February 6, 2023

Crypto Engine is a crypto trading tool for investing in the crypto market with an %88 average win rate on trades and is the #1 trading software for crypto traders from all around the globe in 2022. Try it For FREE Today. 

Just a couple of weeks ago, Vitalik Buterin was talking about potential vulnerabilities of the Bitcoin network and promoted Ethereum in preparation for its big event — the merge with the Beacon network. While many BTC fans dismissed the idea that fees will not sustain Bitcoin’s infrastructure and will create a vulnerability where someone with a couple of billion dollars could bring the whole ledger down, skeptics received a new argument in their favor.

Centralization seems to be inevitable

One of the biggest dangers that the Bitcoin network sees in the future and does not have a clear answer to is the centralization of mining efforts. Currently, BTC mining is one of the most lucrative business endeavors a tech-savvy entrepreneur can find in the tech world. However, it has become very expensive too. With ASIC units surging in price and electricity demands skyrocketing, many miners found their forays in the world of crypto less attractive.

The recent drop in Bitcoin prices and the electricity price increase caused many miners to close their BTC positions to cover expenses related to mining. Many were forced to completely shut down their operations. Nevertheless, hash rates continued growing. The competition drives up prices across the whole industry and creates a situation where only mega-corporations can afford to mine BTC.

What happens when several huge players start controlling the network? At the moment, the combined hashing power of the US and China is enough to initiate a 51% attack. It seems that the situation when the same influence will be concentrated in a single country is impossible. However, with a long enough period of incremental centralization, the level of vulnerability will only increase. Mining pools are already very centralized.

Is it so bad?

The short answer is “no”. We are not even close to the situation where someone can attack the network. In the long run, fees will be enough to sustain mining operations and support continuously increasing hash rates. We will probably face some problems related to centralization, but the community has the necessary instruments to deal with them.

trade now

Altcoin Directory is not responsible for the content, accuracy, quality, advertising, products or any other content posted on the site. Some of the content on this site (namely Branded Content Posts) is paid content that is not written by our authors and the views expressed do not reflect the views of this website. Any disputes you may have with brands or companies mentioned in our content will need to be taken care of directly with the specific brands and companies. The responsibility of our readers who may click links in our content and ultimately sign up for that product or service is their own. Cryptocurrencies, NFTs and Crypto Tokens are all a high-risk asset, investing in them can lead to losses. Readers should do their own research before taking any action.

Leave a Reply

Your email address will not be published.

Only $250 and you're Rich - Simple way to make $1,372/Day Learn More
Skip to content