Ethereum developer Evan van Ness expressed concern over Bitcoin (BTC) mining centralization, pointing out that the top two mining pools control more than half of the total hashrate.
December 27 in Twitter threadVan Ness said that of the last 1,000 Bitcoin Block, 501 was mined through the Antpool and Foundry USA mining pools – suggesting majority control of the hashrate. A chart of bitcoin hashrate distribution by BTC.com based on three days of data it shows Foundry USA currently controls 31.1% of the hashrate, while Antpool controls 21.1%, for a total of 52.2%.
Van Ness cited a “hysterical piece” by crypto-focused news publication CoinDesk. criticized the article Ethereum Regarding the centralization of the network after the merge and the transition to Proof-of-Stake (PoS). end of september article, CoinDesk takes issue with the co-founder of a cryptocurrency firm citing that “420 of the last 1,000 blocks have been created by just Lido and Coinbase.” Van Ness commented:
Van Ness also noted that at the time of publishing the article, bitcoin’s block production was more centralized than that of Ethereum. For example, two different mining pools mined 430 of the latest 1,000 blocks. He explained that he was complaining about a “double standard,” claiming that “Ethereum and Bitcoin are the most decentralized chains ever.” He concluded:
“I would argue that Ethereum is significantly more decentralized, but that is at least debatable.”
What are mining pools and why is it a problem?
A bitcoin mining pool is a group of miners who pool their computing resources in order to increase their chances of finding blocks and earning rewards. When a block is found, the rewards are distributed among pool members according to their contribution to computing power.
Mining pools are necessary because the probability of finding a block in the bitcoin network alone is very small. By joining a mining pool, miners can increase their chances of finding blocks and earning rewards. Additionally, mining pools allow participants to receive a steady income stream instead of waiting for a rare block discovery.
At the same time, bitcoin mining pools have become a significant pain point for the decentralization of the network because those entities choose the transactions and contents of blocks mined by multiple miners. Mining pool GHash.io is an infamous example as it gained control of over 51% of the network’s hashrate in 2014. pool later committed To avoid controlling the hash rate by more than 40% in the future.
Mining pools need to control only a small fraction of the total hash rate of the cryptocurrency network. This helps ensure decentralization and security. When a single mining pool accounts for a significant portion of the network’s hashrate, it becomes more vulnerable to a 51% attack, in which a single entity could potentially disrupt the network by controlling most of its computing power.
In a 51% attack, an entity that controls a majority of the hashrate can compromise the integrity of the network and engage in malicious behavior, such as reversing transactions or double-spending. This has never happened with bitcoin, but it has happened on blockchains where the low hash rate makes such attacks practical.
In 2019, Ethereum Classic (ETC) 51% faced assaultWith crypto exchange Gate.io identifying at least seven double spends. Vertcoin suffered four separate attacks in 2018, resulting in theft of about one lakh, double spending showed off In the same year over $18 million was stolen from the Bitcoin Gold (BTG) network. Finally, in 2013, the Litecoin fork, Feathercoin (FTC), also suffered a 51% attack.
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