In regards to the issue of miners becoming increasingly centralized over time, Saifedean Ammous provides the following response.
Bitcoin faces criticism due to centralization, specifically related to mining and nodes. Mining, the process of processing Bitcoin transactions and creating new blocks, has been criticized for the concentration of hashing power among a small group of miners. This raises concerns that these miners could collude to control the network or manipulate transactions.
Nodes, which are computers participating in the Bitcoin network, play a crucial role in propagating transaction information and validating consensus rules. The number of decentralized nodes is essential for Bitcoin's decentralization and resilience. A higher number of decentralized nodes leads to a more decentralized Bitcoin network and increased stability. Therefore, the Bitcoin ecosystem strives to maintain a significant number of decentralized nodes.
Miners perform the necessary work to create blocks and submit the resulting blocks to nodes for approval. However, nodes have the authority to accept or reject these proposals from miners. Miners operate under the rules and requirements set by the nodes and receive rewards accordingly. Consequently, miners are subject to the governance of nodes, limiting their control over the network, even if they attempt to manipulate it for their own benefit.
The 2017 block size war serves as an example where miners attempted to change the block size in Bitcoin but were rejected by network participants. This case demonstrates that miners do not have control over Bitcoin. Nodes hold the practical authority in Bitcoin, determining consensus rules and governing the network's operation.
Therefore, the decentralization of nodes is crucial for Bitcoin's decentralization and success. Bitcoin ensures decentralization by maintaining a significant number of decentralized nodes, distinguishing it from other digital currencies. While other digital currencies often prioritize functional or decorative features, Bitcoin prioritizes decentralization and strives for increased stability and trustworthiness.