BitPay CEO: Miners control Bitcoin, and that’s a good thing

Editor's Note: The author Stephen Pair is the CEO of BitPay, the leading payment processor in the Bitcoin industry. In addition, BitPay is also the development leader of the open source projects Bitcore and Copay.

This is the first of my four posts. I was going to outline BitPay’s current thinking and plans regarding the Bitcoin block size issue, but it turned out to be too long to fit in one post.

A few weeks ago I was talking to someone who brought up the concept of taking some of the control away from the miners. I thought it was interesting. It begs the question, if you take some of the power away from the miners, who should you give it to? Should there be one person who owns the Bitcoin trademark? Should they have the power to set the official Bitcoin™ consensus rules? Perhaps miners should sign their own blocks, and only those miners who have been granted official trademark protection, Bitcoin™ consensus rules, should be allowed to create blocks. If you follow this line of thought to its logical conclusion, you end up with a centrally managed system that does not require mining.

Individually, miners control very little, but collectively, they control everything about Bitcoin. This is an important and fundamental property of Bitcoin. Miners decide whether a transaction is valid and suitable for inclusion in a block. Miners also decide whether a given block is valid and should be included in the blockchain they are building. But if a single miner runs a different set of rules, the resulting block will be rejected by other miners and they will not receive any reward for their efforts. Therefore, while miners compete with each other to produce a block most efficiently, they also need to cooperate. They must reach a consensus on the rules that define what kind of transactions or blocks are valid. They also need to have a certain degree of confidence that the blocks they produce will be accepted and included in the blockchain by the majority of miners. Therefore, the consensus rules need to be clearly defined and easy to understand.

But miners can’t force people to use Bitcoin. Miners don’t just compete with each other. They compete with a lot of other systems as a whole. There are a lot of traditional options for users to choose from, centralized networks like Visa, MasterCard, and PayPal, to name a few. There are also a lot of alternative cryptocurrencies for users to choose from (over 600 altcoins are listed on coinmarketcap.com). If miners want to gain market share and retain customers, they must provide a good service at a competitive price point.

Miners can delegate their power to others. If they wish to do so, they may choose to have a mining pool produce the blocks they mine, thereby enforcing consensus rules or censoring transactions. Miners can also let others influence or control the software they run and the rules it enforces. The only reason developers, mining pools, or any other non-mining component would have a say in consensus rules is when miners need to choose (consciously or accidentally) to delegate their power. Miners can put their business at risk if enough of them don't pay enough attention to their decisions. Miners need to be knowledgeable when things affect the operation of the Bitcoin network.

Because of the Proof of Work (POW) consensus mechanism, Bitcoin gives all network operation rights to miners, and of course anyone can become a miner. This collective, coordinated action makes the Bitcoin network a powerful, novel, and revolutionary system. Destroy the power of miners over Bitcoin, and you destroy everything about Bitcoin. If the power that Bitcoin miners have scares you, then become a miner. If the centralization of mining worries you, the solution is not to use another centralized alternative, but to become a miner. To quote Alan Kay, anyone who is serious about Bitcoin should become a miner.

Tomorrow, I will discuss Bitcoin as a settlement system.

Original article: https://medium.com/@spair/miners-control-bitcoin-eea7a8479c9c#.m2krc16h7
By Stephen Pair
Compiled by: Satuoxi
Source (translation): Babbitt Information (http://www.8btc.com/miners-control-bitcoin)