Cobra, who is the co-owner of bitcoin.org and bitcointalk.org, two of the world’s most vibrant bitcoin communities, has written an open letter to the entire Bitcoin ecosystem. The Letter claims that the current proof-of-work algorithm of Bitcoin, originally created by Satoshi Nakamoto, needs to be changed because it is a disaster waiting to occur.
It’s Been a Long Time Coming
Back in 2017 when the SegWit2x working group canceled the bitcoin hard fork just a week before its activation, the anonymous owner of bitcoin.org declared that Satoshi’s white paper needs to be rewritten.
In his words, “The white paper is to blame for all these dangerous beliefs – We seriously need to rewrite it, or produce a completely new white paper and call that the Bitcoin white paper.”
He also added:
“The whitepaper is probably the only vaguely “technical” document that many people in positions of power and influence have read, it’s what they base their understanding of Bitcoin on. And it’s very easy to misunderstand in subtle ways. It’s an extremely dangerous document for an ignorant person to read.”
Cobra Bites Again
Fast forward to February 24, 2018, Cobra has thrown another bombshell via “An open letter to the Bitcoin Community.”
The letter hinted that bitcoin is gradually losing its strongest attribute, which is being a decentralized cryptocurrency, as some ‘big whales’ are controlling the majority of the hash rate and this is a very dangerous situation for the entire Bitcoin ecosystem.
Here’s an excerpt from the letter:
“One of the reasons people chose Bitcoin was the fact that it was decentralized. But did you know that this is slowly changing? A substantial percentage of the network hash rate is starting to become concentrated in the hands of one man and his company. The security of the Bitcoin network now essentially depends on them acting honorably, and bitcoiners being ready to respond to it. They get more powerful each day.”
Cobra also suggested the need for a hard fork to a new proof-of-work (PoW) to further secure the network and move to a PoW/PoS hybrid. However, it is not an easy feat to achieve.
A Centralized point of Failure
Cobra made it categorically clear that the crypto destiny of bitcoiners and the bitcoin network is currently in the hands of Bitmain and this could be a time bomb waiting to explode.
According to Bernstein analysts, in 2017, Bitmain made roughly $3-4 billion in operating profits.
In the letter, Cobra stated that a decentralized system doesn’t need to rely on a centralized point of failure to act in a good way. He also expressed his displeasure over the way Bitmain has dominated the ecosystem and how impossible it is for other new miners to catch up with them.
Cobra hinted that the hash rate has already been mishandled to give political support to reckless and dangerous hard fork attempts. He says that the miners have questionable loyalty to bitcoin at best, seeming more interested in supporting Bitcoin Cash, undermining the very network employing them.
The worst and most dangerous part of it all is that they are based in China, a country with a long track record of human rights abuses, censorship, and generally evil behavior. The miners are in a position where the Chinese government can seize their mining equipment at any time; something they will no doubt do if bitcoin becomes big enough to allow them to use their control of the hashrate to push a Chinese geopolitical agenda.
Miners Must Go
To solve the problem and avert a possible volcanic eruption of the Bitcoin network, Cobra thinks getting rid of the miners is the way to go:
“Bitcoin mining is the primary cause of all Bitcoin’s problems. The miners have always favored every hostile attempt to take over the network. They block new features for their strange political agenda. It’s the miners who lend support to altcoins that undermine Bitcoin. We need to get rid of them while we still can, they’re no longer a useful part of our community. Hard forks are scary, but let’s not be afraid to at least try to build consensus when we can all see the problem right in front of us.”
Why a PoW Change Won’t Work Now
Some stakeholders in the crypto ecosystem took to Twitter to express their opinions on the matter.
Co-founder of BITMAIN, Jihan Wu, said that changing the PoW is not the ideal thing to do because if that happens, Bitcoin’s market share in the crypto market will fall under ten percent.
Managing Director at Octagon Strategy, David Chapman also disagreed with Cobra. He said changing PoW would only make the bitcoin miners move to another network and this will surely crash bitcoin.
Erik Voorhees stated, “I strongly oppose changing PoW for Bitcoin. Significant ramifications and risks of such a change and I’m unconvinced BTC’s mining ecosystem is unhealthy. Cheers to all the miners who have made Bitcoin the most resilient blockchain on Earth.”
Bitcoin developer and Co-founder of Ciphrex, Eric Lombrozo, noted that for a PoW change to happen, there must be an overwhelming market support, and this is not the case for now unless the giants with the biggest hash rate start misusing their control. If there are no other means to stop the abuse, only then will the market support a PoW change. A change such as that suggested by Cobra will just lead to another altcoin.
From all indications, many developers and bitcoin enthusiasts are not on the same page with Cobra as per his suggestion. Therefore, a PoW change might not come to pass at least for now and is considered the most dangerous change, especially when bigger entrants into the mining sector are getting ready to make their entrance, such as Samsung. The electronics giant revealed their intention to develop ASIC miners in early February, as reported by BTCManager.