A new report released by Aiden Lab looks at the dawn of Bitcoin (CRYPTO: BTC) and reveals insightful new information.
What Happened: This recent report maintains a firm emphasis on the privacy and notion of decentralization in the early days of Bitcoin. There are numerous important insights highlighted in this report.
Firstly, it provides evidence of several fragilities in the early Bitcoin network, as a result of centralized forces and susceptibilities to being exploited, such as via 51% attacks.
Next, it reveals that there was a ring of 64 major agents that mined the majority of Bitcoin in its first two years, as it grew to reach a dollar. The research also highlighted how the Bitcoin network was extremely vulnerable, in terms of privacy and security.
Furthermore, if the majority of the computing power of the network is controlled by a few miners, there can be a double spend of Bitcoins. This served as a major vulnerability to the network in its early days.
In addition, the notion of being decentralized is also questioned due to the centralization of computing power during the network's first two years.
Finally, the research focused on a data point of Satoshi Nakamoto’s updates to the code and posts occurring primarily during the daytime in the Western Hemisphere, thus, indicating he was potentially based in North America.
Why It's Important: As the Bitcoin network continues to grow, currently sitting at a market capitalization of over $568 billion, it is further expanding itself globally, to individuals and organizations from all backgrounds and areas.
The notion of being decentralized is essential to Bitcoin investors, because the apex crypto serves as an alternative to centralized assets. Thus, the privacy and security issues raised in the academic report, as a result of over-centralization, are indicative of the early shortcomings of the network that were strengthened and remedied as the network expanded.
What’s Next: The next step in the expansion of the Bitcoin network globally is governmental regulation. Understanding the security and privacy threats that plagued the network’s early days, provides miners, investors, and institutions more insight into how to steer Bitcoin towards its optimal growth in the future.
As governments begin to regulate this sector, in an effort to enhance security and privacy, their actions can be guided by reflecting on the shortcomings this network suffered from in its early days.
