503.2 Lesson - centralizedMining

Screen: centralizedMining

Headline: Bitcoin Mining Is Centralized

Reward: 2

Text: Some people believe that mining pools, which are groups of miners that work together to increase their chances of finding a block, could potentially disrupt the bitcoin network or censor transactions.

However, this concern stems from a lack of understanding of the incentives of miners and their role in the network. In reality, miners have a strong incentive to follow the rules of the network and maintain the integrity of the blockchain, as their own profits depend on it.

As Jimmy Song said, "A majority of hashing power can't: take coins you already possess away, change the rules of bitcoin, or hurt you without hurting themselves."

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QUIZ

Question: Can mining pools disrupt the bitcoin network or censor transactions?

Answer: No, because they have a strong incentive to follow the rules of the network and maintain the integrity of the blockchain

Feedback: Yep, that's right. Did you know that the decentralized nature of the bitcoin network ensures that no single entity, including mining pools, can disrupt the network or censor transactions

Correct: true

Answer: Yes, because they have a majority of the hashing power

Feedback: Nope, sorry! While mining pools do have a significant amount of hashing power, individual miners are extremely mobile and can trivially direct their hashrate to an honest mining pool

Correct: false

Answer: Yes, but only if they are acting in their own self-interest

Feedback: Incorrect. While it is true that mining pools have an incentive to act in their own self-interest, this does not mean that they can disrupt the bitcoin network or censor transactions.

Correct: false