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David Schwartz, the Chief Technology Officer of Ripple, has raised a point that has drawn attention to the process of centralizing the Bitcoin (BTC) hash power. With his intervention, Schwartz challenges the conventional wisdom that it is the majority of hash power that determines who gets to control the name “Bitcoin.” Responding to tweets, he not only questions the understanding but goes on to raise a fresh question, the one about the authority to define what is popularly known as Bitcoin.
Ripple CTO questioned whether a rational user would blindly accept whatever is called BTC, regardless of its qualities, honesty, or integrity. Schwartz emphasized the importance of distinguishing between what is labeled as Bitcoin and what users actually desire, suggesting that the former does not necessarily align with the latter’s preferences.
Role of Hash Power in Bitcoin Consensus
Hash power, the computational power used for mining and confirming transactions on the Bitcoin network, has long been seen as a key factor responsible for consensus. The Nakamoto consensus, the basis of the BTC network, uses the longest chain rule, which says that the chain with the most computing time is the legitimate one. This principle has served the integrity and security of the BTC network since day one.
Schwartz’s criticism raises the question of the level to which hash power actually authorizes the building of the Bitcoin identity. He gives an example of the Bitcoin Cash hard fork from 2017, where he claims that rational users did not immediately choose the team that claimed to retain the “Bitcoin” name after the fork. This goes against the idea that the majority of hash power dominantly defines the true essence of Bitcoin.
Examining Rational User Behavior in BTC Ecosystem
Schwartz’s intrusion into this type of operation gives rise to a reevaluation of user behavior within the BTC system. Providing an argument that adherents of Bitcoin could simply have labeled it by sticking “Bitcoin” without being able to be sure whether users blindly hold that on just the mere fact that those did not have any underlying principle or quality, not only has he made the case of the network governance, and also fellow users called for the reconsidering. Through this talk, it is shown that the more complex aspects of choice influence the Selection of Bitcoins and resistance to the network.
Read Also: Hong Kong’s Securities Association Tips Authorities On Crypto Self-Regulation
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
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In a recent blog post, Vitalik Buterin warned against overloading the network’s consensus. While Ethereum’s consensus is highly secure, Buterin said overloading it would expose the ecosystem to high systemic risks.
Buterin’s post follows massive congestion on the Bitcoin network, which led to a surge in transaction fees.
Possible Risks of Consensus Overload
Crypto assets like Bitcoin and Ethereum use the consensus mechanism to validate transaction authenticity and maintain the security of the underlying blockchain.
This consensus mechanism influences how a blockchain network verifies transactions while determining network fees, transaction speed, and more.
Amid surging transaction fees on the Bitcoin network due to congestion, Buterin asked users not to overload Ethereum validators to preserve the consensus mechanism.
In his blog post, the co-founder warned against the dangers of overworking Ethereum’s consensus. He said some proposals suggested using Ethereum consensus for other purposes, such as price oracles and re-staking. And some even suggested using layer-1 forks to recover layer-2 projects in the event of unexpected occurrences.
While the urge to expand the blockchain’s core functionality is high, Buterin said such an extension would render it fragile. He pointed out that a certain subset of these techniques brings high systemic risks to the ecosystem and should be resisted and discouraged.
If validators get overloaded, the ecosystem could face such risks as bugs or 51% intentional attacks initiated by actors who advocate for a fork to protect their deposits. These risks include creating ETH/USD price oracles where ETH holders or validators could receive bribes to vote.
According to Buterin, a case scenario where participants receive money to offer the wrong answer would cause honest people to lose money. In that case, Ethereum can only fork to recover users’ funds, which is a high risk.
However, while Buterin disagrees with price oracles, he acknowledged the need for better Oracles amid high bug risks. Buterin believes various problems are inherently different and should have unique approaches.
Buterin Advices Against Extending Ethereum Consensus Functionality
Overall, Buterin’s article kicks against the expansion of Ethereum consensus functionality as that would cause increased costs, complexities, and risks in running a validator.
In addition, he advises the community to be cautious of application-layer projects that may increase the scope of blockchain consensus outside core Ethereum protocol rules.
He urged the Ethereum community to preserve the blockchain’s minimalism and support re-staking without slippery slopes that could extend the roles of Ethereum consensus. The founder asked users to help developers find alternative strategies to achieve their security goals.
After transitioning from proof-of-work to proof-of-stake consensus last year, Ethereum recently witnessed the Shapella upgrade on April 12.
The upgrade commissioned a phased release of staked Ether, increasing activities and transactions on the network. That explains the increased concern for security and validator risks on the network.
Featured image from YouTube and chart from Tradingview
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