Bitcoin Is Centralized

Bitcoin Is Centralized

nearly 10 years going strong in my portfolio Bitcoin is still my favorite cryptocurrency but it could be better and guess what we can all play a part in making sure that it continues to improve and get better and stay robust for years and years and decades and generations to come we now live in a day and age where we have people like Michael sailor bragging that they’re holding more Bitcoin in other countries than any other country in the world which is amazing um but that is a type of centralization centralization in Supply and as we all know that the market cap of Bitcoin is still small enough that a whale can definitely manipulate the price of Bitcoin you’re holding a lot of that coin and you want to sell it or buy it you can use your uh influence in your wealth to affect the price now there’s other ways that centralization can lend to influence over the Bitcoin Network in much more serious ways than just the super official price what I’m talking about is Bitcoin mining this has been a concern and a growing concern for anyone who pays attention to bitcoin and who cares about it being robust and continuing to thrive in the future I know we are in a bullrun and most people who are watching cryptocurrency videos today aren’t really interested or even maybe know the intricacies of Bitcoin mining today’s video is going to serve as an introduction for some as a reminder for most others I know there’s several of you who are watching this video that actually care and please stick around for the end of this video cuz I will give you tips on how you can help solve this problem isn’t that great don’t you love a free market and a peer-to-peer Network that anyone can take part of Amen I do okay so let’s get right into today’s video Bitcoin mining should be thought of as the engine that runs the Bitcoin Network minor are the computers that do the work to get blocks fill those blocks with pending transactions and if they do so fast enough they are rewarded with both the Bitcoin transactions paid by those transactions and that are included in the block they’re also paid by newly created bitcoin which is called a block reward now bear with me I’m not going to get in the weeds too much I’m not going to get too technical but what miners do is they use special specialized computers specialized Hardware that is really good at solving complex mathematical equations and each minor is competing against the next guy who has a very similarly fast and Powerful computer trying to solve that mathematical equation first so that they get the chance to get the block fill it with transactions and get paid in Bitcoin so in that way miners are the ones that keep the network going they keep keep the transactions flowing they are the ones setting and establishing the history of all Bitcoin transactions and thus the network now what kind of computers do these miners use way back in the day in 200920 you used to be able to do it on your computer on your laptop at home just let it run you know all day all night as long as you can and you can mine a 100 Bitcoin every 10 minutes that’s what Satoshi and hfny and all the early guys in in Bitcoin were doing which is really cool to think about but nowadays the competition has ramped up and we have what are called mining Farms huge industry the Bitcoin mining is now a huge industry involving Millions possibly probably billions of dollars worth of investment and equipment and infrastructure supporting the mining of Bitcoin and the miners now are using what are called asex very specialized Hardware specifically designed for mining Bitcoin you know you buy a computer today you can do all sorts of things with it you can browse the web you can render videos you can do a lot of things but what miners use are computers specifically designed just for mining Bitcoin and so they’re really good at it so what to do if you can’t afford an expensive Asic or you only can afford one and you can’t compete with the huge mining Farms that are now prevalent in Bitcoin mining today well there are things called mining pools where you can participate ipate in a pool of other people wanting to mine Bitcoin you can combine your computing power and in that way any rewards that are given to you are shared among the group according to the amount of computing power they have attributed so in this way instead of let’s say you have a small little mining rig and you’re up against these huge mining uh industry players and you might get lucky maybe in 10 years you’ll mine and get one block you’ll get one block reward and the transaction fees is involved in that maybe and what a mining pool does is it equalizes uh the amount of energy and time you put into it and you might get a uh less of a reward because it’s being distributed but it’s occurring more regularly so give and take you know you might hit the lottery once in 10 years or you might get a or you might get a more steady paycheck so a lot of people are participating in mining pools specific specifically for this also mining pools make it much more easy for you to participate and help to support in the security of the Bitcoin Network because you aren’t solely responsible for the technical setup of your mining rig you are attributing your computing power to uh another company essentially that is doing all the hard work and you’re much more passively getting an income so how does this affect Bitcoin and how does it make it centralized that is the is such a dirty word I would much more rather be saying it is becoming more and more decentralized but what we’re seeing today and the stats that I’m going to be giving you uh in a in a second in this video is probably going to shock you and I hope that it shocks you into taking this seriously and taking the next steps which I’ll be providing at the end of this video so 56% of all computing power that is attributed towards mining Bitcoin 56% of this they call Hash rate is controlled by two mining pools one is from the USA and the other is from China no surprise there uh the first one from the USA is Foundry this one is owned by dcg uh the guy behind that one is Barry silbert other huge popular crypto uh crypto companies under the umbrella of dcg involve Gemini Genesis coindesk and a lot of others so also they have um one the top two mining pool Foundry important note about Foundry as well super popular super not private you have to have you have to go through kyc and AML uh protocols giving up all of your personal information you are fully identified as a participant in this mining pool and all of your mining rewards are achieved not in a private or Anonymous Manner and the other mining pool from China is ant pool also fully kyc antpool has some interesting history I will be going over a bit with you I bet you didn’t know uh so a little bit of History here bitm is a company out of China the former CEO of bitmain is Jihan woo here’s some interesting facts about him he is a crypto evangelist in his own right in 2011 he was the first to translate the Bitcoin white paper into Chinese in 2012 he held the first Bitcoin denominated IPO in an effort to fund the creation and the development of application specific integrated circuits just for mining Bitcoin also known as Asic and this is still the preferred and much popular used uh Hardware devices the Asic miners that are used to mine Bitcoin today but bitmain the creator of these mining uh rigs these mining Hardware owns ant pool and a lot more than that they say that ant pool is like the pool of all pools and bitm in fact indirectly controls all the other uh Bitcoin mining pools in China bitmain has achieved this kind of indirect control over these mining pools in China by providing a service that can ensure against bad luck in the pools but this requires the mining pools to use bitmain’s templates and services and also to pay an insurance which is then distributed later on and it obviously leads to a lot more centralization in mining so basically what I’m saying here is that mining pools have kind of gotten out of control and they really benefit from the economies of scale they’ve reached a size where the cost of production is distributed enough they’re more efficient and the benefits reflect that as if that’s not bad enough I found this out researching this video it shocked me so here’s some facts for you 40% of all newly binded Bitcoin is run through one single custodian another way to put it 47 out of every 100 newly mined Bitcoin are run through one single custodian what is that custodian Cobo and this involves us mining pools and Chinese mining pools it’s everyone is funneling through this one centralized payout distribution custodian solution and keep in mind that Foundry in the US and antpool in China are fully kyc that means that an incredible amount of newly mined Bitcoin is identified and is you know there used to be a premium on Virgin Bitcoin because uh you know it had no transaction history it couldn’t be linked back to any kind of CD uh transaction history but now it’s really moving for so far in that direction where they can say exactly who is responsible for mining it and who was the first owner of that Bitcoin as well the sacrifice of privacy is starting at the very Geto when Bitcoin is being created that is truly disappointing and this custodian Cobo they know who is using their service they know who they’re Distributing the rewards to so that information that they have is highly important and probably already being tapped into by whoever wants to know probably us and Chinese governments just saying the saddest part is is that that type of information is only protected by decentralization the complete opposite of what we’re seeing happening right now okay okay okay so don’t freak out don’t freak out you guys this is again a peer-to-peer Network it is you are free to participate it as best you can and at this point it is in all our best interest to do so whenever possible so if you have an interest in learning how to mine I commend you and I want to encourage that I don’t care if you have computer expertise I don’t care if you have the ability to invest in a really expensive mining rig what most matters is you have an interest and a drive to make that happen and so with that time will uh develop where you can actually play a huge part in hoping in helping to decentralize is the Bitcoin Network and here are two mining pools that you can please explore and consider joining yourself especially if you are currently uh participating in a mining pool that I mentioned today and ant pool and Foundry there are a few others that even though they’re not in the top two they’re they’re of a sufficient size where maybe you know we should see more decentralization even there so check out stratum V2 I’m going to put links to all of to both of these options Down Below in the video description also you can check out ocean pools no kyc required with that one as well try to search out smaller mining pools so if this video at all helped you understand the status of Bitcoin mining or helped you to be encouraged to play a bigger part in its decentralization then I think this is an amazing video and I’m really glad that you watched it till the end if you want to know what Toby and I are doing with our cryptocurrencies how we’re trying to keep them safe and advocate for more decentralization in the cryptocurrency space no better place to look than learning crypto.com thank you so much for watching I appreciate it if you hit like And subscribe see you later

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🔗 Useful Links 🔗
Stratum: https://stratumprotocol.org/
Ocean: https://ocean.xyz/
Mononautical (Analysis): https://x.com/mononautical/status/1777686545715089605
Mining Stats: https://mempool.space/mining
AntPool Analysis: https://www.nobsbitcoin.com/bitmain-antpool-pool-of-pools-report/

Todays video dives into the topic of Bitcoin mining centralization. We examine the role of mining pools, specifically Ant Pool’s dominance, and its potential impact on Bitcoin’s decentralized nature. How does mining centralization compromise users? We explore the challenges and solutions to maintain a decentralized Bitcoin network.

👇CHAPTERS 👇
00:00 Intro
01:00 Bitcoin Mining Centralization
01:50 What Is Bitcoin Mining?
04:20 What Are Mining Pools?
05:54 Why Is Bitcoin Centralized?
07:35 Who Owns Ant Pool?
09:30 Privacy Sacrifices
11:17 How To Fight Centralization

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