One of the biggest arguments in favor of Bitcoin (BTC) is the issue surrounding its decentralization. However, the analyst known as Mr. Whale recently stated that the BTC is not decentralized as well as dependent on countries.
One of the key benefits of Bitcoin is that it is decentralized, meaning that no single entity or group controls it. This decentralization is often cited as one of the main advantages of Bitcoin, as it makes it less vulnerable to manipulation or interference from central authorities.
However, some have argued that Bitcoin is not as decentralized as it claims to be, and that a small number of entities actually control a large portion of the network. Mr. Whale, a well-known crypto analyst, recently made this argument in a series of tweets.
Mr. Whale first pointed out that just four mining pools control over 51% of the Bitcoin network’s hashrate. He then went on to argue that these four mining pools are “effectively the central authorities” of Bitcoin.
Furthermore, Mr. Whale argued that the four largest exchanges by trading volume also control a large portion of the Bitcoin market. He claimed that these exchanges “manipulate” the price of Bitcoin and can “freeze” or “reverse” transactions at will.
As a result of these centralization concerns, Mr. Whale concluded that he does not see a future in which Bitcoin works as a decentralized currency. He stated that he believes that Bitcoin will eventually be replaced by a more centralized cryptocurrency.
Mr. Whale’s comments have generated a lot of controversy online, with many people disagreeing with his assessment of Bitcoin’s decentralization. However, it is important to note that Mr. Whale is not the only one who has raised concerns about centralization in the Bitcoin network.
In fact, a number of well-known figures in the crypto space have voiced similar concerns in the past. For example, Ethereum co-founder Vitalik Buterin has said that he believes that Bitcoin is “pretty centralized” and that its mining pools are “quite consolidated”.
Likewise, Litecoin creator Charlie Lee has also criticized Bitcoin’s centralization, calling it a “problem” that needs to be fixed.
Despite these concerns, it is worth noting that Bitcoin is still far more decentralized than traditional fiat currencies or even most other cryptocurrencies. This is because no single entity or group can control or manipulate the Bitcoin network in any significant way.
Known for his controversial opinions, Mr. Whale has posted on Twitter on the subject and said he doesn’t see a future in which Bitcoin works. However, he points out that he is not propagating hatred around the cryptocurrency, only “reporting facts”.
Is Bitcoin Centralized?
Decentralization, as the name suggests, is characterized when no single figure controls something. In the case of Bitcoin, the network is “run” by different figures, so the technology is treated as decentralized.
However, Mr. Whale disagrees and argues his point. “The Bitcoin network has been reduced by 55% since China banned its mining,” the analyst begins.
He also features a story in which European Union regulators are allegedly creating a set of rules to prevent cryptocurrency mining in the region.
Mr. Whale then asks, “What happens if every country in the world bans or regulates Bitcoin?”
Due to the series of actions by China against cryptocurrencies, the analyst says that “it is not true” that Bitcoin is decentralized and independent of countries. He justifies:
“For the network to function and work efficiently, it needs miners. With incentives fading and countries starting to regulate [cryptocurrencies], the network quickly begins to weaken.”
Despite the claims, Mr. Whale claims he is not playing hate free Bitcoin. According to the analyst, he is just “sharing facts that many refuse to acknowledge”.
In addition, he leaves comments open and says he wants to hear opposing views. Mr. Whale also reveals that he bought Bitcoin in 2013 and supported the cryptocurrency for many years.
However, he says he can no longer see a future in which Bitcoin works.