Author: Chris Priest 2015-12-26 03:18:13
Published on: 2015-12-26T03:18:13+00:00
The term "mining centralization" is a highly debated topic in the Bitcoin community. Some people believe that mining is already centralized, while others argue that this is not the case. Under normal operations, a single mining pool would have no effect on the system, and it would only be problematic if that pool censored transactions or operated outside of the norm. However, if a government were to try to disrupt the network in the future, having all hashpower under one control could be problematic if hashpower liquidity is low. Hashpower liquidity measures how easily hashpower can move from one pool to another. If all the mining hardware is mining on one pool and cannot switch to another, then hashpower liquidity is low.On the other hand, if there are many pools in existence, and mining hardware owners can easily switch to another pool, then hashpower liquidity is high. This is important because if a single mining pool started censoring transactions and there was no other pool to move to, this would be bad for Bitcoin. Therefore, the author argues that hashpower liquidity is a more important metric to consider than simply "mining centralization." The difference between the two terms is that one describes a temporary condition, while the other measures a more permanent condition. Instead of using the term "mining centralization," people should focus on increasing hashpower liquidity.
Updated on: 2023-06-11T02:46:50.351271+00:00