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Decentralization and Resilience are Key to Bitcoin’s Value

Coindesk via Yahoo Finance | | Feb 17, 2022

key to bitoin is decentralization - Decentralization and Resilience are Key to Bitcoin’s ValuePeople sometimes ask me for a single reason why I think bitcoin is an attractive investment. It’s simple: Bitcoin is the hardest monetary asset ever created.

By “hardest” I mean “hardest to create more of” – it’s the monetary asset in which I have the highest confidence that the supply is limited. It’s like gold, but better.

Decentralization is the key

Decentralization isn’t a goal unto itself. Instead, decentralization is key because it makes the Bitcoin network maximally resistant to attack from anyone who might seek to change its monetary policy and thereby threaten its inherent scarcity.

No other cryptocurrency comes close to Bitcoin’s level of decentralization, and it seems unlikely that any ever will.

So what makes bitcoin (BTC) the most decentralized digital asset?

Satoshi is a ghost

The most straightforward way to change an organization is to influence its leader. Bitcoin has no leader. Its founder, Satoshi Nakamoto, has managed to remain pseudonymous for well over a decade. And ever since Satoshi ceased communicating with the Bitcoin community, no individual or group has managed to exercise enough influence to make significant changes to Bitcoin’s monetary policy.

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No other digital asset can make this claim to having a long track record without influential leadership. There is no leader to coerce, no committee to bribe, and no constituency strong enough to change it.

Running a node is 'easy as (Raspberry) Pi'

One of Bitcoin’s most important decentralizing factors is the ease with which a user can run a node. Such nodes both relay transactions through the network and also verify the entire transaction history. This allows anyone to verify the entire transaction history of Bitcoin and also make sure that future transactions comply with the rules of the protocol, including the fact that no bitcoins are double-spent and that the overall supply is strictly limited. All this can be done with less than $300 worth of computer gear and a low-bandwidth internet connection.

13 years of conflict have proved Bitcoin’s decentralization

Bitcoin has likewise survived numerous challenges in its 13-year history, culminating in the Block Size Wars. In this struggle, a group of companies with interests in Bitcoin attempted to change the protocol to allow an increased number of transactions per second.

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The lesson drawn from this conflict was that Bitcoin would not be changed by an economically powerful group of individuals seeking to impose their will over the objections of the average users of the network.

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