The One Thing That Could Stop Bitcoin

Discussion in 'General Discussion' started by JVanL, Oct 8, 2019.

  1. This site uses cookies. By continuing to use this site, you are agreeing to our use of cookies. Learn More.
  1. JVanL

    JVanL Contributor

    Many Bitcoin enthusiasts are of the opinion that cryptocurrency is unstoppable. The basis for this belief stems mainly from the decentralized protocol that maintains the Bitcoin network. From its original design, the distributed ledger of Bitcoin is maintained by participating computers from different parts of the world. A perceived alteration of this system is what has generated fear among many Bitcoin users. Some people even believe that the reason behind this fear is the one thing that could stop Bitcoin.

    There is a perceived original structure of the Bitcoin network, at least by the early adopters. This perception is that individuals across the globe will be able to run Bitcoin nodes and mine the cryptocurrency on their personal computers. This was the system in Bitcoin’s early days. However, because Bitcoin mining is now a competitive exercise, specialized equipment began to find their way into the industry.

    Can I Still Mine Bitcoin As An Individual?

    Gradually, mining Bitcoin with a regular PC became a wild goose chase. Within one decade of Bitcoin’s existence, miners have moved from PC, to GPUs, FPGAs, and today ASIC miners have dominated the industry. With time, what was expected to be a level playing ground with minimal entry requirements became more and more sectionalized. Unless you have an ASIC miner, it has become almost impossible for you to compete in the mining network. The competition did not stop there, as even among the ASIC hardware users, the bar has been raised.

    The fear of many Bitcoin users is that the regional balance of mining power has become chronically one-sided. Because of infrastructural availability and other fundamental factors, over two-thirds of the mining hashrate emanates from China. What this means is that most of the mining equipment within the Bitcoin network is installed in and around the Chinese region. Is China the one thing that could stop Bitcoin?

    PlattsburghBTC on Twitter

    Why Are Most Bitcoin Miners Located in China?

    Although Bitmain, the main manufacturers of ASIC miners, is based in China, other factors that attract most of the Bitcoin mining to the region include the cold weather and cheap electricity. While these are the infrastructural reasons for locating Bitcoin mining equipment in China, it only halfway explains why so much hashrate is concentrated within the region. The majority of the hashrate (over 70%) is shared among just a few mining pools and many consider this so contribute to why China could be the one thing that could stop Bitcoin. Here is why:

    Since Bitcoin mining has become very competitive, many independent miners find it difficult to carry out Bitcoin mining activities profitably. It became common that individual miners were running their equipment and consuming electricity without getting any rewards. The more efficient machines seemed to be taking all the money in the network. This gave rise to what we know today as Bitcoin mining pools. Individuals or groups are now pulling resources together to build gigantic mining farms. This results in more efficient machines that can mine blocks more frequently and the rewards are shared among the participants.

    The Bitcoin mining pool system has become so organised that an individual from any part of the world can simply subscribe to a Bitcoin mining company and their mining exercise. What interests us here is that the biggest of these companies and their Bitcoin mining farms are located in China. Technically, this looks like a structure that defeats the original design of a decentralized network. To worsen the case, it is happening in a region that is spontaneous with regulations and sanctions, as we’ve seen before.

    Why Is China So Powerful In The Bitcoin Industry?

    China has had a strong presence in the Bitcoin ecosystem, especially from the early days. Most of the big exchanges had strong bases in China, and the awareness of the technology in the region was second to none. The regulatory stampede on exchanges in the country in 2017 was a sudden move that did not necessarily come as a surprise. The socio-political atmosphere of China and the way its government executes economic policies is giving Bitcoin users reasonable concern. With about two-thirds of the Bitcoin mining hashrate based in China, it technically leaves the entire network at the mercy of the government’s policy makers.

    F2Pool, AntPool, BTCC, BW Pool are some of the biggest Bitcoin mining pools in the Bitcoin network, and are all located in China. It is also suspected that a reasonable share of the unknown pools within the network are also situated there.

    Although many Bitcoin users do not care too much about where the Bitcoins are mined, their concerns remain mainly on where to buy the mined Bitcoins. Platforms like Vertex.Market which offers peer-to-peer trading allows traders to stay within the original protocol of the network, and trade Bitcoin seamlessly with traders around the world. And the network’s protocol must not be neglected.

    Bitcoin is created as a decentralized peer-to-peer network. Anything that threatens this protocol will not be good for the cryptocurrency. Although many people seem not to be distracted by the lopsided regional hashrate allocation, there are those who really think that it is one thing that could stop Bitcoin.

    The One Thing That Could Stop Bitcoin
  2. wikimitral

    wikimitral Contributor

    Hope that it won't stop bitcoin.
  3. CryptoTC

    CryptoTC Crypto Fat Cat
    Staff Member

    Grooming myself between naps
    Sleeping on a couch, chair, bed, or under a table
    There are many things that could stop bitcoin. Many, many.

    1. Countries create their own virtual currencies
    2. Vendors never adopt bitcoin as a valid method of payment
    3. Regulations
    4. Persistent perception that it’s a tool for speculation, not a currency
    5. Taxation and the lack of progress in making purchase non-taxable
    6. Other crypto currencies with wider support and cheaper mining costs
    7. Infighting between crypto fan boys who think this is PS vs XBox or Mac vs PC rather than a world-changing shift in global payment systems
    8. Banks. They have much more power than any bitcoin supporter will admit.
    9. Governments. Ditto. Also see #3 and #5
    10. The irreversible nature of transactions
    11. Scams. See #10.
    12. Difficulty in use. Some still can’t figure out Venmo. Good luck getting them on board with a crypto payment app
    13. Price volatility
    14. Price volatility
    15. And finally, price volatility.
  4. wikimitral

    wikimitral Contributor

    So, we must be afraid of price volatility, right?
  5. The CC Forums

    Staff Member

    Depends. Volatile is terrible for adoption, but great for speculators.

    The long term idea is that volatility will exist until the total market cap of bitcoin gets to a value where it could become more stable in price. Then volatility may settle down and stability becomes the norm. Then it becomes usable.

    That’s why I own bitcoin for the long haul. But the biggest risk is that another coin will come along and get adopted before bitcoin gets there. Stable coins are already out there, struggling for critical mass to gain adoption.

    But @CryptoTC is right, that list presents a lot of barriers to overcome before any crypto gets adopted. Even then, why would use translate to higher value? It might not, using his UKG rant as an example.
  6. Amir77

    Amir77 Contributor

    Kinda read somewhere that the bitcoin economy would fall once the creator Satoshi Nakamoto releases his million bitcoins. Is that the same logic to China holding too many bitcoins? They kinda control the bitcoin’s economy? (or am i wrong)
  7. wikimitral

    wikimitral Contributor

    I don't believe in it till they show us some proofs.

Share This Page