The blockchain industry faces a vast disparity of power, similar to the conventional finance industry.
2008 saw the introduction of blockchain technology as a decentralized, secure, and transparent system for administering digital transactions. Since then, blockchain has expanded beyond the financial sector and is now used in supply chain management, healthcare, games, digital media, and social media, among other industries.
Bitcoin is the cryptocurrency on everyone’s consciousness and in the digital wallets of over 400 million individuals worldwide. Bitcoin’s hash rate is the required computing capacity to validate transactions and generate new entries on the Bitcoin blockchain. A high hash rate is required to maintain the Bitcoin network’s integrity, but it also poses significant challenges.
The high energy consumption necessary to maintain a high hash rate is one of the most critical issues. As more miners join the network, both the hash rate and the required amount of energy to maintain its increase. The environmental impact of BTC mining has been a source of concern throughout Bitcoin’s chaotic history and ascent to mainstream popularity.
There is also the possibility of 51 percent attacks by mining platforms that command the majority of the network’s hash rate. If a single mining pool or group of mining pools control more than 50 percent of the network’s hash rate, they could potentially conduct malicious activities such as double-spend attacks and revising transaction histories. This poses a significant hazard to the Bitcoin network’s security and integrity.
Lastly, the Bitcoin network’s limited scalability is another difficulty associated with its hash rate. As more users join the network and the number of transactions rises, the network can become congested, resulting in sluggish transaction times and high transaction fees. This can hinder Bitcoin’s viability as a payment system and has sparked ongoing debates within the Bitcoin community regarding how to resolve these scalability issues.
Similar to the conventional financial industry, the blockchain industry has rapidly descended into a significant power imbalance. The concentration of wealth and influence within a small group of individuals has produced a highly centralized industry. Early adopters of blockchain technology, specifically Bitcoin, were able to amass substantial wealth through mining, investing, and trading.
This has resulted in a concentration of wealth and influence among a limited group of people. The intricacy of blockchain further restricted early adoption to a minute fraction of the global tech community. This convergence of power and wealth has made it challenging for new competitors to enter the market and challenge the dominance of established competitors.
Also Read: Experts predict the price of Bitcoin at the end of 2023
