[EGreg]

So much for Bitcoin’s vaunted decentralization. In fact the inequality is probably far more pronounced. Since multiple accounts can belong to one organizatipn - but not the other way around :)

PS: if a bitcoin wallet belongs to one centralized exchange, it’s still under centralized control!

[chrisco255]

Bitcoin's decentralization remains unaffected by its distribution. But its distribution is fine. Any distribution is going to follow the pareto principle. No getting around that.

If you're looking for idealistic purity, and assume it's worthless if unattained, you're wrong.

[EGreg]

Somewhat a large strawman to go from “1% owns 92%” and “you just want idealistic purity”. And also “not decentralized” to “worthless”.

I thought this was supposed to liberate us from problems of the current financial system?

Decentralization of Bitcoin can be understood in a variety of ways.

1) To make forward progress: it is extremely centralized, all transactions in the world must go through a miner

2) In terms of concentration of ownership and effect on price: highly centralized, again

3) In terms of mining pools: once again, highly centralized

What exactly is the lure?

[chrisco255]

Decentralization is a security and censorship-resistant feature of Bitcoin. All transactions must go through a miner, but the only way to mine a block is by solving a SHA256 hash in competition with tens of thousands of other miners also trying to solve for the hash all around the world.

There is no way of saying 1% owns 92% (after all, I can churn out a million addresses used purely for one-off transactions, if desired, that's totally acceptable, wallets are practically free to produce). But it wouldn't matter if it did, because distribution of Bitcoin does not affect its security or censorship resistant properties. All transactions get the same amount of security. All holders are equal in terms of protection provided by the network.

Concentration of ownership of any capital asset is going to follow a Pareto distribution. That is not unique to Bitcoin... it's true of everything from stamps to stocks. Bitcoin never made the claim to some sort of idealistic theoretical "even" distribution as if that would be fair, but I digress... Bitcoin is also not the end all be all of crypto assets, and plenty of additional capital value has been distributed among the long tail of crypto assets that have cropped up since (over 60% of crypto's market cap is among other crypto assets).

Mining pools are not centralized entities. They are loose organizations that miners join to even out the yield on their mining equipment. A miner can fluidly leave and re-join a different pool at will. The pool's sole function is to smooth out yield. If a pool fails to do that, it loses its miners. It's not some central entity that can command the miners in it to 51% attack the network. That's not how pools work.

But even if they did, it would be painfully obvious that it was happening, and the Bitcoin community would mount a response, which may include a hard fork if desired.

I am more involved in the Ethereum community than Bitcoin. The lure is that I can borrow and send six figures worth of crypto in 2 minutes, and deploy it to a smart contract multisig and create an on-chain organization in a single afternoon that is used to deploy capital for anything from charitable fundraising to art commissions and auctions to online gaming production to startup operations. I can coordinate across jurisdictions frictionlessly. I can retain my assets when moving across borders. I can retain true ownership and custody of my funds without any central parties. I can earn yield on my funds by lending it out to on-chain options markets. I can fund any one I want on the internet without Paypal's permission or blessing. I can move to a third world country and still retain all of these capabilities.

It's not going anywhere, it's hugely valuable. It continues to get more powerful and more user-friendly.

[EGreg]

I just want to clarify where I stand

I’m a huge proponent of Web3 and smart contracts

I just criticize Blockchain as the underlying layer. I am saying the emperor has no clothes. I mean, even Polygon the so-called “scaling solution” for Ethereum is still built on Blockchain, and so stuff like this happened a week ago: https://www.coindesk.com/tech/2022/01/06/polygon-under-accid...

No one asks how many websites or emails per second can happen using HTTP or SMTP. Guess why… there is no bottleneck. There is no block and no miner. The entire network is what’s called “embarrassingly parallel”.

What we need is programmable smart contracts that are on an embarrassingly parallel network. And we would have been there by now if not for the profit motive of the blockchain bagholders. Most technologies get faster and cheaper over time — but first gen crypto had besn perversely designed to become slower and more expensive with time and adoption!

I submit that the ONLY reason people stick with first-gen stuff like Bitcoin, Ethereum Classic, and NFTs of pictures that anyone else can view without “owning” them, is the profit motive based on speculative greed of finding a “greater fool” to buy your “store of value”, followed by the sunk costs of having bought into this outdated technology. The utility is minimal beyond STORING value and the store of value is a self fulfilling prophecy. It’s like if people rediscovered retro video games and speculated with them because they were so rare, except what’s sad is ALL THESE NEWER PROJECTS which have so much promise are pegged to Bitcoin and when its price goes down, it drags them down too.

You’ll eventually see them decouple and then I wonder what will make Bitcoin so much better than a random ERC20 token. Why “store value” when I can grow it 300% a month?

[EGreg]

Ask yourself, how much should an SSTORE instruction cost on the EVM for “scalable” solution like Polygon?

It’s still a blockchain, so you’re going to have tons of machines store your dirty laundry…

And the more nodes join the network, the more expensive it will be to store the CURRENT state — not even history. Let alone state TRANSITIONS as more and more dapps adopt the chain.

I mean … this should be obvious to any mildly critically thinking technologist, and it was even pointed out to Satoshi in the newsgroups around 2009. Bitcoin could never become a “peer to peer cash system”, and the “world computer” can never scale to “web scale”. It’s a glorified mainframe where you rent time.

And all because of BLOCKCHAIN.

That’s what isn’t scalable. And all this crap about increasing the block size by N just misses the whole point!

You’re not supposed to have a network architected to have everyone store everything, and have giant bottlenecks on top of that. And Proof of Work is EVEN WORSE because you don’t know who will mine the next block so every cleint also tries SPAM as many miners as possible with their transaction. They’re al competing to get into a fixed-size block and you’re hoping this is the architecture to be adopted by the whole world anyday now?

Imagine if BitTorret or the Web worked this way. The industry will move to DHTs and will realize that the fact that you can move millions of dollars for a fixed $100 fee is a BUG, not a feature. It means that the long tail of much smaller transactions ALSO uses the whole firepower of the network, like if a dime was transported using an armored truck and a convoy. It’s not proportional.