Introduction
Imagine a world where power is truly in the hands of the people, where trust is not placed in central authorities, but in a decentralized network of participants. This is the world made possible by Bitcoin. Since its inception in 2008, Bitcoin has grown from a grassroots movement into a robust, decentralized network that redefines how we perceive value. Rooted in the cypherpunk ethos of privacy and self-sovereignty, Bitcoin operates without a central governing body, relying instead on a global network of nodes and miners to secure its blockchain. In this article, we will explore the extraordinary decentralization of the Bitcoin network, from its community-driven beginnings to its unparalleled node distribution and mining power. By the end, you’ll understand why Bitcoin is the benchmark against which all claims of decentralization must be measured. In an era dominated by centralized systems, walled gardens, and prying eyes – Bitcoin stands out as the beacon of decentralization.
Grassroots Movement
Grassroots movements are driven by the collective efforts of ordinary, often brilliant people. These movements start at some sort of community or local level and grow organically.
This is the spirit of bitcoin.
The Bitcoin Protocol was released to the world in 2008 by Satoshi Nakamoto when they published “Bitcoin: A Peer-to-Peer Electronic Cash System” to the crytography mailing list.
The cryptography mailing list is the predecessor of the cypherpunk mailing list, the written legacy of a massively successful grassroots movement known as the Cypherpunks. The Cyperpunks were a group of privacy-focused activists, technologists, and builders. Their ethos and ideology are summarized in this pice – “A Cypherunk’s Manifesto” It is widely believed or theorized that Satoshi was some combination of a cypherpunk, inspired by the cypherpunk, contributed to the mailing list, etc. The indisputable fact of the matter is that the creation of the Bitcoin Protocol was only made possible because of the work of the Cypherpunks.
The Bitcoin protocol is an invention built on a foundation of previous technological advancements and FOSS contributions. Including, but not limited to SHA-256, public-key cryptography, and the peer-to-peer network structure. Bitcoin itself is open-source which inherently allows anyone to inspect, modify, and contribute to its code, fostering innovation and trust. Crucially, Bitcoin operates without a governing body or central authority. The network is governed by its participants, who collectively enforce its rules through consensus mechanisms ensuring decentralized control and security.
This grassroots origin/ethos of Bitcoin has been pivotal to its growth, resilience, and adoption.
Nodes - The Backbone of Decentralization
Nodes are crucial components of the Bitcoin network. Bitcoin nodes work by independently running the Bitcoin Core software to verify transactions and blocks, maintain a copy of the entire blockchain, and communicate with other nodes to reach a decentralized consensus on the validity of transactions. This means that each node maintains a record of all transactions that have ever occurred on the Bitcoin network, ensuring transparency and enabling them to independently verify the validity of new transactions and blocks.
As of today, there are 16,335 reachable Bitcoin nodes running around the world. Citizens in the The United States run the most nodes in the world at 9.05% of market share followed by Germany (8.53%), France (2.31%) and The Netherlands (1.77%). With adiverse geographical distribution across numerous countries, this widespread presence enhances the network’s decentralization and security. This helps ensures no single entity can control the entire system.
Currently, there are 9,513 (58.24% of nodes) nodes being run via the Tor network. The Tor network is a decentralized network designed to enhance privacy and anonymity online by routing internet traffic through multiple encrypted layers. When Bitcoin nodes run on Tor, it means they use this network to obscure their IP addresses, enhancing their privacy and making it more difficult for third parties to track or censor their activity.
Running a Bitcoin node is relatively straightforward (learn how here), requiring minimal technical expertise and hardware, which empowers anyone to participate in the network. This accessibility further decentralizes the network, reinforcing its resilience and robustness against centralization. If you were still skeptical, let me pose a simple illustration. Do you think its possible to destroy every copy of the Bible on Earth? Destroying the node network is kinda like that.
Mining - The Heartbeat of the Network
Bitcoin mining involves solving complex mathematical problems to add new blocks to the blockchain, a process that secures the network by making it costly and difficult to alter transaction history. Bitcoin mining is a ruthlessly capitalistic industry. Competition among miners, driven by the distribution of hash power, enhances the network’s security and resilience by preventing any single entity from gaining excessive control.
As of recent estimates, there are thousands of individual miners, hundreds of commercial miners, and numerous mining pools globally, spreading the mining power across different Geo-political influences. Currently the United States has 37.84% of has power, followed by China at 21.11% (despite banning mining, talk about resiliency) and Kazakhstan at 13.22%.
However, it has been discovered that mining pool centralization can and is posing a risk to mining decentralization. The four largest mining pools account for 78.72% of has power – Foundry USA (25.99%), AntPool (25.3%), ViaBTC (15.6%), and F2Pool (11.81%). I highly recommend everyone listen to the experts discuss this trend in this episode of TFTC – “Bitcoin Mining Pools Are Critically Centralized”. Despite this specific risk, I believe the resiliency and game theory of the Bitcoin network will prevail.
We are in the Mega Miner error. The 10 largest publicly listed mining companies (BITF, BTBT, BTDR, CIFR, CLSK, CORZ, HIVE, HUT, MARA, and RIOT) in the United States have raised and invested billions of dollars into the industry. They have a combined market cap of over $20.41 Billion. This substantial financial commitment to maintaining and expanding mining operations has made the Bitcoin network more robust than it ever has been. I believe future investment will only get larger further enhancing the Bitcoin network’s security and resiliency.
There is No Second Best
Bitcoin is THE standard for decentralization. Any claim to decentralization needs be measured against Bitcoin’s rigorous standards.
The most decentralized network and technology is intrinsically the following:
The most trustworthy
Has the most freedom and human rights
Has the highest probability of staying alive
The most fair
The most representative
The hardest to attack/corrupt
The hardest to change
The most accessible
The most predictable
Therefore, the users of any other network or technology that claims to be decentralized, need to be aware that they are participating in a network that is automatically less trustworthy, free, fair, etc. While each person’s preferences and trade-offs will vary, in my opinion, encouraging the participation in any network or technology that is not the decentralized standard severely compromises the user of such network/technology.
Participants that decide to participate in and build on a network/technology that is not capable of supporting human prosperity in the most maximum way are consequently jeopardizing human prosperity. These users will inherently be deprived of their time, energy, capital, innate rights, and the most virtuous experience available.
A tough proposition to support.
Conclusion
Bitcoin ensures no single entity can exert control over the entire system. The Bitcoin Network demonstrates unparalleled robustness, evidenced through its extensive node distribution, mining power, community involvement, and capital investment. It is by far and away the most advanced and decentralized technology that humans have ever invented. Because Bitcoin is actually decentralized, participants cannot be deprived of the rights it provides them and are incentivized to keep it decentralized.
Grass roots movements cannot be replicated because they are inherently unique and organic. While the technology of Bitcoin can and has been replicated, It is seemingly impossible for the network effects to be recreated. After all, you can only invent the wheel once.
Full Disclaimer – https://wyattorourke.com/disclosures/
