Who controls the Bitcoin network — Grandmas take
“Who controls the Bitcoin network?” this is often the first question I get at lectures. Whilst most people seem to have come to an acceptance of the fact that there will only ever be 21 million Bitcoins and that in one way or another it's independent of the “old” banking systems. The question of who is actually the owner or has control of the network seems to be very much itching still.
To be fair, it is a highly valid question, about 15 years ago there was nothing called Bitcoin and close to no one had heard about a technology called blockchains. A few years later Bitcoin market cap is close to the largest S&P500 companies and a (small) country has implemented it as legal tender. It goes without saying, people want to know who the heck is calling the shots around here?!
I’ve seen my fair share of answers to this question; one more ambiguous than the next:
No one controls Bitcoin (oh give me a break…)
Everyone controls Bitcoin (I thought you said no one?)
The networks control Bitcoin (the network?)
Nodes and Miners control Bitcoin (please just go away I don’t like you anymore)
Control of Bitcoin is an intricate question and one that honestly have no easy answer. But as I enjoy the public humiliation of trying to explain this weird industry I thought would give it a shot and see if I can bring some clarity. For the ride, I’m bringing granny as I think she might hold the answer to understand this question.
Let me start by asking you a question — who controls the internet? Are you putting your foot in your mouth and giving me the same ambiguous answers as above? I hope so because that is true, Bitcoin and the internet work in a very similar way as they are both protocols.
Ok, so what is a protocol then?
I’m glad you ask :)
A protocol is a set of rules and standards for formatting data.
Yeah, that doesn't really help anyone, does it? Let me try to break this down a bit.
When we talk about protocols in tech we usually mean a standard of how to communicate information. Protocols are however everywhere in life, you are most likely using many of them each day without even thinking about it. As protocols are just shared “standards” of how to do something. When you get into an intersection with your car you (hopefully) stop for a red light and drive off as it turns green. This is because the red, yellow, and green standard of a traffic light is a shared protocol.
Now I’m going to say something crazy, the Bitcoin protocol works a bit like when your mother knits you one of those itching Christmas sweaters.
Knitting can be seen as a protocol, and as you granny strings together that awesome pattern of a penguin in a Santa hat, it is similar to how miners within the Bitcoin networks validate transactions onto the Bitcoin blockchain (that's one weird sentence).
As granny needs to adhere to the recipe of the pattern, miners need to validate transactions to go onto the Bitcoin blockchain. Like making the sweater this is costly and takes a lot of effort. However, as Christmas day arrives you entitled little bugger only need to confirm that the sweater fits and that it's indeed the penguin pattern that you ordered. If not we punish grandmother by slashing her (sorry this was just a poor joke about Proof-of-Stake which you won't understand). Similar to if granny hadn’t done her job Bitcoin transactions are easy to validate if they have adhered to the rules of the protocol and if they don’t miners get the reward for their work. This is all a fancy way of saying that if the penguin lacks a hat granny is going to have one angry grandchild.
Ok, so I might have let this one stretch a bit too far out but let me summarise. The control of the Bitcoin network is an interdependency between different stakeholders where everyone holds a small piece of the control. Miners make the effort of validating and adding transactions to the Bitcoin network, they, however, have to adhere to the standard of the protocol which is easy to validate. In the situation of a miner not adhering to the protocol, which is worth noting happens continuously, they create something that is incompatible with Bitcoin transactions and easily get rejected.
So who then actually controls Bitcoin? My answer to this is that it is the rules of the protocol that controls it, and to change Bitcoin you need to change the rules of the protocol. Doing this however is no easy task and was very much the intention when Bitcoin was designed. As miners get rewarded for their costly effort of adhering to the protocol and validators easily check this, the incentive to stay with the protocol rules is huge whilst the incentive to change them is small.
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