Recent years accept brought important misunderstanding of the term decentralization as it pertains to Bitcoin. Literally, it way the dispersal of nodes, data, miners too developers; according to some, the dispersal of miners (everyone mining alongside a consumer PC) is the master vision of Satoshi, too that vision supports One CPU/One Vote, important every unmarried user mines alongside a dwelling identify PC too a smartphone. People who modified algorithms to antagonize the R&D of AISC chips were hoping to avoid the centralization of computation might that these chips would bring. Inevitably these efforts were inwards vain: algorithms could stall the nascency of specialized mining chips, but non foreclose it.
The truth is, everyone-mines-with-PC — the One IP/One Vote ideology — is just what Satoshi opposes. If every miner’s PC were to contribute as a total node, all the IP addresses of all of the nodes volition hold upward empowered equally. As a result, those who accept the might to distribute a large meat of IP addresses, enjoin a botnet, could dominate the Bitcoin network. H5N1 botnet could contain hundreds of thousands of nodes; e.g. the Baofeng Trojan Horse controls 250,000 nodes, much to a greater extent than than Bitcoin’s 6,000 to 8,000 total nodes. The botnet controlled past times the Baofeng Trojan Horse could hence easily launch 51 per centum attacks.
Instead, what Satoshi really meant alongside “One CPU/One Vote” is that one computational unit of measurement represents 1 unit of measurement of power. More computational units equals to a greater extent than power: This is represented past times Computation is Power inwards the proof-of-work (PoW) system.
It sounds similar a genuinely fair too decentralized utopia if everyone gets to mine alongside PCs too smartphones. But why is the stability of a blockchain compromised inwards this context? Simple, decentralization is non a term describing a status, but a procedure inwards aggregate. Decentralization of condition does non necessarily hateful the decentralization of the process.
Nodes are dispersed inwards a botnet inwards price of the status, but they are highly identical inwards price of behavioral patterns. In contrast, truthful decentralization is measured past times the grade of liberty allowed for joining inwards the consensus-making. Given that the codes are opened upward source too that this information is every bit accessible, liberty of decision-making is an indication of fairness. One enjoys the might to participate, as good as the might to quit.
Another way to empathise decentralization is to retrieve of it similar an investment portfolio. H5N1 portfolio demands the diversification of risks too assets. This is a viewpoint that dates dorsum hundreds of years. In the words of Antonio inwards Shakespeare’s The Merchant of Venice:
My ventures are non inwards 1 bottom trusted,
Nor to 1 place; nor is my whole estate
Upon the fortune of this introduce year
As the mutual proverb goes, don’t lay all your eggs inwards 1 basket.
However, if the assets inwards 1 handbasket are related, a diversification of the portfolio, no affair to what degree, volition non diversify the risks. In a downward market, a portfolio of related assets could Pb to a loss. In such a situation, a long shot similar allocating all majuscule to 1 especial could hold upward a improve choice.
Should the grade of the human relationship amidst these assets hold upward unknown, hence the Principle of Maximum Entropy may apply: assume these assets are of a maximum randomness. For a blockchain, assume the nodes savour absolute liberty of decision-making too are non entrusting developers alongside disproportionate might too too delegating them to practise the bookkeeping.
Princeton University’s opened upward course of teaching inwards Bitcoin too Cryptocurrency Technologies suggests Bitcoin’s consensus algorithm is highly subject on randomness. Instead of setting specific timing for the procedure of consensus making, it posits that, over time, the probability of simply about blocks achieving consensus recognition volition increase, acre the probability of conflicting viewpoints emerging volition decrease exponentially.
The everyone-mines-with-PC model may look to hold upward to a greater extent than dispersed. However, should these PCs larn infected alongside a bot virus, their demeanour volition hold upward affected as one. No affair how keen the release of nodes, they really tin hold upward seen as simply 1 node.
Another example would hold upward the operate of multi-sig safety past times the Bitfinex exchange. Because the soul key kept past times BitGo automatically signs for all requests from the Bitfinex server, this 2-key organisation is a de facto 1-key system. No affair how many soul keys are used inwards a multi-sig system, or how dispersed they are, as long as the behavioral blueprint of these keys is identical, this multi-sig organisation is compromised.
By contrast, though the prisoner of war incentive causes the appearance of centralization of computational might (in fact it’s dispersed, although a few hands command the greatest amount of computational power), nobody could halt yous from joining inwards the mining or the R&D of mining devices. It’s a decentralized procedure of gratuitous competition. It’s similar voting inwards an election: While a republic could hit a Canadian prime number government minister similar Justin Trudeau (son of quondam prime number minister, Pierre Trudeau) thereby creating a blood succession inwards appearance, the decentralization of the democratic procedure empowers its legitimacy.
Decentralization is non a novel word. Think of the “invisible hand” of Adam Smith; It’s contest inwards a gratuitous market. With competition, the centralization of computational might is non a bad thing. On the 1 hand, the high toll of computation makes it impossible for pools too miners to launch 51 per centum attacks as they are rational economical participants. On the other hand, irrational actors, enjoin a puddle alongside a large percentage of computational power, cannot sustain an attack. The computational powers of a puddle practise non genuinely belong to it, too it volition facial expression upward constant challenges from novel powers too novel players.
The centralization of computational might is the natural resultant of marketplace competition. Specialized project is the natural resultant of gratuitous contest inwards whatever opened upward system, pretty much similar a biological organism. Professional miners, professional person payment processors too wallets, professional person blockchain information providers: These are the natural results of the decentralization of a blockchain, non the resultant that should hold upward deliberately avoided.
The postal service Guest Post: What Is the True Meaning of "Decentralization" inwards Blockchain Technology? appeared kickoff on Bitcoin Magazine.
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