Decentralization makes the network more resistant to attacks, making it impossible to change its monetary policy and threaten its inherent scarcity. Conflicts of interest have allowed learning that no one can impose their will on average network users.
The current annual supply rate for gold and Bitcoin is around 2% of the total mined. The yearly production rate of Bitcoin falls by about 50% every four years and could drop to zero in the next century.
Under the current supply schedule, the annual issuance rate of Bitcoin will be about half that of gold and will continue to fall. That will cause the pioneering cryptocurrency to be significantly more scarce than the precious metal.
The scarcity of gold and its excessively high extraction cost limit its value. On the other hand, decentralization has determined the supply of Bitcoin from its original design and history.
The determining factor in the success of Bitcoin is precisely decentralization, which is why that network is the most resistant to possible attacks. No one can change its monetary policy or threaten its inherent scarcity.
The Anonymity of Satoshi Is Critical to Bitcoin
Anyone could easily change an organization by influencing its leader, but Bitcoin does not have one. Satoshi Nakamoto has remained anonymous for more than ten years and has not communicated with his community anymore. No one else has managed to wield enough influence to change the monetary policy of the network.
No other crypto asset has had a history without a leader to coerce, a committee to bribe, and a constituency to change its structure.
Running the Bitcoin Network is Extremely Accessible
The ease of running nodes is one of the most crucial decentralization factors in Bitcoin. They transmit the transactions through the network and check the previous transaction history. That is possible with an investment of less than USD 300 in computer equipment and a low-speed Internet connection.
Other cryptocurrency networks support many transactions or offer more feature functionality. However, higher memory and bandwidth requirements result in fewer nodes. In general, large corporate entities are the ones that usually execute them.
If there are further advances in computing, anyone can run Bitcoin nodes on their smartphone. That could dramatically increase the number of nodes on the network, making it much more decentralized.
Conflicts of Interest Test the Decentralization of Bitcoin
Since its inception, Bitcoin has also survived numerous challenges, culminating in the Block Size Wars. Several large companies interested in the cryptocurrency tried to change the protocol to allow more transactions per second.
Some node operators and developers resisted that change as the increase in the size of each block would increase the size of the blockchain. Therefore, it would be harder to run the network, reducing the number of nodes and decentralization.
That conflict allowed learning that nobody could change Bitcoin to impose their will on the average users of the network. Large companies had to give in to a group of average network users, thus proving the high decentralization level of Bitcoin.
By Alexander Salazar
