K
Kathleen Martin
Guest
Since the launch of Bitcoin in 2009, the blockchain and crypto space has struggled to solve the blockchain tri-lemma problem, which simply states no blockchain is able to achieve all three of decentralization, security, and scalability at once.
Proof of work (PoW) chains have suffered most on scalability, proof of stake (PoS) on centralization etc. In an effort to solve the problem, blockchain developers are now working out ways to achieve all three, without sacrificing any of the properties.
Is Decentralization Being Ignored?
In the haste to build better features for blockchains, many developers are selecting scalability and security over decentralization, an important feature for some of the users in the space. Satoshi envisioned a platform that totally removes any aspects of a central authority controlling the network, no single point of failure and no censorship while maintaining resilience to any external attacks.
As the blockchain field’s total market capitalization soared to a $2 trillion industry, every single cryptocurrency project is foregoing decentralization by choosing to build scalability and security features on the network, sacrificing some or all of their decentralization properties.
Take a look at Bitcoin today. Building its name off decentralization, Bitcoin has backtracked into centralization gradually through its mining processes. Simply put, a group of users (miners) is paid to verify transactions and find new blocks for the rest of the community. This has inevitably led to partial centralization of the network as the blockchain’s hashing power is distributed amongst a few companies or individuals.
Problems with Miner-Centric Proof-of-Work (POW) Chains
As alluded to, proof-of-work chains such as Bitcoin essentially rely on a relatively small number of users (running full nodes) to keep the network safe. These nodes accept valid transactions and keep away bad actors from sending through invalid transactions. However, most of these nodes are not responsible for creating new blocks – a task left for miners – but only validating transactions.
Miners are even more centralized than the node operators. For instance, the top nine Bitcoin mining pools control over 55% of the total mining powerof the network, which gives them absolute power over the network if they choose to collaborate, nothing would stop them from taking over the network. These miners are the deciding factor of which valid transactions actually make it into a block or not, and only this small group is involved in ensuring the liveliness of the network and the prevention of censorship attacks.
You can already sense the lack of decentralization in all of this. If the miners are coerced or paid to disrupt the Bitcoin blockchain, there could be serious consequences that would even render the blockchain useless. This is the case for all blockchains, whether they use PoW or proof-of-stake (PoS), or any other paid consensus.
Continue reading: https://www.coinspeaker.com/blockchain-decentralization-fade-away-security-scalability-take-centerstage/
Proof of work (PoW) chains have suffered most on scalability, proof of stake (PoS) on centralization etc. In an effort to solve the problem, blockchain developers are now working out ways to achieve all three, without sacrificing any of the properties.
Is Decentralization Being Ignored?
In the haste to build better features for blockchains, many developers are selecting scalability and security over decentralization, an important feature for some of the users in the space. Satoshi envisioned a platform that totally removes any aspects of a central authority controlling the network, no single point of failure and no censorship while maintaining resilience to any external attacks.
As the blockchain field’s total market capitalization soared to a $2 trillion industry, every single cryptocurrency project is foregoing decentralization by choosing to build scalability and security features on the network, sacrificing some or all of their decentralization properties.
Take a look at Bitcoin today. Building its name off decentralization, Bitcoin has backtracked into centralization gradually through its mining processes. Simply put, a group of users (miners) is paid to verify transactions and find new blocks for the rest of the community. This has inevitably led to partial centralization of the network as the blockchain’s hashing power is distributed amongst a few companies or individuals.
Problems with Miner-Centric Proof-of-Work (POW) Chains
As alluded to, proof-of-work chains such as Bitcoin essentially rely on a relatively small number of users (running full nodes) to keep the network safe. These nodes accept valid transactions and keep away bad actors from sending through invalid transactions. However, most of these nodes are not responsible for creating new blocks – a task left for miners – but only validating transactions.
Miners are even more centralized than the node operators. For instance, the top nine Bitcoin mining pools control over 55% of the total mining powerof the network, which gives them absolute power over the network if they choose to collaborate, nothing would stop them from taking over the network. These miners are the deciding factor of which valid transactions actually make it into a block or not, and only this small group is involved in ensuring the liveliness of the network and the prevention of censorship attacks.
You can already sense the lack of decentralization in all of this. If the miners are coerced or paid to disrupt the Bitcoin blockchain, there could be serious consequences that would even render the blockchain useless. This is the case for all blockchains, whether they use PoW or proof-of-stake (PoS), or any other paid consensus.
Continue reading: https://www.coinspeaker.com/blockchain-decentralization-fade-away-security-scalability-take-centerstage/
