Kadan Stadelmann, chief technology officer (CTO) of Komodo, an open source technology workshop, raised concerns about the increasing centralization of the world’s largest cryptocurrency, Bitcoin. Stadelmann argues that increasing centralization poses a threat to the fundamental principle of BTC as a decentralized digital currency.
Centralization poses an existential threat to Bitcoin
According to Stadelmann, a worrying trend toward centralization within the Bitcoin network could threaten the cryptocurrency’s decentralized identity. Citing the increasing concentration of mining power within a few mining poolsKomodo’s CTO pointed out that only two mining pools, Foundry USA and Antpool control more than 50% of Bitcoin’s hash rate.
Based on Blockchain.com data, Foundry USA has a 27.33% share, having mined around 164 blocks, while Antpool controls a 24.66% share with 148 blocks mined. The concentration of mining power has also been distributed among five pools, with these pools collectively controlling 80% of the The hash rate of BTC.
This centralization of power actually threatens The decentralized nature of Bitcoinas concentrated control over hash rates could give these pools influence over decision-making processes and potential censorship of transactions.
“A minority of miners control substantial resources, undermining the decentralized ethos that Bitcoin claims to uphold. This scenario calls into question the egalitarian nature that BTC was intended to represent,” Stadelmann told BeInCrypto.
Financial acceleration BTC Centralization problems
The Komodo CEO also cited the growing involvement of major financial institutions in Bitcoin mining operations as another concerning factor that could potentially minimize Bitcoin decentralization.
Leading financial services organizations like black rock, Morgan Stanley, Goldman Sachs and Vanguard currently hold significant shares in two of the world’s largest Bitcoin mining companies, Riot Blockchain and Marathon Digital Holding. Notably, Avant-garde and BlackRock remain the main shareholders of these two companies.
Stadelmann revealed that the growing involvement of financial giants in BTC mining operations may pose a risk of centralization, with decision-making and control over the Bitcoin network potentially concentrated among a select number of individuals.
Traditionally, Bitcoin’s core principles were designed to maintain decentralization, distributing power among a diverse group of people and eliminating third-party control by government and regulatory agencies.
However, Stadelmann warned that increasing centralization within the Bitcoin network could offset the balance, potentially depriving BTC of its decentralized nature and diminishing its original purpose within the financial sector.
He stressed the need to continue discussions on the real beneficiaries of this digital currency. This suggests examining whether BTC benefits the broader crypto community and the global economy or potentially falls under the entity control possibly aiming to monopolize the power of BTC through dominance of mining pools.
BTC price rises to $64,700 | Source: BTCUSD on Tradingview.com
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