- The Bitcoin 64 are the original miners that dominate the Bitcoin hashrate
Cryptoinfowatch has previewed a new study which says that Bitcoin is not as decentralized as it could be. The study was conducted by Alyssa Blackburn, a data scientist at Rice University and Baylor College of Medicine in Houston.
The report says that it studied leaks from the Bitcoin network to determine how decentralized the network is. It highlighted the fact that the cryptocurrency was originally proposed as an anonymous, decentralized, trustless network. However, it claims that down the line, leaks have shown that BTC is not as anonymous as Satoshi, its inventor claimed.
The article from NY Times referencing the study claims that the lead said that its essence was
“to pierce the scrim of anonymity, track the transaction flow from Day 1 and study how the world’s largest crypto economy emerged.”
The Decentralization Question
The study reports that according to the Pareti principle, Bitcoin ownership in the community is highly centralized. It states that the Bitcoin network of miners is not as decentralized as it could have been because early participants dominated the mining space of the cryptocurrency.
The team aggregated just 64 miners that possess the most hashrates for the Bitcoin network. It added that this could have put the network in jeopardy due to the possibility of a 51% attack. This attack makes double spending of assets possible.
Network Well-Being Made Priority
However, it reported that despite this possibility, it has never happened on the Bitcoin network. The large hashrate holders have consistently supported the network’s well-being.
The study compared the behavior of the high hashrate miners to the centipede game. It concluded that these miners are more interested in the general good of the users of the Bitcoin network than in their individual gain. The study said that this is the only reason why these miners have not exploited the network through a 51% attack.
The report says:
“we find that experimental subjects learn to avoid this strategy, and instead tend to cooperate the vast majority of the time – even when they cannot possibly benefit.
Surprisingly, cooperation is significantly higher in an N-player centipede game than a classic 2-player centipede game with identical payoffs, suggesting that players in an anonymous group want to avoid spoiling the collective outcome.”
According to the study, early Bitcoin miners account for ₿2,676,800. It added that this is far more than the early community gave them credit. It added that this is 1000-folds more than what the community had anticipated. It added that it is surprising that a community of a handful of people built a monetary network that is as remarkable as Bitcoin.
The study added that the Pareto principle as applied to monetary ecosystems also manifests within the Bitcoin community. It added that this also manifested in the Bitcoin community from its early days.
The per the report:
“Pareto distributions among top earners have been observed consistently around the world (24-29), reflecting the fact that the centralization of wealth and resources is ubiquitous in economic communities.”
Using the distribution of Bitcoin mining income, the researchers showed that a power law was apparent at all intervals from when Bitcoin was launched to when it attained value equivalent to the USD. It concluded that
“implies the emergence of Pareto distributions within four months of bitcoin’s launch. This underlines the degree of centralization of the bitcoin blockchain, and highlights that Pareto distributions can emerge extremely rapidly.”