Quote from: DaRude on January 15, 2016, 01:23:30 AM

Quote

"...if decentralisation is what makes Bitcoin good, and growth threatens decentralisation, then Bitcoin should not be allowed to grow.

Honestly it's hard to disagree with this statement.

Bitcoin is not built for decentralization in the first place.

You can't get decentralization without one of the following:

1) Having users expend PoW to process their own transactions just like how it was done with email. IOTA doesn't seem to be quantifiable security-wise though...

or

2) A collateral bid (not flat rate), deterministic block production system with a fixed number of nodes where you're required to lock collateral for an extended period of time to be one. This makes it so decentralization is built in at a protocol level by having a much greater limit on Sybil. Mining is also really just a subsidized futures contract in the first place where you're required to lock collateral to speculate on it.

I argued with Gavin that Bitcoin is designed to monopolize due to the following statement below, but he claimed you hit a nash equilibrium by gaining something like 30% hash rate (i forget the exact number). Either way, my view is that centralization is built-in at a protocol level for PoW. If he's right, then I guess it would not monopolize, but the pool makeup would probably always resemble something like it currently does with 4-10 major players.

Quote from: r0ach on January 07, 2016, 12:17:20 AM

The end game game theory of PoW is to form a monpoly with greater than 50% hash rate placed in multiple rathole pools (sybil attack) because if you don't do it, someone else can, so it's the only logical move to protect your investment. In other words, you're accomplishing the attack you seek to prevent (but not executing it) to stop the other guy from doing it. Since there's no way to know who owns the pools, it's a system of security through obscurity.

While being not so likely, for all you know, Satoshi owns every mining pool that's ever existed. The point is, the system is designed to monopolize, while also being almost impossible to verify the real state of security of the system at any given time. If you accept that as a security model, you're also accepting a security model of someone owning over 50% hash rate out in the open.