Cryptocurrencies decline, and why centralization is not a threat to bitcoin
Bitcoin once again fell below $10,000 dragging the rest of the market behind itself. The first cryptocurrency dipped by almost 5% within the day, having dropped to $9,630.
Ethereum lost 7.7% in price, Ripple fell by7.4%, Bitcoin Cash — by 9.2%. On average, crypto assets from the TOP-20 dipped by 5–10% — with the stablecoin USDT being an exception, the rate of this coin has slightly increased by 0.22%.
Why centralization of mining is not a threat to BTC
According to a research by TokenAnalyst, it can be that 50% of the bitcoin hash rate is controlled by one company. Analysts found that five large mining pools have teamed up to launch a single cloud mining service.
“Any centralisation of bitcoin network hash power should be of concern,” the TokenAnalyst summarizes.
Indeed, the owner of 51% of the capacity can try double-spending or even cancelling transactions. But how beneficial is it? The very bitcoin creator Satoshi Nakamoto wrote in bitcoin’s White Paper:
“If a greedy attacker is able to assemble more CPU power than all the honest nodes, he would have to choose between using it to defraud people by stealing back his payments, or using it to generate new coins. He ought to find it more profitable to play by the rules, such rules that favour him with more new coins than everyone else combined, than to undermine the system and the validity of his own wealth.”
Thus, it is more beneficial for the owner of a large number of capacities to continue to mine cryptocurrency rather than to manipulate the blockchain. This is confirmed by other cryptocurrencies (for example, BCH and BCV), whose centralization is much more pronounced. However, their networks are still functioning, and no one is engaged in “51% attacks”.