Accidental Bitcoin Centralization

By Deane Barker on January 23, 2015

Blockchain scalability: As Bitcoin gets bigger, the history of transactions (which is required to make the whole thing work) gets less manageable, leading to centralization, which is the anti-thesis of the whole idea.

We can already observe empirically that more than 50% of the hashpower securing the network right now is owned by just five entities – see figure 1. This is a real security threat. Five is a small enough number that state-level actors could directly coerce all five entities without too much trouble. Five is also small enough that active collusion would be fairly easy to coordinate.

Is not getting better.

The bitcoin blockchain is presently about 25 GB in size. Downloading the blockchain peer-to-peer takes about 48 hours, and of course 25 GB of disk space. This is a serious user experience flaw…