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Bitcoin is largely controlled by a small group of investors and miners

techspot.com

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Re: Bitcoin is largely controlled by a small group of investors and miners

#361

Post by hammock »

YossarianFrPrez wrote: post #102
jonas21 wrote: post #25

The Techspot article is a summary of this Bloomberg piece: https://www.bloomberg.com/news/articles/2021-10-25/bitcoin-s... which is itself reporting on this paper from the NBER: https://www.nber.org/system/files/working_papers/w29396/w293...

Interesting quotes from the first section of the paper: "We first document that 90% of transaction volume on the Bitcoin blockchain is not tied to economically meaningful activities but is the byproduct of the Bitcoin protocol design as well as the preference of many participants for anonymity." "We show that the Bitcoin mining capacity is highly concentrated and has been for the last five years. The top 10% of miner…

>"We first document that 90% of transaction volume on the Bitcoin blockchain is not tied to economically meaningful activities but is the byproduct of the Bitcoin protocol design as well as the preference of many participants for anonymity."

What do you think a similar metric would look like for the US dollar, when you consider the $600 trillion-plus derivatives markets?

Re: Bitcoin is largely controlled by a small group of investors and miners

#363

Post by brighton36 »

jstanley wrote: post #330
capableweb wrote: post #279

Earlier quoted context omitted.

Developers of the core protocol would notice, add a flag and then miners/clients/exchanges who want to remain with the same dev team can signal they want to follow the "dev" chain instead of the "miner" chain. Usually forks have checkpoints as well so things can't change willy-nilly.

If blocks in the "miner" chain break the rules of the "dev" chain, then no flag is required. You'll automatically stick with the chain that contains valid blocks, as determined by the implementation that you're running.

Eventually the us government will decide what codebase is valid. And exchanges will immediately switch to that codebase. Probably that codebase will support kyc and whitelist/blacklist functions. Bitcoin is fiat. It doesn't have 79 protons in it's nucleus.

Re: Bitcoin is largely controlled by a small group of investors and miners

#364

Post by FabHK »

glenvdb wrote: post #292
FabHK wrote: post #235

Earlier quoted context omitted.

> just 0.1% (about 50 miners) control close to 50% of mining capacity So, the much-vaunted "mathematical guarantee" that only 21m BTC will ever be mined depends on the benevolence of those 50 miners not to fiddle with the code base. Makes perfect sense to trust those honourable individuals more than the central bankers in control of fiat. /s

You've revealed plainly that you haven't got a clue what you're talking about. Miners can't change the protocol of the entire network. The only malevolent thing they could do is perform a 51% attack if they all colluded together. And even that wouldn't achieve much, so there's not much incentive to do it. All they can do is a double spend. They would've been better off spending that energy on mining blocks to be rewa…

So, let's play that out. Suppose 90% of miners (hash power) collude (as GP posited), for example validating blocks with a larger coinbase (mining reward). The "good" nodes don't accept these (but the "bad" miners can trivially have many nodes that do accept them). But now the "good" hash power drops to 10%, so only every 100 minutes a "good" block is mined (suppose this happened just after a difficulty adjustment), and that goes on for 20 weeks. In the meantime, the bad nodes and miners carry on as before, pretty much, but with their malicious change incorporated. If they're bored, they can devote some of their hash power to double spend attack the "good" chain. Which chain will come out on top?

Sure, it's unlikely. But not impossible. Just as runaway inflation in a reasonably managed fiat currency is not impossible. Just unlikely. (And, yes, hyper inflation has happened historically. Similarly, rewriting of the immutable Ethereum chain and BTC forks have happened historically.)

Re: Bitcoin is largely controlled by a small group of investors and miners

#365

Post by troyvit »

anonporridge wrote: post #108
nuerow wrote: post #94

Earlier quoted context omitted.

> Soooo. . . you're saying a tiny fraction of the population controls the vast majority of the resource? You mean just like every other major resource on the planet? :) I understand the need to try to dismiss this problem, specially from those who have a dog in the race, but the dream of having a magical pseudo-currency that solves all problems and unexplainably makes everyone richer and richer just falls out flat if…

> magical pseudo-currency that solves all problems and unexplainably makes everyone richer and richer That's not what's exciting about bitcoin. What's exciting is that it is the first digital, global money that isn't protected by the proof of violence of the state. The US dollar is the world reserve currency because the United States is the best in the world at deploying destructive power, and the British and French…

Bitcoin uses a lot of energy. Power is (arguably, and not always)[0] gained or exercised through violence, if not of the state then of the large entities that generate that power, be it coal, natural gas, hydro or even solar.

[0] https://hbr.org/2021/05/how-much-energy-does-bitcoin-actuall...

Re: Bitcoin is largely controlled by a small group of investors and miners

#366

Post by FabHK »

fsflover wrote: post #359
FabHK wrote: post #345

Earlier quoted context omitted.

> With bitcoin, you trust math. No, you trust the 50 miners that control the majority of the hash power not to mess with the code that embodies your math (or doesn't, as the case may be).

No, you trust the majority of people running the code, not just miners: https://news.ycombinator.com/item?id=29012699 .

What if the majority of people running nodes disagrees with the majority of hash power holders? Running a node is cheap.

Re: Bitcoin is largely controlled by a small group of investors and miners

#367

Post by Kbelicius »

3np wrote: post #291
YossarianFrPrez wrote: post #102

Earlier quoted context omitted.

Interesting quotes from the first section of the paper: "We first document that 90% of transaction volume on the Bitcoin blockchain is not tied to economically meaningful activities but is the byproduct of the Bitcoin protocol design as well as the preference of many participants for anonymity." "We show that the Bitcoin mining capacity is highly concentrated and has been for the last five years. The top 10% of miner…

> The top 10% of miners control 90% and just 0.1% (about 50 miners) control close to 50% of mining capacity This is incorrect. Replace "miners" with "mining pools" and they're closer to the mark. What's happened is that the block construction (done by the pool operator) and the PoW (done by miners) are mostly decoupled. Some miners will run everything themselves, but they're not represented in those numbers. (There a…

> This is incorrect. Replace "miners" with "mining pools" and they're closer to the mark.

It is correct. They are talking about miners not mining pools.

Re: Bitcoin is largely controlled by a small group of investors and miners

#368

Post by noch »

ur-whale wrote: post #344
mensetmanusman wrote: post #332

Earlier quoted context omitted.

The funny thing is that death or mental illness by a hoarder means the btc go poof until the end of time. Therefore, over a long enough time scale, the number of available BTC tends towards zero.

That's assuming that BTC's aren't infinitely divisible. Currently, you can only chop them up into atoms worth 1e-8 BTC (satoshis), but there isn't much that needs be changed in the code and the protocol to get that to much finer grained. Therefore, it's unlikely that there will ever be zero bitcoins.

> Currently, you can only chop them up into atoms worth 1e-8 BTC (satoshis), but there isn't much that needs be changed in the code and the protocol to get that to much finer grained.

Such a change would be a hard fork and, as you know, we don't do that in Bitcoin. But, no worries because we have millisatoshis in Lightning. Because Bitcoin scales in layers, each layer can implement more and more divisibility as required.

https://bitcoin.stackexchange.com/a/69704

As you said, bitcoin is infinitely divisible, therefore the world economy can run on 1 btc or 1 satoshi.

Re: Bitcoin is largely controlled by a small group of investors and miners

#369

Post by RedBeetDeadpool »

rhinoceraptor wrote: post #321
anonporridge wrote: post #108

Earlier quoted context omitted.

> magical pseudo-currency that solves all problems and unexplainably makes everyone richer and richer That's not what's exciting about bitcoin. What's exciting is that it is the first digital, global money that isn't protected by the proof of violence of the state. The US dollar is the world reserve currency because the United States is the best in the world at deploying destructive power, and the British and French…

Bitcoin isn't a currency, it doesn't function as such. It can only support at most a few dozen transactions per second. It's a speculative instrument, and its value is propped up by Tether, which pretty much everyone agrees is incredibly fraudulent.

The Dollar isn't money, it doesn't function as such. It can't store value very well. Its a federal instrument, and its value is adjusted by the Federal Reserve, which pretty much everyone agrees is incredibly fraudulent.

Re: Bitcoin is largely controlled by a small group of investors and miners

#370

Post by rory »

hammock wrote: post #361
YossarianFrPrez wrote: post #102

Earlier quoted context omitted.

Interesting quotes from the first section of the paper: "We first document that 90% of transaction volume on the Bitcoin blockchain is not tied to economically meaningful activities but is the byproduct of the Bitcoin protocol design as well as the preference of many participants for anonymity." "We show that the Bitcoin mining capacity is highly concentrated and has been for the last five years. The top 10% of miner…

>"We first document that 90% of transaction volume on the Bitcoin blockchain is not tied to economically meaningful activities but is the byproduct of the Bitcoin protocol design as well as the preference of many participants for anonymity." What do you think a similar metric would look like for the US dollar, when you consider the $600 trillion-plus derivatives markets?

The notional value of all derivatives ($600T+, maybe, we think) is MUCH MUCH higher than the dollar amount actually transacted in the derivatives market. So kind of comparing apples to oranges there.
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