Case of Bitcoin Cash, is Total Miner Distribution Becoming a Fairy Tale?

Perfect miner or node distribution in Proof of Work networks like Bitcoin only worked “the first time.” The same applies to token distribution in initial coin/exchange offerings. This is according to Ryan Sean Adams, the founder of Mythos Capital, a vocal crypto supporter and investor. In his view, an ideal Bitcoin or Ethereum killer would require perfect decentralization, or what he terms as “completely novel distribution.”

Bitcoin endorsed by the US SEC

Achieving that feat demand existing or upcoming projects to outperform Bitcoin, a project that officials from the stringent US Securities and Exchange Commission (SEC) have endorsed to be the most decentralized.

The main value proposition of blockchain projects is complete node distribution where no single party has control of over 51% of the network hash rate in Proof of Work systems.

Bitcoin, like Ethereum, use the Proof of Work consensus algorithm for transaction verification. In an incentivized model, willing miners are rewarded with ETH or BTC for confirming transactions and securing the network.

The Trouble Presented by ASICs

Bitcoin, despite being the most secure, is powered by ASIC miners. ASICs are special chipsets that are tuned to mine Bitcoin. They are expensive, scarce, and because of this, the combined hash rate of three of the leading Bitcoin mining pools exceeds 51%.

Bitcoin Hash rate Distribution
Bitcoin Hash rate Distribution

Ethereum developers are taking a different path. While they transit, readying for activation of Phase Zero test net in the next few days, Programmatic Proof of Work (ProgPOW), a suggestion that seeks to make Ethereum ASIC resistant, is taking shape. ProgPOW will close the efficiency of GPUs, making it hard for ASICs to have an upper hand.

Token Centralization

Blockchain projects are ideally supposed to be decentralized. The underlying chain must be characterized by a high level of node distribution for the network to be censorship resistant.

It has been observed that an unspecified mining pool of Bitcoin Cash, a Bitcoin spin off, controls over 51% of the total hash rate.

Bitcoin-Cash-Mining-Pool-Hash-Rate
Bitcoin Cash Mining Pool Hash Rate

Meanwhile, most ICOs have a high level of token centralization with a huge share under the control of founders or the project’s foundation.

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