Right, so when Bitcoin advocates say things like:
Bitcoin gives us, for the first time, a way for one person to transfer money to another person anywhere in the world, so that the transfer is guaranteed to be safe and secure, everyone knows that the transfer has taken place, and nobody can challenge or block the transfer.
You're saying that's actually
false because these "3 or 4 entities" can block whatever they want and the rest of the network is powerless to prevent it?
Yes, by design. They can. They won't mostly.
In my view, the miners would only get away with that if the rest of the network agrees with that action. If the majority of non-mining nodes disagree - and there's an incredibly strong likelihood they would disagree, because blocking transactions is categorically not part of Bitcoin's ethos or underlying principles - you can expect that a change of algorithm would be promptly forthcoming
Ha. Another algorithm. If core writes it quickly. Core, the other oligarchy. And if exchanges list that new version as "bitcoin" and unlists the original. The third oligarchy. If core doesn't move its ass, and if exchanges continue to list the original coin with the original algorithm, as the thing they call "bitcoin", you can always dream of a change. What are you, "decentralized user with your node that is happy", going to do ? After all, miners are free to build the blocks they want. They are free to build upon the blocks they want. That's the consensus mechanism in bitcoin. They even played by bitcoin's rules. Your expensive non-mining node wouldn't see anything fishy. It simply turns out that the 4 most important mining pools decide not to include transactions from user X or exchange X, and decide not to mine on blocks that do so. That's the consensus by proof of work. Changing algorithm is not evident, because suddenly, there wouldn't be an army of miners, ready to provide enough PoW with the new algorithm. From one day to another, there wouldn't be enough different hardware available. What algorithm ? Etherhash ? Scrypt ? Cryptonight ? ... How to sell this in the bitcoin narrative ? What if different forks appear ?
The *real* reason why this won't happen, is simply the market. This is why strong decentralisation is not very important. Most of these oligarchs are in bitcoin and need the market to appreciate it. So they most probably wouldn't do something that breaks the market entirely. Although, with the recent possibility to short bitcoin naked with futures in cash, things may be less evident.
and there would be many expensive bricks that used to do something profitable left to rot on a shelf somewhere. Not to mention that the users of that exchange would be innocent bystanders and wouldn't deserve to have their withdrawals blocked like that. There would be uproar if miners pulled a stunt like that. So no, "3 or 4 entities" do not have "consensus deciding power". Miners might decide what transactions go in their blocks, but users decide which blockchain they freely choose to follow. If the users aren't accepting those blocks, no one cares who they did or didn't include.
In an industrial proof of work system, that blockchain needs to be made first, before you can decide to follow it. For that, you need someone to code it (if it isn't Core, it most probably will not be called "bitcoin") ; if it remains a PoW coin, you still need an industrial amount of mining hardware to mine it ; and you need exchanges to list it.
My point is that if these power structures, which are oligarchies simply because there are only a few deciders in each of them, keep one another in check, that's good enough, and that's what will keep bitcoin running. But it has not much to do with decentralization. And if these entities collude over certain aspects, they will dictate their will. But in the end, they are kept in check by the market, as long as they are looking for gains.
Whoever says miners have all the power is wrong; whoever says users have all the power is wrong; whoever says developers have all the power is wrong. It should be more than self-evident by now that's not how this shit works. It all exists in equilibrium. No one group can act unilaterally if the others don't agree, unless one of them is prepared to fork off or be forked off.
Absolutely. But this is why this talk about decentralisation is bogus. You have a few oligarchies that keep one another in check. Like everywhere else. You have the miners (the industry). They are essentially 3 or 4 to decide. You have Core. They are a handful to decide. You have the important exchanges. They are a few tens to decide. And then you have all the users that gamble on its tokens. They are the market that finance the whole circus. And that's the power structure of bitcoin. Like most other financial ecosystems. Not much "decentralized". Samsung is also depending on its customers. Apple also. Bitcoin's industry also. That's what keeps this up and running. Not "decentralization". Because it isn't.
So, like Apple could prevent you from having an iphone, but won't, the mining pools could prevent you from transacting, but won't. Most of the time. Unless they have a good reason to. There's not much of a difference.
If Facebook pisses off most of its users because it behaves "unethically" towards some of them, or if the mining oligarchy pisses off most bitcoin users because they behave "unethically" towards some of them, that will have grave consequences in the market for both of them, and that's why Facebook is nice to its users, and the miner oligarchy is nice to bitcoin users. In general. That's why it works. Not because of the myth of decentralization. Even though it makes for a good story to tell at the camp fire.