway so this makes sense. The only way to create centralization among users would be mass manipulation by media or compromising a leader.
Different layers of decentralization in Bitcoin have proven themselves already!
In the past the self regulation of different layers is proven already in real life:
- UASF (User Activated Soft Fork)
Miner centralization is a problem for a while already and happily decreasing at the moment because of increasing competition outside of China. Segwit was an update that would improve the capacity of the network and fix malleability. Most of the miners didn't want it to get implemented because it would eliminate their advantage of using Asic Boost and create the fundament for 2nd layers that would enable transactions outside their fee system. Beside that the high fees caused by network obstruction was extremely rewarding for them.
The result was that certain code that would benefit the network and was wanted by the devs, businesses and users as well was blocked by a centralized greedy group of miners. The answer of the users was to launch the UASF, some software that would reject all the nodes that were not updated with Segwit from August 1st.
Because a majority of the miners was signaling to not upgrade to Segwit it looked like a network split would happen until the last week. In the last few days before the 1st of August all the miners shifted from no Segwit to Segwit because they were afraid to mine a coin that the users don’t want to buy and use. The users forced the miners to do what is best for the network and eliminated the negative influence of miner centralization!
- Cancelation Segwit 2x
Before Segwit got implemented an agreement was signed between most of the miners and businesses to do an upgrade where Segwit would be implemented and 3 months later the block size would be doubled by a hardfork. As described the upgrade to Segwit happened fluently because of the UASF but against the 2x upgrade 3 months later was a huge resistance among the users and devs.
Most of them were not against a block size increase in general, but the fact that the agreement was signed by corporations and miners (not really decentralized consensus) behind closed doors and the code was written in a short time and not really reviewed yet. Beside that replay protection would not be included so there was a huge risk for users to lose funds and chaos could appear.
A future market was created and users decided the prices by buying and selling and thus creating the supply and demand. 95% of the miners was signaling for 2x and about half of the businesses said to support it, so the forse behind the hardfork was overwhelming.
However, the future markets started with a price of 0.3 BTC for 2x and went down to 0.1 while the fork date was coming closer. Finally the fork got canceled because the miners knew that they would mine a coin that is worth 90% less while the expenses remained the same in the beginning and the businesses knew that they would lose 90% of their customers if they pushed it through. The users had the final say again!
As you can see: Even when one of these areas get compromised it will be hard to break the decentralization over all. This makes the decentralization of Bitcoin extra strong. The fact that Bitcoin doesn't have a leader or known creator is extremely important, because users have the final say and most of them will back the leader when he wants to change something. This means that every cryptocurrency except Bitcoin probably can be compromised by compromising the leader.
Decentralization is the perfect democracy
As you can see above only the majority of the users can decide what Bitcoin is. Any change in the network will only come through when the majority of the users agree. This means that Bitcoin consensus is the perfect democracy that no single government in the world ever accomplished to create.
Bitcoin consensus is a purely voluntary way of decision making without any fraud or unfairness. I believe that eventually all ‘services’ delivered by governments can be done by Bitcoin where changes in the ‘law’ can be changed through this system. It will be way more efficient and fair and not backed by violent but based on voluntary action.
Decentralization makes the network resilient
Decentralization means that the network is present on the device of every entity involved and not at one single place or server. Also the influence is spread over everyone involved. This makes the network extremely strong and resilient, because there is no place to attack or hack, no server to take down and no CEO or owner to arrest or bribe (the last one is possible for many altcoins).
In the past there were some attempts to create an electronic currency, but they are all shut down by the government because they want to keep the monopoly on money creation. It was possible to shut them down because they were centralized. Bitcoin is the first decentralized electronic currency and they are not able to shut it down. The only way to do it would be shutting down the entire internet, but even this won't help them anymore since BTC now is broadcasted over satellite and can be used with SMS.
Bitcoin, the honey badger don't care!!!!!!!
Decentralization enables game theory
The UASF and Segwit 2x story are examples of game theory (will target this in another article). Game theory in short means that decisions that are good for the network are made because everyone want as much as possible gain for himself and this is prioritized above politics or agreements. All players will do finally what is good for the network because that is the best thing to do for themselves too. The above described examples were internal issues where game theory plays a roll, but when Bitcoin gets more relevant and valuable it will play out on global scale. This is where it gets really exiting!
Since powerful entities can’t destroy or control Bitcoin there will finally be only one possible outcome. In the beginning they will deny the importance and make agreements with each other to not get involved in Bitcoin and even act against it. When a certain point is reached they will have the choice between losing their business or wealth (= power) or getting involved. When a few of the big boys decide to get involved even an armsrace can happen. Because the first to come in will buy cheap and get extremely rich and the last will suffer. This will play out among (central) banks, governments and big corporations.
Perfect example is Jamie Dimon:
This can only happen with a cryptocurrency that is extremely decentralized like Bitcoin, because when it is not possible to compromise the ONLY WAY to maintain power is to get involved. When a centralized crypto like Ethereum, Bcash or Ripple get important enough to trigger this scenario, they simply arrest the CEO and seize the control over the network. THIS IS THE MAIN REASON I AM EXTREMELY BULLISH ON BITCOIN AND NOT ON ALTCOINS.
Conclusion:
Bitcoin is the most decentralized cryptocurrency and this makes it enormously resilient, indestructible and nobody can make changes without the will of the users. This enables the situation where powerful entities will fight to own an as big as possible share of the network by buying or mining it because they can’t simply ‘take’ it. This means HUGE gains in price for the HODLers that were in already.
Disclaimer
This is not investment advice, but just my view on the current situation
Store your Bitcoin secure and keep control of your own keys!
Ledger hardware wallet
Trezor hardware wallet
Ensure your privacy with VPN and pay with crypto!
Torguard
Previous post:
https://steemit.com/bitcoincash/@michiel/and-another-huge-black-swan-for-bitcoin-cash-i-would-say-strong-sell
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Hey @michiel this is great , helpful article to Bitcoin fans . I will like to add ;
UNLIKE RPPLE'S 100 BILLIONS THERE WILL ONLY BE 21 MILLION BITCOINS :
Another thing to consider while observing the vast blockchain environment is that Satoshi’s creation unlike the 1,300 other cryptocurrencies in existence has only 21 million. Other digital currencies have billions already in circulation and billions more to come using other less tested consensus mechanisms like Proof-of-Stake. So in essence bitcoin’s inventor created something unique and different than the digital goods we all swap today. Unlike your MP3s or digital movies, bitcoins cannot be copied, and this weekend 16.8 million of them have been mined, hoarded and a large number of them have been lost. To many cryptocurrency investors, this makes Satoshi’s invention a very valuable digital asset, unlike anything the world has ever seen.
I'm not sure because there's a lot of manipulation in bitcoin made for some group of whales that works together now we can see low prices for the big sell made for a group of whales, we know the power is centrate in decentralization and we need to work strong to have a real decentralization in bitcoin and in alts. Regards
Every attack (on purpose or not) will have a negative influence for a while, but BTC will survive and come out stronger. The China ban caused a big selloff, but the result was that the market became more immune for government regulation (Chinese are still trading like crazy, but more underground). Attackers spammed the network and made transactions expensive for a while, the market came up with upgrades and batching and the network is stronger than before. The Jappanese whale started to sell off Bitcoins, the price dropped 70%, the Jappanese Wale got less rich and the Bitcoins are better divided between users, Bitcoin comes out stronger again.
Thanks for your valuable and Didactive post about btc & so on.
We can take out a lot of information by your post.By dint of we can increase our skill that is beneficial for all steemians.
I will always visit your site & wait for your upcoming post.
Thanks .
@Resteem & follow has done.
Thank you very much! will keep posting
@byresteem ,Please am@yetunde have send ,2sbd scince 4hours ago ,what happen.
all time great post about bitcoin. incomparable writing. thanks sir for explaing about bitcoin decentralization.
Thank you, I think decentralization is the most important feature of BTC, many shitcoins are missing that
People really underrate bitcoin. I think half of it is people are bitter about missing out on the significant gains. I personally have a very little( <$50) but understand it's importance for the crypto market as a whole and respect its' ability to come through almost 10 years of trading.
Yes, I think people are too much focussed on fancy features instead of basic properties I think. And off course many think they missed out on BTC and want to find the 'new BTC', but I think that doesn't exist and BTC itself will have more huge gains
100%!
Thanks for the comprehensive summary! Good post.
Bitcoin is very Extreme! 👻👻👻
Yes!!!
For future viewers: price of bitcoin at the moment of posting is 8225.90USD
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"Decentralization is the perfect democracy"; Decentralization is freedom, and I think that is what all the human beings are always searching for, that´s why it is inevitable that cryptocurrencies will succeed and revolutionize the world as we know it.