Blockchain Claims to Be Decentralized — It Isn’t
Your entire philosophy underlying blockchain is to decentralize info storage, and the know-how itself does that fairly effectively. Nonetheless, there’s one downside on this complete system that we forgot to think about — individuals. If you concentrate on it, we’re social beings, and we like to affix forces to do issues collectively, even when meaning constructing large cryptocurrency mining farms.
that is the issue with blockchain right this moment, 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 lots of crypto farms across the globe, however the truth stays that almost all of the most important ones are in nations such because the USA, China, and Russia. These farms aren’t typically owned by only one particular person however are a results of a number of individuals becoming a member of their entry to computing energy.
Dalian Cryptofarm, for instance, is among the largest mining farms on the planet, and it’s positioned in Dalian, China. It’s even attainable to decide on a mining bundle based on your preferences and make investments small quantities to realize revenue from mining in Dalian. The final time we checked, Dalian’s hash charge was 360,000 TH, with a month-to-month power value of greater than $1,170,000. The result’s mining 750 bitcoins a month (which ought to scale back after halving and all the next 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 may very well be misplaced immediately.
Despite the fact that it’s extra more likely to occur in China, it may 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 won’t shut them down instantly however will discover a option to scale back their operations.
All in all, a decentralized community ought to depend on any single entity, and plainly Bitcoin is transferring in that path, as mining farms are getting greater 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. Nonetheless, there aren’t any indications that Bitcoin will ever change, and it’s nonetheless the most important and the most well-liked crypto.
However there are points with Proof of Stake as effectively. Individuals are already creating funding swimming pools the place they’ll collectively stake their funds within the hope of a much bigger revenue. If such funds turn into too giant, we are going to as soon as once more head in the direction of centralization.
One other option 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, corresponding to tomi’s MP1 mini supercomputer, which is designed to behave as a micro-server and might be simply related with different computer systems of the identical type, creating small however efficient crypto mining clusters. Along with crypto, MP1 can provide many alternative cloud computing providers, together with advanced simulations, accelerated AI, real-time ray tracing, photorealistic rendering, and far more. The startup is at present engaged on growing the MP1 mission.
Closing Ideas
No new know-how is unhealthy. As we’ve seen on many events, the best way we use and apply it may well 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.
Nonetheless, we nonetheless have to improve it and all the things that follows it to attain true decentralization reasonably than simply discovering workarounds again to centralization, which is what the large 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.
