Tremplin.io spoke with the CEO of the Braiins pool, Jan Čapek, to shed light on the risk of centralization that has resurfaced in recent months.
Foreword
There are multiple centralizing pressures on the Bitcoin network. The most significant ones come from ASIC manufacturing and pools.
Jan Čapek, co-founder of Braiins, the very first Bitcoin pool, answered our questions about the risks of centralization of the Bitcoin network, which we have heard a lot about in recent months.
Hello Jan Čapek. The most centralized dimension of the Bitcoin network is ASIC manufacturing. What can you tell us about it?
Centralization of chip manufacturing could be a problem: a single manufacturer holds the vast majority of the market, which is a concern because it could introduce unintended bugs, government pressure, or weak incentives to improve ASIC quality.
Many companies are trying to expand their business to the hardware needed to mine bitcoins, including Braiins. I think that in a few years, there will be more ASIC manufacturers, but it is true that the ultimate challenge of decentralizing hardware lies in the manufacturing of chips. Currently, TSMC is the world leader in this market, and the development of new industries in this area is extremely slow.
[Note pour le lecteur néophyte : Un ASIC signifie littéralement « circuit intégré propre à une application ». Il s’agit d’un circuit intégré conçu pour réaliser une application spécifique (hacher des données via l’algorithme SHA-256 dans le cas du « mining de bitcoins »).]
Foundries are indeed a small club. Samsung can also produce in 3nm, and that's about it. Could we be more optimistic about ASIC design? Will your company Braiins design one someday?
The supply of chips, like that of bitcoin or gold, is extremely inelastic and does not adapt quickly to market demand. Since supply is limited, only large players with significant financial resources can participate.
At Braiins, we are working on developing our own hardware, but this is a long-term undertaking. This year, we started with mini-miners to get our hands dirty. Creating an ASIC or a full chip will take a long time, but we believe that “slow and steady wins the race”!
Pools are the second biggest factor of centralization. Could you explain what a pool is and how they can be a threat?
Pools emerged because lone bitcoin miners were facing high costs and unpredictable rewards. To address this, they pooled their resources to share the risks and rewards, creating a more stable business where individual profits are amplified by collective effort.
Pools could pose a threat if a large percentage of the hashrate converged into one pool, allowing malicious owners to launch attacks (selfish mining, reorgs, censorship).
According to game theory, miners should move away from the largest pool since they have an economic interest in maintaining a balanced and secure network.
A newcomer in the small club of pools (Ocean Pool) is making a lot of noise. One of its founders declared that Bitmain “probably selects over 50% of transactions and manufactures 90% of ASICs”. How did he arrive at these figures?
While we don't know how he arrived at these numbers, we can do a statistical analysis of the blocks of transactions that pools submit to miners. We can derive some reasonable estimates from this. We believe that Bitmain is likely selecting a percentage slightly lower than 50% of the transactions inserted into the blocks.
As for ASICs, we are not sure that 90% of them are from Bitmain. However, as free market advocates, we see companies like Canaan, MicroBT, IceRiver, etc. growing. The competition has become real. Bitmain is a colossus in the bitcoin world, but with new companies and new investments, we are optimistic about this facet of bitcoin decentralization.
What is Stratum V2 and is it the solution against centralization of transaction selection by pools?
Stratum V2 is a communication protocol that is an advancement over BetterHash and Stratum V1, mainly due to its efficiency, security, and miner autonomy. It reduces bandwidth usage, speeds up communications, and strengthens security to prevent man-in-the-middle attacks.
With SV2, miners can also select transactions themselves, which is great for bitcoin's decentralization. Not letting pools choose transactions helps prevent many attacks and censorship issues.
What makes Braiins different from other pools?
I think the main difference is that Braiins is not just a pool. We create an ecosystem around miners by helping them in every aspect of their work. From firmware and hardware setup to pool, proxy, support, etc.
We are trying to create a complete service to help miners become more efficient and therefore more profitable. We are the very first pool and we want to continue to shape the evolution of the protocol by providing updates such as Lightning Network payments and Stratum V2.
Braiins was the last major pool to use the FPPS payment system to distribute rewards to miners. However, it is a system that has come under fire from critics. It may seem naive, but wouldn't it be better for pools to agree not to use it?
The FPPS (Full Pay Per Share) payment system compensates miners for each hash contributed, i.e. the block reward plus transaction fees. This ensures stable and consistent income for the miner.
People sometimes criticize this system because they think it is bad for the decentralization of bitcoin. We honestly believe that this is not true. Every payment system is a trade-off between risk, reward, and security for miners and the pool. There is no perfect system, just different trade-offs.
We believe that the most likely future is the adoption of the FPPS system by all pools and the emergence of global hashrate markets where investors, miners, bitcoiners and individuals will be able to buy and sell hashrate from pools. This, together with the implementation of SV2, will make the bitcoin industry more optimized and decentralized.
In an ecosystem as complex as Bitcoin, amicable agreements are unlikely to work. Mining is a war; each miner is a soldier fighting to win the race for the next block. The only principles respected are the consensus of the protocol and game theory.
Thank you for your time and precise answers Mr. Čapek.
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