Bitcoin, Bitcoin Cash, and Bitcoin SV: A Comparison of Mining Decentralization
The three main variations of Bitcoin – Bitcoin (BTC), Bitcoin Cash (BCH), and Bitcoin SV (BSV) – have similar features such as a capped circulating supply of 21 million and a block discovery interval of approximately 10 minutes. They also use the SHA-256 mining algorithm and can be mined with ASIC machines.
To understand the state of mining decentralization in these chains, Finbold analyzed data from MiningPoolStats. The findings reveal significant differences in the level of centralization among the three networks.
Bitcoin SV (BSV) Mining Centralized in 1 Entity
In the case of Bitcoin SV, one entity called taal.com has mined over half of the last 1,000 blocks within a week. This represents 50.2% of the global block discovery on the network. Although the publicly reported hashrate shows a different result, with GorillaPool responsible for 88% of it, looking at block discovery provides a more accurate measure of decentralization.
This concentration of mining power raises concerns about the possibility of a 51% attack on Bitcoin SV by Taal Pool. Such an attack could impact BSV’s value perception in the market and affect transaction confirmation times. Experts recommend waiting for over 340 blocks (56 hours) for secure transactions on BSV, compared to just 2 hours for BTC.
Bitcoin (BTC) and Bitcoin Cash (BCH) Decentralization
Bitcoin (BTC), despite its market capitalization exceeding $583 billion, is still relatively centralized. Only two entities have discovered over 55% of the last 1,000 blocks within a week. Foundry dominates BTC mining, followed by AntPool, owned by Bitmain.
On the other hand, Bitcoin Cash (BCH), with a market cap of less than $5 billion, leads in SHA-256 mining decentralization. Four entities have discovered 54.1% of the last 1,000 blocks within a week, with Mining Dutch being the leader. However, BCH’s global hashrate is significantly lower than BTC’s, making it vulnerable to a possible takeover by a malicious Bitcoin mining pool.
Overall, Bitcoin SV stands out as the most centralized among the three chains, highlighting potential risks and concerns regarding its decentralized nature.
Hot Take: Centralization Risks in Bitcoin SV (BSV)
The analysis of mining decentralization in Bitcoin SV (BSV) reveals a worrying concentration of power within one entity. With Taal Pool responsible for over 50% of block discovery, there is a theoretical risk of a 51% attack on BSV. This not only affects BSV’s market perception and transaction confirmation times but also raises questions about its true level of decentralization. The need to wait for over 340 blocks for secure transactions on BSV emphasizes the centralized nature of this chain compared to Bitcoin (BTC) and Bitcoin Cash (BCH). Addressing these centralization risks is crucial for maintaining trust and stability in the cryptocurrency market.
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