Blockchain Claims to Be Decentralized — It Isn’t

All the philosophy underlying blockchain is to decentralize info storage, and the expertise itself does that fairly properly. Nevertheless, there’s one drawback on this complete system that we forgot to contemplate — folks. If you concentrate on it, we’re social beings, and we like to affix forces to do issues collectively, even when meaning constructing big cryptocurrency mining farms.

that is the issue with blockchain in the present day, so we have to discover it additional and see how we are able to repair it.

75% of All Mining Farms Are Positioned in 5 Nations

There are numerous crypto farms across the globe, however the truth stays that almost all of the most important ones are in international locations such because the USA, China, and Russia. These farms will not be typically owned by only one individual however are a results of a number of folks becoming a member of their entry to computing energy.

Dalian Cryptofarm, for instance, is among the largest mining farms on this planet, and it’s situated in Dalian, China. It’s even doable to decide on a mining bundle in response to your preferences and make investments small quantities to achieve revenue from mining in Dalian. The final time we checked, Dalian’s hash charge was 360,000 TH, with a month-to-month power price of greater than $1,170,000. The result’s mining 750 bitcoins a month (which ought to scale back after halving and all the following halvings). Because it seems, this farm mines 3% of all bitcoins, which is a really important amount of cash.

However we’ve already witnessed the Chinese language authorities’s aggressive stance on cryptocurrencies. In different phrases, we don’t know their subsequent transfer, and there’s all the time a tiny probability that the federal government can simply shut down crypto mining farms, together with the one in Dalian. If this occurs, billions of {dollars} in BTC might be misplaced immediately.

Although it’s extra more likely to occur in China, it might additionally occur within the USA or Russia. Large crypto mining farms are polluters, and governments merely don’t like them. In the event that they determine that the farms are an excessive amount of of a menace, they may not shut them down instantly however will discover a solution to scale back their operations.

All in all, a decentralized community ought to depend on any single entity, and evidently Bitcoin is transferring in that route, as mining farms are getting larger and the community requires extra computing energy.

What Can We Do About It?

There are a number of options to this. In the intervening time, some cryptocurrencies are switching to a Proof-of-Stake consensus mechanism, which can finish the necessity for prime computing energy, which is an efficient factor for the surroundings. Nevertheless, there are not any indications that Bitcoin will ever change, and it’s nonetheless the most important and the preferred crypto.

However there are points with Proof of Stake as properly. Individuals are already creating funding swimming pools the place they will collectively stake their funds within the hope of a much bigger revenue. If such funds change into too massive, we’ll as soon as once more head in the direction of centralization.

One other solution to clear up that is to finish crypto mining farms and return mining to people and small teams. There are already some initiatives for this, comparable to tomi’s MP1 mini supercomputer, which is designed to behave as a micro-server and will be simply related with different computer systems of the identical variety, creating small however efficient crypto mining clusters. Along with crypto, MP1 can supply many alternative cloud computing companies, together with advanced simulations, accelerated AI, real-time ray tracing, photorealistic rendering, and rather more. The startup is at present engaged on growing the MP1 venture.

Ultimate Ideas 

No new expertise is dangerous. As we’ve seen on many events, the way in which we use and apply it might probably make it dangerous. This additionally applies to the blockchain, which has supplied us with a superb alternative to make the world extra decentralized, and, thus, extra honest and reliable. 

Nevertheless, we nonetheless have to improve it and the whole lot that follows it to attain true decentralization moderately than simply discovering workarounds again to centralization, which is what the massive mining farms finally are. Even when they comply with all of the decentralization guidelines, they nonetheless depend on the stance of highly-centralized organizations we name governments.