The Enormous Power Of China In The Bitcoin Mining Network
The digital currency known as Bitcoin has turned into a multi-million dollar industry and has attracted investors from Silicon Valley to Wall Street. However, in spite of the overwhelming popularity of bitcoin as virtual money, it has started to suffer from an identity crisis. The digital currency is being subjected to the push and pull between commercial growth and the purity of its original purpose. Bitcoin was conceptualized to exist without being controlled by a single government or entity.
Bitcoin must be based everywhere and nowhere but recently, it was reported that a handful of Chinese organizations are assuming majority control over the bitcoin network. Chinese companies have made canny investments with vast farms of computer servers dispersed in remote locations.
An American delegation has recently flown to Beijing where most of the power of Bitcoin mining is concentrated. Four big Chinese companies that are more known as bitcoin mining pools control 70% of the transactions in the bitcoin network. This gives them a large amount of veto power over any changes in Bitcoin software and technology. Chinese exchanges also accounts for 42% of all Bitcoin transactions this year which is creating fear over bitcoin’s decentralization and independence. The Chinese companies however did not agree with the American delegation considering their ultimate decision power over any software changes.
China has made enormous investments in server farms as well as speculative trading on bitcoin exchanges. Concentration on a single jurisdiction does not bode well for the bitcoin mining industry because it can undermine technology freedom. In the Chinese financial world, government crackdowns and interventions are not new and the industry has to pay attention to these things to ensure decentralization of the digital currency. The power of the Chinese community is very apparent in the civil war that divided bitcoin followers last year. The civil war has led to departure of one of the top developers of the digital currency.
It is important for Bitcoin miners to understand all aspects of the bitcoin mining process. Bitcoin mining is not all about making money but securing the digital currency’s network. Every miner that joins a network aids in decentralizing the bitcoin mining industry.