The document discusses the issue of centralization in Bitcoin mining. It argues that proof-of-work leads to mining centralization as mining becomes dominated by a few large hardware owners. This endangers the decentralized nature of Bitcoin. The author proposes an alternative "Conner Consensus" where 1,000 individuals are selected to perform mining without proof-of-work, acting as a decentralized "mining congress" to address these issues. Overall, the document analyzes how proof-of-work may be failing to achieve decentralized consensus as originally intended.
27. If the blocksize is pushed upward,
then propagation times are going
to increase, fewer individuals can
afford to mine, and there are
centralization risks.
If the blocksize is pushed
downward, fees will increase, low
cost transactions become
impossible and are forced to move
off chain, and there are
centralization risks
28. “(Centralization at the 1MB end) isn’t
a particularly dangerous type of
centralization”
– Peter Todd LTB 2015
29. So what is this dangerous type of
centralization?
30. Some say it’s the large mining pools
Hashrate Distribution 11/2/15
31. Some say it is off-blockchain
settlements like Circle or Coinbase.
Hashrate Distribution 11/2/15
32. But these are all subscriber-based
centralizations. A mining pool does
bad things we switch to another
instantly.
33. The bad dangerous centralization
isn’t mentioned in the scholarly /
journal articles.
46. In early 2013, almost everyone in the
Meetup groups were miners. Now
none of them are. And no software
or hardware solution is going to
reverse this.
47. Folks who own massive amounts of
mining hardware opt-in. We cannot
“vote” to remove them. If they
centralize or collude, Bitcoin is
centralized.
48. The Ugly Axiom:
In any system, one can
assure anonymity or
decentralization, but not
both. The two are
inversely proportional.
Inversely Proportional
49. Even if blocks are lowered to 1k, big
miners still benefit from massive
economies of scale & access to chip
foundries. So centralization may be
inevitable.
50. To assume that miners in China are
not colluding with chip
manufactures in China to print cash
is just utter foolishness.
51. Even staying with 1MB blocks
means hardware miners will
continue to centralize exponentially.
52. Even if SegWit and Lightning
Network worked today, mining will
continue to centralize exponentially.
They just make it cheaper for the big
miners to centralize.
67. So, we can either have anonymous
mining, a large unsalable network
and massive centralization or we
can have Satoshi’s dream.
68. Unless we inject a dose of old
school identity based voting into
mining we cannot use the word
decentralization and we can’t claim
censorship resistance
74. He did it to run 51% attacks on
Bitcoin. And he did lots of them.
75. Early decentralization terrified him.
He wouldn’t be able to run updates.
He wouldn’t be able to prevent 51%
attacks. The first months (years?) of
Bitcoin it was entirely centralized.
80. Bitcoin isn’t protected by math. It is
protected by us. It is people. It is
social. It requires voting. It is not a
honey badger. It is fragile. Act
accordingly.
81. My proposed solution is a Conner
Consensus. Pick 1,000 individuals to
do the ‘mining’ without proof of
work. They act as a mining
congress. This gives massive
scaling and massive
decentralization.
82. Note: All the problems mentioned in this talk apply equally to
Ethereum and every alt coin. It applies even to Proof of Stake, but
the effect is somewhat less severe. Proof of Stake like mining
relies on anonymous control that can centralize.