‘Nothing New at All’ in Research Paper That Accuses Bitcoin of Early Centralization
A new research paper that claims Bitcoin (BTC)‘s early success relied on “cooperation among a small group of altruistic founders” rather than true decentralization has ignited a debate in the community, with some questioning why it received such massive media attention despite being “not notable at all.”
The paper, written by researchers at seven universities in the US and Europe, said that although Bitcoin was “designed to rely on a decentralized, trustless network of anonymous agents,” this was far from the case in its early days.
The early period that was observed in the study was between Bitcoin’s launch in March 2009 and until the price first hit USD 1 in September 2011.
During this time, most bitcoin were mined by only 64 “agents,” the paper said, attributing this to “the rapid emergence of Pareto distributions in bitcoin income.”
According to the paper, this – in turn – led to “such extensive resource centralization that almost all contemporary bitcoin addresses can be connected to these top agents by a chain of six transactions.”
Due to the high level of centralization in those early days, attackers could “routinely exploit Bitcoin via a ‘51% attack’,” the report further said, while noting that it was the early users’ “altruistic” approach to the project that kept them from attacking it.
Bitcoin’s decentralization a “myth”
And while it is hardly surprising for people in the community that Bitcoin was less decentralized in its early days, that did not stop the New York Times from writing a 4,000-words-long article about the finding titled “How Anonymous is Bitcoin, Really?”
Writing on Twitter, the New York Times called it a “myth” that Bitcoin is “egalitarian, decentralized and all but anonymous,” and said that “data scientists found the reality to be very different.”
Perhaps not surprisingly, the article was quickly mocked by members of the Bitcoin community, with many arguing that the paper it was based on contains nothing new.
Nic Carter, a popular Bitcoin proponent and partner at Castle Island Ventures, commented that,
“This is probably the most egregious instance I’ve found of an article saying something completely anodyne and the NYT trying to gin it up into a big scandal.”
Carter added that the paper the article is based on is “not notable at all,” while reminding people that it has not been published in any peer-reviewed journal, and only covers mining in the period from 2009 to 2011.
“As far as I can tell, beyond some new attribution of early miners, the paper doesn’t say anything new at all,” the popular bitcoiner added.
Others also offered their take on the NYT article, with one user writing: “there is not one surprising thing about this…why even write this story?”
“Is there any data at all from any relevant time frame,” asked another user in the same thread.
Meanwhile, others directed their criticism at the research paper the article was based on, with Custodia Bank CEO Caitlin Long saying that it is “obvious that the authors don’t understand decentralization, or the process of becoming decentralized.”
“Of course Bitcoin wasn’t decentralized in 2009 – but it sure is now (and has been for several years),” she argued.
Responding to Long, Galaxy Digital’s research head Alex Thorn compared the statement made in the paper to how some argue that bitcoin “isn’t a medium of exchange or a unit of account yet.”
“As if bitcoin could just flash into existence and immediately become perfect money. Just a lame critique, really,” he said.
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