Decentralisation is extremely difficult to achieve. This also applies to bitcoin. Two recent articles show that re-centralisation is unavoidable.
I coined the term two years ago after investigating trends of new cryptocurrencies’ preference for adopting delegated consensus mechanisms such as Delegated Proof of Stake (DPOS). Cryptocurrencies such as EOS and Tron sacrifice decentralisation in favour of performance.
Centralised Software Development
Research from BitMex shows how centralised bitcoin development is. Contrary to what people believe as an open-source project with thousands of contributors, the current bitcoin codebase is developed by less than 60 selected programmers from 15 companies. Blockstream and Lightning Labs hire eight programmers each, while other companies such as Square Crypto and MIT’s Digital Currency Initiative allocate seven and six programmers, respectively.
Funding and Direction
It is obvious there are ties on every funding. The funded software engineers are usually obligated to follow their employers’ directions and instructions. Who knows how these companies will direct the development of bitcoin. It is highly probable that bitcoin is forced to adopt these companies’ technologies and solutions to align perfectly with their services. A 100-billion product is tempting enough to control.
Centralised Bitcoin Mining
The Coin Republic‘s article informs us that small miners are, surprisingly, a nuisance to bitcoin’s mining industry as they become unnecessary pressure of selling bitcoins in a bear market, instead of holding bitcoins until the price gets better. The article is against the public belief that all miners count in decentralising the ecosystem. However, the economic model of bitcoin shows that the belief is not true.
This too is an evidence that decentralisation is next to impossible in bitcoin, and probably, all other cryptocurrencies.
- Bitcoin Centralisation is Imminent - March 30, 2020
- If Bitcoin is Worse than Fool’s Gold, Then What is Fiat? - March 29, 2020
- Proof of Stake and How Crypto Exchanges can Break It - October 16, 2019