WhiteSites Blog
WhiteSites Blog
Over time Bitcoin has gone from being a highly decentralized network with thousands of computers mining for coins, to the consolidation of miners into pools, then finally the mega mining farms running ASIC hardware. The result is Bitcoins are now mined by only a handful of pools. This brings increasing risk to the network, as all it takes is for a major player to be taken out and the bitcoin network would stall.
Yesterday I watched as the mempool got a little backed up. 2 x during the day over an hour went by without any bitcoins being mined. Not sure if it was just bad luck, or if a major mining pool went down. The result is Bitcoin transaction fees went from 1 satoshi per byte to over 180 satoshi's per byte, and the mempool didn't clear up for 12 hours. If Bitcoin ever wants to be realistically used as a currency this won't work. No merchant wants to wait 12 hours to make sure your transaction gets mined.
But then this brings another issue. Lets say the bitcoin Market cap eventually breaks 1 Trillion dollars. With so few mining pools. It becomes a game of what keeps my enemy behind gets me ahead. Finding a way to take out competing mining pools becomes very attractive. Take out a few of the largest mining pools and the network would backup. Fees would skyrocket, and confidence in the technology would fall.
The ideal of block chain is valid, but calling bitcoin decentralized when ASIC continue to consolidate hashing power into only a handful of mining pools is not. Bitcoin needs to find a way to further decentralize its network if it wants to survive.