On February 24, 2018, a user with the alias of “Cobra” posted an open letter on Medium addressing the Bitcoin community. He pointed to the dramatic loss of decentralization that current mining protocols have enabled, and called for a change in Bitcoin’s structure.
Cobra owns and runs two portals, Bitcointalk and Bitcoin.org, and is recognized as an enthusiastic and knowledgeable voice in the industry – although the opinions he shares are often controversial. His call comes as an alarm bell for many, pointing to a dominant player emerging in China, Bitmain Technologies, owned by Jihan Wu.
The original hope seems lost
Entreating the Bitcoin community to insist on changing Bitcoin Core’s Proof-of-Work algorithm, Cobra’s open letter points to how Bitcoin mining has come to be controlled by “one man and his company.”
The target of Cobra’s concern is Bitmain Technologies, owned by Jihan Wu. Bitmain is estimated to have made $4 billion in 2017 from its Bitcoin mining. With such massive reserves, Cobra reckons it’s only going downhill from here.
The prospect of a dominant force in mining is anathema to many of Bitcoin’s users. These are the people Cobra hopes to rouse with his alert – those for whom Bitcoin was always most brilliant for its democracy and decentralisation.
Cobra’s alarm stems from a likely scenario of Bitmain Technologies getting bigger as fast as it’s able to, a typical route of growth for any business, cryptocurrency miner or not.
Pointing to the fact that much is made of new entrants to the arena, he openly doubts that any new entrant has a chance of leveling out Bitmain’s influence.
The cryptocurrency expert shared his viewpoint that the giant miner is likely to plow its profits back into more, bigger and stronger mining, and said: “That $4 billion dollar profit will be used to build even better hardware, allowing them to further dominate mining for the foreseeable future.”
Further pointing to the usual role of business growth, he said that Bitmain will probably also look at “[buying] stakes in their competitors,” all of which depicts an unwelcome centralized control over Bitcoin.
Cobra bemoaned the fact that Bitmain continues to control the “majority of the hashrate,” and thus that only a hard fork towards a new PoW could topple them from their position of dominion.
Pointing to some fundamental necessities of Bitcoin’s egalitarian stance remaining secure, such as a limited pool of users and a shared morality, he clearly sees Bitcoin sliding into being just another asset for the rich to enjoy.
For his part, Wu has hit back in a tweet, wishing Cobra well in his concerns. With loads of swagger, Wu responded to Cobra’s open letter, saying: “That is cool — When you achieved it [sic], Bitcoin’s market share in the cryptocurrency economy will fall under 10%. Good luck.”
Perhaps of most concern is the fact that the dominant miner of the hour is Chinese, operating in a country that recently banned cryptocurrency interest and offers in all forms. Not only that, but Chinese social engineering is a well-established phenomenon.
The Chinese regime’s questionable displays of dominance typically go unmet on the world stage.
With attempts to abuse the hashrate already a historical fact, Cobra is also alarmed by Bitmain’s tenuous loyalty to Bitcoin, as they frequently seem to lean towards Bitcoin Cash and generally manifest a rather amoral approach to their mining, devoid of essential principles of decentralization.
Cobra has been in the news before, asking members to help rewrite the original Bitcoin whitepaper, authored by Satoshi Nakamoto.
Saying that the “mining problem is the root cause of all of Bitcoin’s problems,” Cobra is agitating for removing obvious giants of centralization to allow Bitcoin’s organic growth to unfold as anticipated.
Feature image by KELPIE Studio