The apparent centralization in both proof-of-work and proof-of-stake protocols is “tragic because it contradicts the cypherpunk ideals” from which the bitcoin and blockchain movement emerged, said Tomer Afek, the CEO of the crypto platform Spacemesh. . To support this claim, Afek told Bitcoin.com News that only two Bitcoin mining pools control more than 50% of the network’s hashrate, while the top five pools control more than 75%.
‘Centralization and consolidation of mining resources’
For Afek, the concentration of the Bitcoin network’s mining power among a few players should worry decentralization advocates because it means such “centralized actors” are accountable to no one. According to the CEO of Spacemesh, the situation is even worse with protocols that use the proof-of-stake consensus mechanism.
To illustrate, Afek claims that in the vast majority of chains that use this mechanism, “it is a small group of internal investors and early team members that use this mechanism.” [who] control the lion’s share of the coins.” This inevitably allows such individuals to exert undue influence on the network.
As for the often less discussed competitive nature of the race to mine the next block, Afek, a former investor at venture capital firm Evergreen VC, lamented how this potentially contributes to the “centralization and consolidation of mining resources.” When this is combined with the ‘single winner’ for each block interval requirement, it can only result in ‘congested block space and high transaction fees for users’.
Meanwhile, in written responses sent to Bitcoin.com News via Telegram, the CEO also expressed his views on allowing anyone with a computer and storage space to participate in a network’s consensus process. He further revealed why his organization spent five years in research and development before emerging from the shadows. Below you will find Tomer Afek’s answers to questions sent.
Bitcoin.com News (BCN): Proof-of-work mining often draws criticism for its energy consumption, but its competitive nature is less talked about. Can you tell our readers more about the competitive nature of this consensus mechanism?
Tomer Afek (TA): Satoshi Nakamoto solved the Byzantine Generals Problem in an ingenious way: by replacing one actor, one voice, one CPU, one voice. This allowed permissionless public networks based on this solution, known as Nakamoto Consensus, to flourish, but it inevitably created a competition to be the first miner to solve the cryptographic puzzle and successfully mine the next block.
The Nakamoto consensus is safe and has served Bitcoin well, but has some drawbacks. First, the interval between wins is unbearably long for all but the very largest miners, which creates strong pressure toward centralization and consolidation of mining resources (the rule of large numbers works in favor of miners and reduces variance). Second, the network must ensure that in the vast majority of cases there is only one winner during the block interval. This means keeping the difficulty high and the throughput low. In practice, this results in overloaded block space and high transaction costs for users.
All this is to say nothing of the energy intensity inherent in mining evidence, and of the cases where miners are in fact not economically incentivized to act fairly, a phenomenon known as selfish mining.
BCN: Do you agree with this idea that proof-of-work and proof-of-stake protocols have failed to deliver on the original idea of decentralized blockchains?
TA: There has been a worrying and downright tragic trend over the years toward mass centralization of both proof-of-work and proof-of-stake protocols, tragic because it runs counter to the cypherpunk ideals that gave rise to Bitcoin and the blockchain movement. While it is true that Bitcoin has a thriving ecosystem of users who run their own nodes and Bitcoin is therefore somewhat inoculated against certain forms of attacks, in practice only two pools currently control more than 50% of the Bitcoin hashrate and the five largest pools more than 50% of the Bitcoin hashrate. 75%. This trend should be concerning to anyone who cares about decentralization, as these pools are centralized actors that largely act with little to no responsibility and require the trust of their constituent miners.
The situation with proof of stake chain is even worse. In the vast majority of such projects, a small group of internal investors and early team members control the lion’s share of the coins, stakes, and therefore influence on the network. Even Ethereum, which only recently gave up proof of work and has long claimed to stand for decentralization, is now subject to massive and growing centralization due to economies of scale related to staking and MEV.
BCN: Can you explain to our readers the difference between competitive mining and race-free mining, perhaps with an example?
TA: It’s actually very simple and comes down to simple statistics and probability. If, as a home miner, even one with the resources and acumen to acquire and operate a Bitcoin mining ASIC, you attempt to mine solo, from home, without joining a mining pool, you can be expected to you can successfully mine one block every 30 years. average, reflecting the competitive dynamics described above. You can join a pool, of course, and most do, but then you pay a portion of your rewards to the pool operator and trust them to calculate and pay out the rewards fairly, with little to no accountability.
At Spacemesh, on the other hand, a home miner with even the minimum required resources (256GiB of free hard drive space, a consumer-grade desktop computer, and an always-on broadband Internet connection) is guaranteed to earn a reward at least once every two weeks. . So there is no reason to join a pool and no need to outsource the trust to a pool operator.
BCN: Your company Spacemesh was reportedly in the research and development phase for about five years before emerging from the shadows. What problem were you trying to solve and is the solution still relevant today as the industry has evolved significantly over the past five years?
TA: In short, Spacemesh is doing something no blockchain has ever attempted: making home-based mining both accessible and economically sustainable for ordinary internet citizens forever. To do this, it was necessary to develop a series of tailor-made, advanced protocols and technologies, a feat that proved to be more difficult and took longer than any of us expected. The good news is that, as mentioned above, the Spacemesh network went live in July and we have now proven that these technologies are viable and secure.
In addition to other technologies we developed, this required creating a custom consensus mechanism known as proof of spacetime, which is a hybrid of proof of work and proof of stake. Like proof of work, it is permissionless, so anyone, anywhere in the world, can start a new miner at any time without permission and without specialized hardware or expensive deployment. Like a proof-of-stake network, it is green and requires 99% less energy than an equivalent proof-of-work network.
We believe that these issues – fairness and accessibility for miners, lack of consent and environmental friendliness – are only more relevant today than when we started.
BCN: Can you describe the blockchain topology and the difference between the chain topology and the mesh topology that your platform uses?
TA: The key innovation that has enabled Spacemesh to solve the competitive mining dynamics described above and introduce a new era of cooperative mining is the mesh topology. In an old blockchain like Bitcoin, as described above, all miners compete to successfully produce the next block, an inefficient and energy-intensive process. In Spacemesh, by contrast, many miners work together to produce each block: currently, 50 miners provide their opinions on the next block, and the decentralized, permissionless protocol collects votes from honest participants in the next canonical block. These ‘opinions’ from many miners form the mesh topology.
BCN: Do you believe that allowing anyone with a computer and storage space to participate in the network’s consensus process will lead to a resurgence in crypto mining?
TA: We don’t have to wonder this! We are now seeing this game taking place before our eyes within the Spacemesh community. We have an active, engaged community of tens of thousands of miners, most of whom are home mining enthusiasts who have dusted off old mining gear, having previously given up GPU mining for Ethereum or hard drive space mining for Chia, and fired up the new Spacemesh. miners. The proof is in the pudding: 50 TiB have already been invested in the Spacemesh network and the growth from era to era since its inception has been overwhelming.
Of course we won’t stop here! It’s still not as easy to mine Spacemesh as we’d like. The onboarding process still has some bumps and the resources required are still higher than we would like. Our vision is to enable mining for the entire range of consumer-grade hardware, up to and including a $100 Raspberry Pi and smartphones. There is no theoretical reason why the Spacemesh protocol will not support this in the future. We are well on our way and have already significantly reduced the resources required.
Spacemesh is the IKEA of blockchain. We know that ordinary people place disproportionate value on things they build themselves, a well-studied psychological phenomenon known as the IKEA effect. We see today that diehard Spacemesh miners would not give up their hard-earned Smesh coins even at prices well above what they are currently trading on the market.
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