Bitcoin is a huge project in which many people focus their efforts on developing and evolving, but who really controls this project and its evolution? In this article you will learn about the different forces that converge in Bitcoin and how they balance each other.
El birth of Bitcoin brought to life the long promise of decentralized money. Money where no central entity had control or manipulated the system at will for its own benefit. It was the birth of a new type of money that freed us from the chains of control that money can strongly impose on society. And to a certain extent, all of that is true, Bitcoin is financial freedom.
However, the ecosystem has changed a lot since its inception. At first, a few were part of it and, at that time, the rebellious spirit prevailed in the community. But now, the reality is very different. Now there are large companies that make life in the ecosystem with their economic interests making weight. Then there are whales, miners, exchanges, developers, and economic and financial companies of many kinds. And even the community itself seeks to counterbalance and bring the balance in its favor.
That is why at this point it is very logical to ask Who controls Bitcoin? What is the biggest presence that dictates what is Bitcoin, its development and more importantly what is its future? At Bit2Me Academy we asked ourselves both questions, and that is why we have created this article with some answers that will surely help you understand what happens in the Bitcoin ecosystem, and why not, of other cryptocurrencies.
Bitcoin, the eighth wonder of the world. A decentralized system that some want to centralize
If something has highlighted the human species, it is its need to maintain control. The fact of feeling with the power to control the things around us, gives us power and tranquility. It's basic, and we've all experienced it. But that nature is broken in Bitcoin, as this is a decentralized system. Tidy with math, but lawless in control. That means that there is no one who controls Bitcoin as such, since what really determines its control is a purely digital code, software, something intangible. This at least in its operation, and it is something that we can hardly change. That is, Bitcoin is a digital currency, and as such, being digital and decentralized, it escapes the absolute control that an individual or group of individuals may try to impose.
A little difficult to see that right? But it is simple if we understand that the development of Bitcoin, each line of code that forms it from its beginnings to the present, was not written, decided or imposed by an individual or a specific group of individuals. Instead, it was something community-built, hundreds and even thousands of people around the world have participated in that development. Some are well-known figures, others are as anonymous or even more, than the own Satoshi Nakamoto. But if something is clear here, it is that the development of Bitcoin is not something imposed to the letter, and the times when something like that was tried, things did not end very well for whoever tried.
However, despite this, despite decentralized development, Bitcoin does not escape the attempts of individuals, or very specific groups of individuals, to control it. After all, who cares about the world's number one cryptocurrency and its market capitalization as large as the annual GDP of many countries in the world? Surely your answer and ours is the same: "a lot of people are interested, especially if they invest in it, and want to multiply those investments."
Does this mean that Bitcoin has failed as decentralized money and community building? Not at all, in fact, Satoshi Nakamoto predicted this and therefore developed Bitcoin as free software. That way, if someone tried to control the system for their own benefit, the rest of the community could override that action simply by taking the code to take it another path. Ingenious, don't you think? The greatest protection against absolute control in Bitcoin is a simple software license, free software, who would think?
Despite this, many think that a series of forces and interests converge in Bitcoin that fight to control it. Nothing to hide here, it is human nature at its finest. Everyone wants to control the situation, whether that situation may be against or in favor of their interests. That is why we can identify those forces and measure their true impact on the control of Bitcoin.
With this in mind, we will mention what these forces are and what impact they have on the Bitcoin ecosystem.
The developers, the builders of Bitcoin
One of the forces that dispute the most control of Bitcoin is developers. After all, they are the ones who write the code that makes Bitcoin work. They are the ones who accept what changes are going to be made and what changes are not, how they are going to be made, when and why.
Basically we can say that Bitcoin developers are gods, in the sense that they have absolute control of what the Bitcoin software can or cannot do.
This is a situation with which many in the community disagree. The expression "There should be no kings in Bitcoin" (and much less gods) makes this situation very clear. The idea of a core of immovable developers does not like at all, and the fact that positions like the Bitcoin Lead Developer they are not renewed in a more democratic way. It is also reported that censorship, corporatism, conflict of interest or political agendas have come to Bitcoin due to this situation.
Anyway, developers are that high-control line, which is ironically necessary up to a point, and obnoxious at another.
If we ask ourselves the question Am I able to develop for Bitcoin? Surely the answer will be varied, but a good part lacks the necessary programming and cryptography knowledge for the task. Even with everything, that your improvement proposals are accepted must always go through the approval of a current Bitcoin developer. Nonetheless, Bitcoin developers maintain control of Bitcoin development, but they are always under the gaze of the community.
And so it is, the entire community sets its eyes on the developers, what they do, what they say, and even what they don't say. The best example we see in Gavin Andresen, his actions to impose a change in Bitcoin against the consensus of the community earned him to be relieved of the position of Bitcoin Lead Developer. And when he gave his support to Craig Wright (a Bitcoin Cash), the same community bombed him. The same goes for characters like Adam Back, who is always told that he entered Bitcoin for simple economic interest (and for nothing else), which he demonstrates with his position as CEO of Blockstream. The same goes for Gregory Maxwell, which they call the "Bitcoin destroyer" for proposals such as followed, Taproot y Graftroot.
Do you know the strangest thing? The situation is replicated in other projects with a scale equal to or even greater than Bitcoin. Take for example the development of the Linux kernel, Linus Torvalds is known as "Benevolent Dictator for Life (BDFL)". And it is understandable that it is called that, when in kernel development, it is Linus who has the last word, and if you screw it up, his string of rudeness (his culture, as he says) will make you go to a psychologist. Despite this, Linus is the only one who at the moment has the potential to carry out a project of this magnitude, and he has done so for more than 29 years.
Well, the same happens in Bitcoin and its developers, many may see them as a problem, but they are necessary for Bitcoin to evolve and grow as software and ecosystem, and that nobody can deny.
The miners, the heartbeat of the network depends on them
Another important actor within the Bitcoin ecosystem are the mineros, and it goes without saying that your position is vital to the functioning of the network. If, for example, a major mining pool were to go down, the security of the network would be at risk due to the drop in hash rate.
The example can be worse, if for some reason, the miners associate to attack the network, they could bring it to an end in a few hours due to a hard fork. That is the worst scenario imaginable, but it is a possible scenario. Many cryptocurrencies have been practically dead after a 51% attack.
At this point, the miners have enormous power, not only because they are the ones who keep the network running, but because their actions can destroy it, if they wanted to.
However, here comes the games theory and the Nash equilibrium. While it is true that this would be possible, against these actions is the reality that miners make large investments to mine Bitcoin, so destroying the network that feeds them is not very smart. But this is far from being a brake on another problem, if the community outside the miners wants to make a change, and this change touches the interests of the miners, they will almost unanimously (as has already happened) oppose said change.
At this point we can see the miners as a nation in the middle of the cold war, if you meddle with their interests, they will not hesitate to press you by all means, and they will always remind you that they have the nuclear button, the one that turns off the mining machines. , nodes while saying "Ciao, Bitcoin".
Last but not least, remember that they have the ability to decide which transactions to add to a block, and with this they can force users to pay more if they want their confirmation to be confirmed in the next block in the chain.
However, the reality is not so bad for users. While this is true, it is difficult for miners to coordinate normally to generate pressure. But not impossible, in fact they coordinate sometimes. That is why the decentralization of mining is so important, a challenge that Bitcoin has been trying to solve since practically the first day it was born.
Companies and Exchanges Do they energize or control the market?
The arrival of shops and exchanges to the Bitcoin ecosystem, it was a breakthrough. With them, Bitcoin began to gain relevance as a currency, exchanges arrived, expenses for products and services, it is the Bitcoin boom. No one can deny that it was merchants and exchanges that allowed the development of Bitcoin to accelerate in great strides and for Bitcoin to reach hundreds of millions of people.
But many companies are solely for the money. They do not seek to train, get Bitcoin to people and even, sometimes, it is just one more product that perhaps they criticized in the past. At this point we see institutions and companies. Names like Paypal, BBVA, JP Morgan, and many others who invested in destroying Bitcoin are now looking to profit from it.
Many other companies are in the crypto world not only to earn money, but to support the project, provide a budget for developers (who do not feed on code by the way) and create a richer ecosystem for everyone.
But we must not forget that others on the other hand, are certainly for opportunism and trying to get their share of the "loot" of the crypto world, and if they can manipulate the way of perceiving cryptocurrencies in a massive way.
The actions of one and the other obviously have an impact on the system, and all advocate for the implementation of functions that help improve their presence or technical capacity within Bitcoin.
For example, Blockstream is a well-known company in the Bitcoin ecosystem. The salaries of various Bitcoin developers depend on it. It also brings in a lot of budget to maintain Bitcoin development, develop new technologies, and more. But on certain occasions the community has denounced that Blockstream has tried to pull the strings of the development of Bitcoin in its favor and that of its investors. Another thing that it is always criticized for is its patent system, something contrary to the free software spirit that Bitcoin started and that Blockstream has implemented as commonplace.
nChain Craig Wright's company on the other hand, is what they call a troll company. Non-patented inventions made by the community have been patented by this company. Even Bitcoin itself and its entire system have been patented by this company, in an attempt by its creator to gain prominence in the ecosystem.
On the other hand, there are exchanges, whose enormous economic power can turn the tables on the ecosystem. For example, OKEx and CEX enlisted cryptocurrency from their exchanges Monero (XMR), and with it they brought down the price of the cryptocurrency. This speaks volumes about the enormous power that exchanges have to control the value of cryptocurrencies as they help a currency reach more people.
If true, the market rules rule cryptocurrencies and their value, but an exchange can manipulate that price at will, to make a profit. The decisions of which currency to list or not, or even which version of the node to use, has a very large influence on a cryptocurrency. And the same thing happens in Bitcoin.
However, there are many exchanges, and free competition means that exchanges have to adapt to what users ask for, because an exchange that does not serve the wishes of its customers has its days numbered.
The whales, a movement and they generate cataclysms
The Bitcoin whales are another power faction in the Bitcoin world, and their power lies in that they are rich, very rich, so insanely rich that many exchanges fall short of them. For example, the address 35hK24tcLEWcgNA4JxpvbkNkoAcDGqQPsP, is a known address of the Huobi exchange, and it has a total of 141.451,59463747 BTC at present.
What can a whale do with such an amount of money in Bitcoin? Well, it will significantly affect the price of Bitcoin and with them the cryptocurrency markets globally. No matter where you make the move, you will feel its effects in some way. In fact, many people agree that the 2017 bull market was the work of a group of whales, which managed to shoot the price up to $ 20. That shows us the enormous power of these whales in the world of Bitcoin.
Something curious that has been seen is how some whales are the founders of other cryptocurrencies. Cryptocurrencies like USDT o XRP They have been accused on multiple occasions of using their cryptocurrency to get rich, being able to freely issue huge amounts of new currencies and then buy Bitcoin with them. Undoubtedly, accusations that we will see in the future as they end but it is still an important point of control.
The community, the great crypto crowd
Finally we find the crypto community around Bitcoin, and if we can say something about it, it is that an important part of it is formed in the crypto world. It is understandable, Bitcoin is the oldest project and its community is the most mature, so many have a good understanding of the project and its philosophy.
The problem is that sometimes what the people of the project understand can differ a lot between people (which is normal), and sometimes it can go totally against the principles and interests of the community and the project itself (what it's wrong). Be that as it may, the community is a great crowd of critical thinking, attentive to what is happening in the world of Bitcoin and that does not hesitate to make itself felt when it does not like something.
The community is usually about developers, companies that come to business, regulators, in short, they are a congregation of people who always seek to protect the project in which they believe. But just as they protect they can also destroy it.
Although it may sound cruel to say so, the community sometimes ends up being the fuel necessary to sow the chaos that many need to carry out their plans. The case of Bitcoin, Bitcoin Cash, and Bitcoin Cash SV is an example. But another more recent step with Steemit, TRON and Binance. The targeted community got to the point of splitting up a huge project (Steemit), responding to what Justin Sun and Changpeng Zhao were saying. The power of the community is enormous, especially because the community is the one that consumes, the one that participates in the markets, and the one that in the end forms most of the dynamics of the market, and that is an enormous power of control. Is the community a decentralized entity? Yes, but with enormous power. Power that many seek to lead to use to their advantage.
The sum of all forces in: equilibrium?
Now, since you know which are the main forces fighting for control of Bitcoin and how each of them can manage their presence in the ecosystem, you will surely think: "Bitcoin is a disaster full of manipulation". The truth is that this is true, up to a point. Because while all these forces exist, none manages to exercise full control over Bitcoin. There is no force that can tell "I have absolute control over Bitcoin". The truth is that they are all quite opposed.
And this can be explained with a simple law that applies in the world of physics, the well-known Newton's First Law, which reads in a simplified way the following:
The sum of all the forces applied to an object is equal to zero, reaching the state of equilibrium.
If we extrapolate these last words of Newton and take it to our ground we can say that:
All the forces that seek control over Bitcoin are such that the sum total of them generates equilibrium.
Something that we can clearly see in the well-known Game Theory, the Nash equilibrium.
And this is demonstrable, like any physical or mathematical formulation. For example, do you remember that at the beginning we spoke that Gavin Andresen tried to forcefully make a change to the Bitcoin code to cater to his interests? That's the developer's control force in full swing. In contrast, the community, the rest of the developers, the miners, and the rest of the forces opposed. The result is that the change was not made, and Gavin Andresen lost his position as Bitcoin Lead Developer.
Another good example, we see it in the hard fork of Bitcoin and Bitcoin Cash. The hard fork was done on such terms that it could itself be disastrous for Bitcoin, the developers and the Bitcoin Cash community did not care about that. However, in contrast, Bitcoin exchanges, miners, community and developers did their best to make the event as less damaging as possible. As a result, the hard fork went smoothly, and Bitcoin continued on its way. Again the strength of all achieved balance.
When a whale moves its BTC to sell, the price quickly falls. But the market and the community quickly counteract this and seek to bring the price to the new equilibrium level where general interests converge.
Even what Satoshi Nakamoto did by putting Bitcoin under a free software license as permissive as MIT is an early reflection of that balance. The MIT license allows Bitcoin to always be free software, it allows it to be a public or private development, a development where everyone can benefit. Because the goal is simple: it is leading the world to a decentralized era, an era where the forces that act for control (governments, banks, international organizations) find a balance with us building the counterpart.
Now you can understand that Bitcoin is not controlled by anyone, but always seeks balance between all its actors. That, for now, is the truth of Bitcoin, and you can see it daily everywhere within the crypto community.