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Bitcoin, decentralization and distributed computing

I don’t understand celebrating a tiny database & nodes…🤷‍♀️ I want peer-2-peer electronic cash. Scaling matters.

Robin deLisser on LinkedIn

Robin is right.  Scaling matters. Scaling isn’t a mere quantitative advantage in that more of the same stuff is done, but more importantly a qualitative advantage because it enables new things that couldn’t be done without the scale. See The Structural Impact of The Cost of Transaction (CoT).

Regarding distributed computing, the decentralization of the Bitcoin blockchain does have an element of “distributed computing”, but what BTC did with small blocks is fake “distributed computing”.

People confuse the concept of “concurrency” in distributed computing with “redundancy” in the BTC small block network. The former is a feature, while the latter is a bug, or “bag”, more precisely.

Concurrency means that a task can be divided into multiple processes and run simultaneously across different nodes.  This is different from running the same task simultaneously on different nodes. It’s a distributed sharing of the load, which can serve various purposes including scaling, geo-balance, and fault tolerance. 

In this sense, Bitcoin’s mining network aims for fault tolerance rather than concurrency itself.

The fault tolerance requires open competition between independent, replaceable, and redundant nodes. It does benefit from multiple nodes, but the marginal benefit diminishes quickly (exponentially) as the total number of replaceable, redundant, and competitive nodes increases to 4 and above.  The notion that Bitcoin needs redundancy beyond tens of thousands or even millions of nodes is preposterous in the sense of distributed computing, whether it is in the context of fault tolerance or decentralization.

It is the PoW consensus with transparency and open competition of full commercial nodes, not the superficial excessive redundancy of the powerless home nodes, that produces fault tolerance and decentralization.

The “redundancy” in the BTC network is an unnecessary waste of computing resources and, more importantly, forfeiting of scaling opportunities.

The “redundancy” is there with BTC, even touted as a cornerstone for the BTC philosophy, not because it has any computational or economic utility but because it fits the narrative of fake decentralization and the “law-resistant” feature of BTC.

Furthermore, when transactional capacity is severely limited, Bitcoin’s UTXO advantage is largely lost.

Bitcoin’s UTXO enables a unique form of distributed computing, in addition to that enabled by the mining network. Not only can UTXO enable load-sharing, but it does not require synchronization because UTXOs are independent of each other and require no cross-accounting for settlement (and it is in the sense that bitcoin is “cash”).

But when account-based systems such as Ethereum can process more transactions per second (TPS) than BTC’s 5-7 TPS, what is the use of UTXO? At best, it serves as a cover for BTC’s shameful uselessness.

The true advantage of UTXO will become predominant on the genuine Bitcoin blockchain when it pushes TPS to millions and more, beyond where no account-based systems can ever dream of going even in theory.

It won’t be BTC. BTC can only be a nonproductive parasite to the economy. By definition, a parasite cannot be the main body of the host. See BTC is more corrupt than fiat.

People should wake up to think about what the word actually needs.

More on decentralization: Decentralization, a Widely Misunderstood Concept.