Mar 12, 2020

4 min read

Bitcoin: Why Miners (POW) & Developers are Two Separate Entities.

Everything in Bitcoin is about “decentralisation”. It is absolutely paramount that no one central point of control or authority exists anywhere in the network that could potentially take it down.

Bitcoin is sustained & secured by an economic model. In other words, it is in everybody’s financial interests to keep the network going. Miners profit from securing the network by being rewarded in Bitcoin & developers are rewarded by offering services that are paid in Bitcoin. Bitcoin being fixed in supply & a deflationary asset means the price will continue to rise & therefore incentivises trade to be completed sooner rather than later.

If there was a single entity that could potentially bring down the network, then a central bank with an unlimited supply of money could simply print enough money to bribe & economically incentivise that source to bring the network down.

All other forms of Distributed Ledger Technology (DLT) have a centralised starting point representing their very own points of failure & therefore have no credibility as money. These systems of DLT are Proof of Stake (POS), Delegated Proof of Stake (DPOS), Pre-mine, IOTA Tangle & Hashgraph.

Proof of Work (POW) systems that have a creator present at their central starting points from inception such as Vitalik Buterin & ETH / Charlie Lee & LTC / Charles Hoskinson (IOHK) & ADA / Nicolas van Saberhagen & XMR have no credibility as currency due to the influence & control they have had over their respective projects. This leaves the Bitcoin network as the only credible DLT suitable as being a currency.

The Bitcoin network has grown over a period of 10yrs & today on 12th March 2020 has a Market Capitalisation total of $115Bn. This makes it suitably distributed & all involved wealthy enough to make it extremely difficult for a central bank to try and locate, then bribe a central point of authority to close it down.

The amount of money required to use as a bribe would also be difficult to disguise and if caught would require the orchestrator of such a plot to be answerable to a hard line of questioning about their motive, the credibility of its institution & the integrity of those responsible for a nations economic & monetary policy.

The only incentive miners have for the network is profit in the form of a return on their investment, nothing more. If miners were to have any control over the network they could potentially be coerced to collude by a powerful centralised authority. We have seen this instance take place with Blockstream who have control over the Bitcoin protocol fork known as BTC.

With miners securing the network due to economic incentive, it is also in their interests to have developers build useful applications upon it to encourage further use in the form of enterprise adoption. Developers would then use their creativity & entrepreneurial initiative, driven by investment from the miners to seek profits from various use cases.

It is in the miner's interests for the network to be decentralised, but at the same time to be competing with one another within their own economic regions. Miners would also want teams of developers to compete with one another for-profit so that more creative use cases can be found in order to incentivise the growth of the network.

This system of economic incentive can only be achieved on a Proof of Work (POW) system that allows free & fair competition. This is why the network requires these two separate entities.

The blockchain that follows the Bitcoin protocol defined by Satoshi Nakamoto in his White paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System” is called Bitcoin Satoshi Vision, known as Bitcoinˢᵛ & has a ticker symbol (BSV).

To understand why there appear to be x3 separate chains that stem from the Bitcoin Blockchain you can read my Medium Article titled “Bitcoin: A Tail of Blockchain BTC/BCH/BSV linked here — https://medium.com/@sirtoshitv/bitcoin-a-tail-of-blockchains-x3-eebb136457c7

Satoshi Nakamoto had a vision. That vision was Bitcoin. Bitcoin is Satoshi’s Vision. Bitcoin is BSV.

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