[diggan]

> That seems a hell of a lot more centralized than the traditional finance system

Most countries/systems have one central bank, even if we assume there are only 2 mining pools and they "control the network", wouldn't a central bank still be more centralized?

Besides, the mining pools don't "own" the network, anyone can participate, which kind of makes the whole "more centralized than a central bank" argument kind of weak.

[raggles]

Right, but bitcoin is global, not just for one country. And while anyone can participate in theory, in practice the big mining pools always get their first. And if a quorum of mining pools gets together, they can fork the blockchain or do all sorts of other shit. Without those mining pools confirming transactions you can't even spend your bitcoin. As a functional currency, I just can't see how this is any better, like in any way. Probably why it hasn't actually become a functional currency and is just a traded commodity that everyone is hoping like hell won't crash and burn one day.

[Ferret7446]

Forking the blockchain is impractical. You need enough compute power to maintain both forks for some period of time, which means you've effectively halved your compute power. And all that gives you is the power to double spend, after which one fork's transactions are "revoked". This is not a huge problem; regular financial transactions also get revoked (e.g., chargeback). The amount of compute needed to protect transactions for, e.g., half a day (which is much much shorter than the potential chargeback interval) is basically impossible.

> do all sorts of other shit

There's not much shit they can do, without breaking the fundamental cryptographic primitives that make it work. They can't steal money. They can double spend, as above, or they can delay transactions with a probability proportional to their ownership of compute, integrated over a period of time. If they own 80% of the compute, and they really really don't want you to perform a transaction, then they can block it for 10 minutes with 80% chance, 20 minutes with 64% chance, 30 minutes with 51%, an hour with 26%.

Compare that with Visa which has blocked transactions it doesn't like (e.g., porn) for years.

And even this blocking is economically disincentivized. If you want to get a transaction through and the "mafia" don't want it, you can offer a higher transaction fee. Either the "mafia" will have to accept your transaction, or give up the enticing fee to someone else. Transaction processing is a free market.

And compute dominance is something that needs to be maintained indefinitely. Obtaining compute dominance does not guarantee future dominance (unlike with proof of stake systems, which is IMO one reason why proof of work is superior).

[rlpb]

> And if a quorum of mining pools gets together, they can fork the blockchain or do all sorts of other shit.

This is a common misunderstanding. Miners do not have power in the system. Anyone can fork Bitcoin, but when people want payment in Bitcoin, they won't accept ForkedBitcoin regardless of the number of miners shilling it. Meanwhile mining money will be left on the table for anyone who wants to enter mining of the original Bitcoin and at greater mining profit.