A peer-to-peer electronic cash system is inclusive. It empowers people to have control over their money. Satoshi Nakamoto’s whitepaper inspired Breno Araujo to explore the power dynamics of Bitcoin mining. While proof-of-work (PoW) may sound like something righteous and fair, the power is really in the hands of companies that run massive node operations. This centralization has led to an oligarchy, where the same few dozen miners have dominated Bitcoin mining for years. Moving to proof-of-stake (PoS) has helped reduce Ethereum’s carbon footprint, but it’s worth noting who really benefited. Coinbase holds 11.5% of all staked ether (ETH), effectively having a 11.5% say on what happens to the network.
Conflict is not inherently bad, as it can lead to good outcomes. But when power is exercised unilaterally, it’s important to be aware of the potential conflicting interests that can lead to unfair outcomes. Aligning incentives between miners and users is the most important thing blockchain developers can do. Satoshi’s crowning achievement was solving the Byzantine Generals Problem for a digital cash system. However, miners often win when users lose. Is there a sustainable way to turn mining into a non-sum-game?
Breno Araujo believes that taking money out of democratic systems and incentivizing miners/validators with something other than direct monetary rewards could be the answer.