Op-Ed: What Is the True Meaning of “Decentralization” in Blockchain Technology?

By September 22, 2016Bitcoin Business

Recent years have brought significant misunderstanding of the term decentralization as it pertains to Bitcoin. Literally, it means the dispersal of nodes, data, miners and developers; according to some, the dispersal of miners (everyone mining with a consumer PC) is the original vision of Satoshi, and that vision supports One CPU/One Vote, meaning every single user mines with a home PC and a smartphone. People who modified algorithms to antagonize the R&D of AISC chips were hoping to avoid the centralization of computation power that these chips would bring. Inevitably these efforts were in vain: algorithms could stall the birth of specialized mining chips, but not prevent it. The truth is, everyone-mines-with-PC — the One IP/One Vote ideology — is exactly what Satoshi opposes. If every miner’s PC were to contribute as a full node, all the IP addresses of all of the nodes will be empowered equally. As a result, those who have the power to distribute a large sum of IP addresses, say a botnet, could dominate the Bitcoin network. A botnet could comprise hundreds of thousands of nodes; e.g. the Baofeng Trojan Horse controls 250,000 nodes, much more than Bitcoin’s 6,000 to 8,000 full nodes. The botnet controlled by the Baofeng Trojan Horse could then easily launch 51 percent attacks. Instead, what Satoshi really meant with “One CPU/One Vote” is that one computational unit represents one unit of power. More computational units equals more power: This is represented by Computation is Power in the proof-of-work (PoW) system. It sounds like a truly fair and decentralized utopia if everyone gets to mine with PCs and smartphones. But why is the stability of a blockchain compromised in this context? Simple, decentralization is not a term describing a status, but a process in aggregate. Decentralization of status does not […]

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