Bitcoin has come a long way from its initial start as a coding project created by Satoshi Nakamoto. Since the initial launch, the electronic currency has shaken up economic market around the world with its unique and non-governmental value as well as distribution into economies big and small. By 2019, this new currency has evolved and is now transitioning to a mature phase. In addition, the production of Bitcoin, better known as bitcoin mining, has become a far more involved process.
The Great Idea Evolved
Originally, Bitcoin was designed both with the internal code that tracked each Bitcoin units, including who had it previously, as well as the consensus rules, etc. Bitcoin running on your computer also used to be enough to do Bitcoin mining. As result, early Bitcoin production was possible by just about anyone. However, things have progressed over a decade since 2009 when it was first released, and now Bitcoin production seems to be consolidating into a smaller group of major mining players.
Bitcoin represents one of the first viable currencies that no one government controls. That means no sovereign power has the ability to set its value, control its supply level, or create inflation in the market as occurs with regular government monetary policy. That, of course, has government regulators fidgety because Bitcoin and similar currencies then represent a channel for commerce entirely outside of their radar. To date, the only way government has effectively interacted with Bitcoin has been through revised taxation policy, requiring those making profit to report their earning and income under penalty of law.
However, with Bitcoin, anyone can participate in the mining, which is the Achilles Heel of Bitcoin’s strength. If a government power decides to put resources into mining, it could effectively create enough production to corner the Bitcoin market. And that in turn would create a controlling power that governments have to date been unable to assert over Bitcoin.
The 51 Percent Attack
We often see that 51 percent of Bitcoin mining is controlled by three companies. This isn’t completely true, but not false either. What should be said is that more than 51% of the hasrated is pointed on 3 big pools in China. Why does it matter? If one entity gains 51 percent or more of the Bitcoin production, that player would then have the ability to halt new Bitcoin approvals as well as cancel out the existing ones. It would be a previously unseen power finally able to regulate Bitcoin for the first time.
By erasing the ability for anyone to create Bitcoin blocks, the market would become a monopoly, which is bad for anyone wanting to use or receive Bitcoins as a currency aside from those approved to have them. No one would trust a controlled Bitcoin market and folks would abandon the market, making Bitcoin worthless in value. Like gold, Bitcoin doesn’t produce anything. It is only as valuable as people assume it to be, creating the demand for a store of value.
Is the Consolidation Risk Real?
The current run is not the first time a singular group came within striking distance of 51% Bitcoin production control. Multiple other electronic currencies have seen similar efforts with greater success, much of it due to the fact that their coding rules were less strict than Bitcoin, making it easier to manipulate. What makes the current risk different is that the effort is backed by a major capital effort with the resources to leverage and push Bitcoin production beyond anything thousands of small players could do in comparison. This is why all Bitcoin businesses and all Bitcoin hobbyists should own one ASIC and mine. Bitcoin’s decentralization depends on market participation in this activity.
Options to Preventing Consolidation
Hashing decentralization remains pretty decentralized today, but pool consolidation needs hashers to point their gear on various pools and to create more mining pools and players to keep diversifying the market. This option makes the most sense since it has all the motivation lined up for a win-win. The individuals win because they can still invest. The market wins because the constant flow of new players keeps diversifying production and diluting any move to a 51 percent control. And the individual mining pool players win because their new Bitcoins aren’t stopped by a monopoly then taking control. It makes sense for everyone except the player trying to take over 51 percent.
Take on Your Part as well as Your Profit
If you want take part in Bitcoin mining, you participation is needed now more than ever. The more first-time mining players that enter the market, the safer the Bitcoin economy will be for everyone who is engaged with it. And our D-Central resources can provide your effort with all the deployment and maintenance support needed to make Bitcoin mining sensible, practical and reliable for you. Because we come with an extensive depth in experience and Bitcoin technical know-how, we can also help your setup avoid many of the first-time problems that really cause lots of headaches for new players and are entirely avoidable.
We established in 2016 with a primary goal on helping Bitcoin mining evolve and grow further. Our platform includes all the critical machines needed for Bitcoin generation as well as the infrastructure needed to adjust to the latest requirements in the market. As one of the leading support providers for Canada and the French-Canadian financial community in Bitcoin today, we are the partner to have for any new venture in Bitcoin, large or small. We serve everyone, from hobbyists to company-organized mining projects. Connect with us; now is the time to realize your Bitcoin position as well as to help the overall market continue to succeed decentralized.