What does the recent New York Agreement tell us about Bitcoin Governance?
Introduction
One of the central tenets of bitcoin and cryptocurrency protocols is decentralisation.
The idea does not just exist for purely egalitarian reasons.
In theory a decentralised system should be more resilient than a centralised one.
For example imagine if you were running your service on a single server. If that server crashed, was hacked or had a power cut, your entire service would be taken out until it was fixed.
Definition of governance from the Google Dictionary
If you ran your service on multiple servers in different locations, then if a single server stops working you wouldn't lose the entire service, and depending on how many alternative servers you had the damage to the network may even be negligible.
In the case of bitcoin the decentralisation doesn't just apply to the network itself, it is supposed to apply to the actual governance and control of the network.
Decentralisation in this respect helps to reduce attack by more human elements such as self-interest.
If a single company was in control of bitcoin its interests may not necessarily align with the community as a whole and they might be able to force changes through that benefit them to the detriment of the rest of the community.
Most of the Mining Hashrate Comes from Just A Few Pools
Whilst we don't have a single company in the control of Bitcoin, we do seem to have several groups that have a large chunk of the say in what happens by way of controlling a huge amount of the mining power.
The recent saga of SegWit 2X vs UASF has illustrated this to a significant degree.
Distribution of Bitcoin Hashrate - Source Blockchain.info
In the case of SegWit 2X it appears a large number of vested interests (mainly large mining companies and pools) got together in private in New York and decided to support an initiative which (at the time) the rest of the community knew very little about.
The Bitcoin Core Developers were invited to attend but refused to come - presumably because they saw it as a snub or attack on their own initiatives.
These events seem to run counter to the open nature of changes to the bitcoin protocol and community openness.
Although I am strongly in favour of scaling (I think we need it ASAP) some of these actions set a troubling precedent.
Overall the situation, illustrates behaviour that is more consistent with a cartel.
It is more reminiscent of the old world business and banking models that I thought we were trying to escape in the cryptocurrency world.
Why is this Bad?
Put simply it can result in a conflict of interest.
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The interests of these companies and mining pools may not necessarily align with the overall community and I can't imagine that Satoshi had this in mind when he envisaged decentralisation.
Don't get me wrong I don't believe these people are deliberately acting to take control of Bitcoin or have any sinister motives.
Many of them, the mining pools, ASIC makers, and bitcoin businesses are the very people who have the most to lose by the continued stalemate.
I believe they are doing what they think is best to move things forward and do it in the most efficient manner.
I think the risk is that long term we may actually end up losing an important part of what makes Bitcoin so strong.
Would a New Governance Model Help?
Part of the problem with this is that the current model of decision making only considers one part of the community (miners) for voting on different issues.
The miners are the ones that signal and have the say.
The problem is that the interests of miners are not necessarily aligned with the bitcoin community as a whole - at least not in all situations.
Indeed this may be one of the big reasons for the current stalemate.
After all, in the short term at least, as a miner you might actually like the higher fees that come with smaller (hence fuller) blocks as you might make more money. The long term consequences may not be as relevant to you personally.
As I have discussed before people often prioritise short term gains over long term gains, so it is perhaps not surprising that many miners have prioritised their own profits over long term viability.
One could say that the New York meeting and the UASF were both prompted by people getting frustrated by this situation.
Could there be a better way of achieving the same ends though?
One way of improving things might be to allow all users of the Bitcoin network to have a vote.
The problem is that there is no easy way to do that and the obvious solutions would likely be open to sybil attack.
That is not to say there is no solution or better way to do things. I believe we should explore other options as a community - even small improvements might be helpful and make the system fairer.
In summary I think the time to look at improving governance is long overdue.
Conclusion
I wanted to keep this short so I have only been talking about the centralisation of governance.
Obviously there are other potential sources of centralisation (e.g. geographical concentration of mining) that can also be a threat and which I might discuss in future posts.
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With regard to governance I think we are dealing with a basic human issue. No perfect model of governance yet exists whether it comes to regular life or online alternatives.
Current blockchain methods have their problems - stalemate being a huge one but concentration of power must also be taken into consideration.
It seems that almost every time someone comes up with a solution to a problem, it creates a new problem which must then be mitigated against.
Unfortunately I don't have an easy answer to these problems but I don't think we should give up on looking for new solutions.
What do you think?
Thank you for reading
Bitcoin has a very basic design with many design flaws. It was genious in the begininning (and everybody thanks bitcoin for that), but now is outdated by newer solutions... DPOS here at Steem for example is with a few dozen delegates more decentralized than bitcoin, where 3 mining Pools have 80% of mining power...
Good points. Things have moved on. I think one of the problems is that the stalemate we have had has prevented evolution of Bitcoin too.
Yeah I also feel that there should be centralization of governence. At least some sort of control to keep market a bit stable so we can be relax and not see many red days.
I'm not arguing in favour of centralised governance. Far from it. It may seem appealing but it goes against some of the principles of the cryptocurrency as I see them.
Yeah decentralized nature has attracted us in crypto world. Lets hope everything got better in coming years.
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Sorry, but it seems nothing can ever be truly decentralized. We have had organized forms of governments, whether the leaders were a few people or a single person, since the beginning of recorded history. Even If people are allowed to rule themselves, there will be certain individuals who stand above the rest, redirecting and controlling, taking charge.
applying that to bitcoin, we start to see the reasons why the governance inst truly decentralized. Individuals will certainly come together, and interests will align. Groups form, and we are back to the old form of government, albeit a semi-decentralized one.
Yes I think you may be right. It is something we aspire for but can never truly reach.
Only looking in rear view mirror. Cannot change anything or make anything better if we are not to recognize that there are solution to the current problem ... even a partial decentralize is a step forward. It already means that there can only be partial control. Better than totalitarian or monopolistic type of control.
Stop overthinking. Look forward my friend.
We need to fight, and need to fight smart.
With big businesses such as the banks, Microsoft, and IBM starting to spend more time on developing off the Blockchain it seems like we run the risk of moving to a more centralized world for crypto. These businesses won't be willing to leave the power of their networks in the hands of the many, and will likely also be interested in making sure there is a base level of mining support for their networks. This will push development forward, but it may come at the expense of some of the current freedom.
Yes I think we run that risk.
The risk exists in all PoW coins... but here in Steem the software is not PoW... Dan thought about these issues from the start when he designed Graphene....
Great piece @thecryptofiend. What is the most amazing in all of this, is that we seem to be witnessing the same predatory behavior on and on and on ... no matter the subject of the investment asset or entity. It's all about cornering the market of it, so the little one (single vote, single miner) have no say and no reward what so ever to work hard promoting the asset or the entity here say. Like any greedy, narrow minded syndicate that has only one objective ... total control from top to bottom ... the best monopolistic approach of empires and rulers.
Personally, we have to find a way to break this mold and behavior really fast or any new idea in the crypto world is doom from the get go.
Rise up ... or at least die trying.
I agree. We have to mitigate against self interest (assuming it is possible).
Half full or half empty? Does it really matter. The solution is now and looking forward. Not in the rear view mirror.
Cannot do the same thing over and over again and expect different result = Insanity (Crazy) " Albert Einstein"
We have to assume it is possible. It is cheap to do so.
If we wait and our life depends on it ... it will be to expensive to start any kind of revolution.
If you value your life and freedom in any kind of way. Keep up the good work my friend.
Thanks!
Don't really know anything about mining, but I do know when people group together they tend to put their own interests first. Seems to run totally counter to the very idea of decentralization to me. Things will play out as they will though, but IMO power and money always tend to corrupt towards wanting more power and more money, so it's not surprising that people are already grouping together to try and sway things in the way that they would like. Always great to read your articles @thecryptofiend, like I said I don't really know anything about mining but you write in such a descriptive and easy to understand way! Thanks for the post :)
Yes that is what I think. It seems to be against the spirit and human nature is very fallible when it comes to being corrupted by self interest. Thank you:)
Yeah it's sad but true, it'll be interesting to see how this plays out in the future, either way it looks like cryptocurrencies are coming more and more into the mainstream.
and the pools are all sitting in china?
Most of the hashrate is.
Very rich info to tap from. You display good knowledge of cryptp and sharing it amongst stemians is a wise choice ....keep it up...
Thanks!
welcome and am quite glad to be following you and know i will gain a lot from your wealth of knowledge.
do find time and check out my blog for my short family story ...you will surely love it . plan to post many from this weekend! do follow me also so we can connect more through our blog posts...thanks
meep
Hello my friend @ionlysaymeep! Hope your day is going well! :)
meep
According to Elizabeth stark and Adam black, the segwit2x is only inviting people that agree. >This proposal has like zero developer consensus," and "Unfortunately, the [mailing] list is only for people that agree with Segwit2x." <
Yes I have heard that dissenters have been removed from the list.
I don't why miners are creating a big fuzz out of segwit...we all know bitcoin is facing scaling issue big time...and now we have altcoins that have 10x times faster block transaction capabilities...segwit is the need of the hour...it will definitely reduce the transaction time and fees...also, at the at end of the day it is a soft fork so even if consensus is not there still it will get implemented...thanks for bringing this up.
Segwit is way too complicated of a change to the codebase. Just remove the block size limit. Malleability really isn't an issue and there are much simpler solutions to that as well.
I know the MASF is going to occur prior to the August 1st BIP 148 UASF around July 21st I believe, but I have seen a "coming together" of sorts between both parties. If both work together and the scaling changes are implemented succesfully, would that action place Bitcoin back on the right track of decentralization?
Not sure but it is better than people opposing each other and constantly fighting.
Many are saying the government created bitcoin, I would be shocked and it be the biggest scam ever but I doubt that 😂😂😂
Yes I have heard that before as well. I think it is unlikely.
Yeah, be so crazy if the blockchain was to control us decades from now lol
nope not crazy, the government will ease us into it so much that it'll feel so normal, one day you're free to use cryptos, the next, government agents are telling you to present your 30-word password to get your pension paid through.
Facts right there :)
Maybe, but then the Government is losing huge money in terms of taxes due to cryptocurrencies.
Yeah, they already know its the end game since 2007 that they cant keep the scam up so created another fiat currency and getting prepared many years down the road. Its all conspiracy theory. lol
Disagree, a few people are trying to control Bitcoin and perhaps, break it.
https://steemit.com/bitcoin/@clearshado/bitcoin-the-cia-and-the-mit-connection
Interesting theory.
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Mining nowadays costs a fortune! I prefer to buy the coins right away. Especially now when the price per share is declined.
True. Mining only makes sense in special cases.
Daamn this is a big problem, wish the miners could be distributed without any monopoly, but this is not the case :(
I can't think of any way to make it happen. As soon as we went to ASIC mining it was pretty much inevitable.
yes, to be honest, this is the only thing that can make cryptos centralized !
But who knows, maybe an other great thinker will find an inovative solution
Yes hopefully.
look around... there are many brilliant ideas out there...
Merci pour cette article.
Est ceque vous pourrez me donner des conseils pour mieux debuter sur steemit
Not in french but you could try here: https://www.steemithelp.net/
Also try the French channel in chat.
Thanks
Of course it should be!
Will it? We dont know.
But if it doesnt then it will just probably be another asset to control everyone once again
Yes.
I believe bitocin governance should be decentralized or at the very most left in the hands of individuals not the government or big companies.
Yes I think we can all agree on that.
Nice Thanks for blogging
You're welcome!
thank you friend
Perhaps another question is, why should all users of the network get a vote? Does a person who bought 0.0001 BTC one time get a vote? Miners get the power because they invest in keeping the system running 24/7.
Because miners interests may not be the same as those of the other users.
So? The miners invested in the network. Users just use it. They can vote by going elsewhere, or invest in the network for a vote.
That makes no sense. Without people using it and creating demand there would be no value in mining it.
People can and do use it. But why do they need a vote? That makes no sense. They are not forced to use it. They can leave whenever they want.
On that basis why do miners need a vote? Nobody is forcing them to mine. Why does anyone need a vote?
Yeah sure why not? Stakeholders simply make their demands of the market and leave if it doesn't deliver. Having a voting process essentially guarantees a central authority to count and enforce the votes.
Choosing to participate or not participate is a form of voting.
The next 35 days will be very interesting in cryptoloandia - good to read your post and see you again @thecryptofiend
Yes I agree - thank you:)
This is looking fantastic explation
Thanks!
Very good points @thecryptofiend! Thanks for blogging about this topic from multiple angles! Great work, as always!!! XOXOXO :-) Cheers!
Thank you:)
One of my friends is always worried that some day the Governments all over the world one day ban all forms of cryptocurrencies and he will lose all the hard-earned money he has put in these virtual currencies.
I asked on Steemit, and people said that there is virtually no chance the governments will ban all these currencies, but I had always had a few questions.
With bitcoin transactions increasing many folds each day and people are not only investing in them but also mining different coins that cost nothing virtually to mine and store.
How can the Government regularize or control something that is as decentralized as a bitcoin or ETH?
But if the Govt does not ban these coins or does not find a way to control them, then they are going to lose a lot of revenue. Regarding taxes that would have been collected if a Dollar was spent at the coffee shop.
How will the Govt compensate this loss of taxes?
Today it might not be a big question, but soon we will have to answer this.
People who are in the administrative fields and those running the Govt will soon realize that the freedom that Bitcoin and the ilk are providing will soon turn into massive monetary losses for the Govt treasury.
A glance at Bitcoin trades will show us the value that the Govt is going to lose.
Do you still think the Govt will not ban or take control over Bitcoin and other currencies?
Follow me: @imransoudagar
I don't think governments can ban them even if they wanted to. They could attack them by taking out mining farms though - just cutting the power supply would be enough. Dan has spoken about this before. The fall in hash rate could create stalemate until the algorithm readjusts the difficulty.
I agree, they cannot ban even if the wanted to but then they will end up creating ways to tax us.
As of now, the Indian Government is sitting silently on this topic, but they had invited people and organizations to debate about Cryptocurrencies. I wonder what laws they are going to make. And I am yet to learn about what the US is doing about this.
You can't escape the Taxman!
Correct. Fear the TAXMAN!!!
O bitcoin and cryptos in general are either the future of economies worldwide, or are going to get squashed by the government.
In the instance of a ban, Im assuming all the government will end up doing is drive the prices to ridiculous amounts, crpytos will be used extensively in the underworld(as it already is in the dark and deep web). Due to its decentralized nature, governments wont be able to trace, or ban cryptos completely and it may actually have the opposite effect, more people may utilize it.
On another hand, governments could turn it into another form of currency, using their massive infrastructures and power to mine, control, acquire and distribute it, turning cryptos into something similar to fiat money. in this case, I believe countries will adopt a two money system, one for normal transactions, and a fluid, dynamic one( crypto) for digital transactions.
If countries adopt a two money system then it will be awesome.
lol, It would be a nightmare, all the work to get out of the goverments grip, only to end up working for them again.
Lol yeah.
Governance or no governance, what's most important is CONSENSUS, whichever way it is to be reached
I don't agree. Consensus may be important but if it is reached in a "bad" way then it may have long term consequences that may be detrimental.
Loved the article. Followed and look forward to seeing more of your content. :)
Thanks!
Government needs to stay out!
Yes. Question is can we actually keep them out?
Honestly, no. I really don't think we can. Unless majority of the people get behind it, and it revolutionizes.
You may be right.
Definitely agree that Segwit is long-overdue for BTC, as I understand it this would be the first attempt for enhancement. Having enteredthe crypto-world a couple of months ago, I was surprised to see an old youtube video demonstrating how quick btc transaction were! Now, it can take some time (and patience) for transaction completion at highwr costs too. It would appear that this is part of the appeal of altcoins, at least in terms of faster transactions.
Were you able to review Boscoin @thecryptofiend? I think Boscoin has a good platform when it comes to governance, as the invested community has a say too.
I wonder what happens to miners once the BTC cap is reached? Will they still be in business for the btc transactions? If so I imagine the tx fees to increase parallel to btc price growth.
Disclaimer: Im a VERY enthusiactic crypto newbie, I'd appreciate a point back to the right direction if it appears what I say don't make sense.
Yes it used to be faster back in the day - still not as fast as other blockchains though. Never heard of Boscoin.
Its decentralized because no one can change it without consensus but there will be growing pains. Greed is inevitable but I can't say anything is better than bitcoin right now. Maybe in a few years but not yet.
Well I think it will evolve. Don't think there is an easy answer otherwise we would already have it.
I know. My hope is bitcoin remains the gold standard in crypto coins but tou never know if something can unseat it. It won't be ethereum but maybe something else will.
Absolutely.
I think there should be a governance model but also an opposition alike politics. So the voices of the people are always heard. Would decentralized governance be a thing? Like is that even possible? Seems like putting those two together would create a neutral solution if we are in need of a solution soon. Just my 5 cents. Cheers!
#follow4follow
Not sure if it could work with a political model like that but who knows.
imagine global parties, no more by countries but for global standings be it whatever they could be standing for
Informative blog appreciate that.
Thanks.
You are giving me stuff to think about, I will follow you!
Thank you:)
Great article. There's no doubt that there's a difference in how different parties think the scaling debate should be handled. I'm just hoping there isn't a hard fork that ends up with two seperate chains, because that might KO bitcoin at this point to be honest (or not, who knows.)
Also due to this mining "monopoly" I was kind of worried about SIA making their new obelisk announcement. Although, after some reading I'm not as worried about it in SIA's case.
Thanks not familiar with Obelisk - what is it?
Sia's new ASIC miner
OK - I had no idea there was an ASIC.
Great post! Keep it up :)
By the way, I'm following you now
Cheers
Thanks!
Interesting and well written article. You make good points and we should do everything we can to protect blockchain from self interest, although it does seem to be a battle vs human nature!
Yes. I think often the great foe in all domains of life is human nature.
Think Bitcoin has to modernise itself fast otherwise they run into major problems. I have no solutions
I am hopeful it will work out.
Nice article @thecryptofiend I would like to know more about mining. Do you have any link you can refer to me? Thanks in advance.
Nothing up to date. The thing is it is not worth mining Bitcoin these days unless you have cheap electricity. Do a Google search for the latest information.
'New governance systems might help but there is no simple solution'. Very true. I like koin's design, where mining is supplanted by voting and governance is split between a (1) board of 7, lower board of 17; (2) miner nodes; and (3) democratic votes of users. This then is a system of balance and checks. For example users can oust board chairs, miners can refuse updates, chairs can blacklist miners.
Interesting. I haven't come across it before.
Sorry, koin is my name for a collection of ideas I've been writing about, see omegakoin.com
OK that makes sense!
In blockchain technologies that deal with the crypto world the technology is decentralized.
not
the
governance.
I believe many people confuse the ideology with the functionality hence why they get itchy with decentralization.
Possibly but there is an idea that governance will be less centralised too.
I strongly doubt it. They won't leave power slip from their hands.
True.
Some good points here actually.
Nice post.
Thanks!
You're right, there are no easy answers. "With regard to governance I think we are dealing with a basic human issue. No perfect model of governance yet exists whether it comes to regular life or online alternatives." Exactamente ( Exactly ).
It appears I may have done something to cause you to 'unfollow' me. Sorry about that and I'd like to remedy if possible. Thanks for your help in advance
Thanks I don't think I've unfollowed you. It is just hard for me to keep up with everything in my feed. If you have anything you would really like me to look at send me it in the chat.
Nope, nothing in particular. Just wanted to rectify anything I may have done wrong. I totally understand the cluttered feed. Sorry to be a bother. I really do enjoy your posts, I just suck at making the time to comment on them. I am working really hard right now to change that.
STEEM ON!
Yes, without decentralization, the Crypto-currency can not survive.
Here was a rumor about the death of Vitalik Buterina - and the etherium collapsed. And the decentralized bitcoin would have survived the rumor of the death of Satoshi Nakamoto
Well ethereum is supposed to be decentralised as well but I think people think of it as being Vitalik on his own!
Though Bitcoin is decentralized, governments won't let it run independently without going it unseen. Bitcoin is a global currency but it would be controlled differently in different political boundaries and nations. We are seeing politics happening in the Bitcoin community too.
The Bitcoin core developers seems to be top notch brains doing great job to the community. I hope the Segwit goes through well but have my fingers crossed for the hardfork. If the hardfork happens creating multiple chains, most people specifically newcomers would get confused with the investment which could hamper Bitcoins image.
Decentralization without community politics would have been better but we humans are selfish and power hungry animals. Hoping for the best.
Yes me too.
I am still getting my head around scaling... I don;t have a full grasp of understanding cryptocurrencies yet..... But am I hearing you say that human nature is the way it is and someone will try and be the big boss of bitcoin which will lead us back to square one? I upvoted by the way it was a great read.
Well the hope is that we can prevent that from happening.
I agree that as more money comes into Bitcoin it would become less and less Decentralized
Bitcoin mining is no longer done in personal computers and can only be done in huge ASIC mining farms
Miners invest on more and more and demand more say in the how Bitcoin is managed
So to would be the businesses that support bitcoin like the exchanges and shops accept Bitcoin
There a need for someone who give direction.
The stalemate with SEGWIT has shown the old way will only impede progress
I'm a afraid this is the price of its success
It is like a small community enterprise that has become big corporation. It can no longer be run the same was
But I don't believe the community is powerless. We buy the coins and we are the ones who choose to use it.And we can switch coin if we want to.
I think that is what broke the stalemate. As there was no progress on the SEGWIT, the threat of the block chain split and the growing popularity of Ether,people begun to switch to other alt coins
Bitcoin governance might become a more centralized but it cannot stray away from the wishes majority of the community
We just need to find a way to make our voices heard better
Yes people may have seen money going into more altcoins and decided enough was enough.
I think Litecoin is one solution as its algorithm makes its harder for concentrated mining pools
Also as shown with the SEGWIT, they were able to decide faster to implement SEGWIT
Also return of Litecoin's founder would give it some leadership
https://news.bitcoin.com/charlie-lee-resigns-from-coinbase-to-focus-on-litecoin/
Yeah, Bitcoin would be more like a precious commodity and Litecoin would be most likely used as a casual day to day transaction coin. Now Litecoin is a sleeping giant especially when it's creator wants it back on track after segwit activation. Speculation could take it to somewhere near 15k to 25k USD when Bitcoin would be on its peak. Hope for the best.
Yes, hoping Litecoin gets back some back some of the thunder the ETH stole from it when it was overtaken as 2nd most popular crytocurrency
True, though Litecoin was just sitting there as a duplicate coin. It has no application rather than just being a currency which was completely inherited from Bitcoin. On the other hand Ethereum is a platform in itself, it had to steal the show as it was unique as compared to any of its competition. Though BTC / LTC and ETH will remain dominant in cryto space.
That was before. Now it has implemented SEGWIT and lightning network, it is a better coin. Market seems to agree as Litecoin holds steady at $45 while Bitcoin and ETH fell way lower
time to move to Litecoin
Great post @thecryptofiend!
Do you foresee governmental systems such as voting being decentralized on blockchains in the near future? Thanks to blockchain we could have a system closer to true democracy.
I think it will happen eventually.
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