Bitcoin has an impending threat, just as every crypto blockchain out there.
The mistakes we make are trying to assume that there's a network of no risks, or a network so perfect that it solves everything. With bitcoin, we get a lot of theories every now and then on how it solves everything but those are all just theories.
Without implementation, what we have is general assumptions to how a network can be leveraged for problem solving. Every ecosystem has its own supporters skilled in writing up these pieces, just as it has its haters(or also supporters who sense a threat) writing up negative coverages.
All pieces at the end of the day are to be considered valid until proven against by implementation. But of course, this is not what we do most times. It's easier to call those putting out negative content as haters rather than take a careful look at their analysis for potential truths as only then can innovations for scaling past those flaws be enacted.
No system is without a flaw and Bitcoin for one has a major flaw and we can hit at it from so many different angles.
The level of wealth to which we envision to exist within that ecosystem is life threatening. Bitcoin at a million dollars a unit sets the network in close value to the US economy. Such valuation threatens the entire financial sector as it is evident that Bitcoin sets the mood for the general markets. But of course, this is not what I wish to discuss today.
Miners are Bitcoin
The biggest threat to technology is often technology itself. On that note, the biggest threat to Bitcoin is itself, which effectively, is the technological design that makes it up.
Bitcoin does not exist without miners. And if there are few miners, it becomes centralized. To me, at this point, being centralized isn't exactly the major problem as bitcoin was once centralized, so being centralized in itself is not an issue, what is an issue is the timing of this centralization and its book-value.
Most systems are centralized by default, yet offer tangible value-addition to economies. Centralized systems are never a problem, but the margin of value-control within these centralized systems are as that directly threatens the security of the broader ecosystem.
A lot of people, like Justin Bons, who made a thread yesterday on the topic of Bitcoin's security model being broken tend to be of the opinion that the takeover of Bitcoin would be public.
I, on the other side, are of the opinion that Bitcoin's takeover will not be public to a great extent at least. The concept of Bitcoin's value doubling as block rewards halves demands that miners maintain a long-standing healthy debt position to maintain mining operation. This is unlikely to happen, hence several of them could be bailed-out by government bodies or prominent companies with effective government ties.
These bailouts(takeovers) will mostly not be public. The network mining could trend towards centralized management with little public knowledge. But of course, this is just my speculation and something quite different may ensue.
That said, an event like this is the type of centralization that is worrisome as the network's value is held against real-world debts, hence, it is maintained. To put it clear, since the network's value remains relatively the same and progressive, access remains limited to a select few - effectively restricting the network design that was meant to attract fresh miners when old miners exit the network.
New miners will not enter by a large margin to offset the central control because of the cost that exists within the system.
Make no mistake, as evident in this content, none of this insinuates that the price of bitcoin will not appreciate consistently over time. However, it supports the notion that its trend towards centralization is looking inevitable and it could pose an industry-wide financial threat.
Posted Using InLeo Alpha
Interesting theory, which appears based on the reality of continual increase in the cost of mining; electricity, maintenance, upgrades, and time… All are costs, whose effect is reduced by scale, which implies concentration of mining resources, which is just another name for centralization.