Can Decentralized Finance Usher in Democracy into Bitcoin Mining?

Bitcoin Mining

Bitcoin MiningIn decentralized finance, miners do not have the means to disrupt the network, a unique feature Bitcoin thrives on.

Bitcoin has been the most sought-after cryptocurrency of the decentralized finance system ever since its inception in 2009. It has been the robust crypto ruled the market with almost 70% of holding in 2021. As a significant currency in the blockchain system, it is one of the important developers of decentralized finance. Investors swear by bitcoins because they are only next to gold in mining. Their supply is limited and their rate of production might fall by 50% to ultimately touch the point of zero production.

 

Why decentralization is important for Bitcoin?

Decentralization works on the principle of equal and distributed power among the coin holders. However, decentralization of power isn’t the only goal. The security it offers has a lot to do with its wide acceptance among crypto traders. Bitcoin’s value is determined by its inherent scarcity. Therefore, in a decentralized finance network, an individual or a remote player doesn’t have the means to disrupt this unique quality. Bitcoin thrives on a decentralized network like no other cryptocurrency.

 

What makes BTC a truly decentralized asset?

BTC is created by ‘Satoshi Nakamoto, which stands for a person or a system, has been anonymous all these years since its introduction. Even after this pseudonymous entity stopped communicating with Bitcoin followers, the system has remained intact. This fact proves how bitcoin represents truly decentralized finance. A bitcoin holder can run a node independently without disrupting other transactions, freedom which rarely applies to other cryptocurrencies. And also, there is no room for censorship in Bitcoin transactions. Even if a transaction is blocked by one investor, the other investors would step in to include the transaction in the block and collect the transaction fee. Hence, decentralized systems give cryptocurrencies the advantage of eliminating selfish Bitcoin mining attempted either by individuals or by groups. A double-spend attack is successfully averted in the Bitcoin system with decentralized access available to every miner. Also, a malicious miner showing such tendencies is eliminated quickly.

The absence of central command though sounds like a charm that would put to rest the perils of centralized systems, not everything is well with a decentralized financial system. A decentralized system runs on a cluster of networks that are run independently, giving a layman the perception that it is an absolute democratic system. But the facts speak otherwise. According to the bitcoin.org website, there have been approximately 30,000 code commits to the Bitcoin architecture, from just 360 developers, with the top 10 developers contributing nearly 70% of the code. This implies there is a kind of fetishism around the network like it exists around any other power system.

Decentralization is the one pivot, around which the crypto notion revolves; a decentralized finance system facilitates financial transactions sans control of a central authority. And so, a big nation like Russia has found uncommon courage to invade Ukraine amidst financial sanctions. Given the fact that Bitcoins value fell from US$68,999.90 to its current value of around US$40,000 because of an unexpected geopolitical crisis, it is only time which can decide if the decentralized financial system can hold Bitcoin immune to totalitarianism.