By analyzing the blockchain, researchers found that the bitcoin network was very centralized in its early days. And unfortunately, this has detrimental consequences for the anonymity of users today.
For bitcoin enthusiasts, times are tough. Prices are plummeting and we don’t know when this infernal spiral will stop, shattering once and for all the famous argument that this cryptocurrency constitutes a “store of value” to counter the inflation of fiat currencies. Currently, the opposite is observed. Hello chaos.
But interestingly, these uncertain bitcoin times are not new. They have always been there. A group of multidisciplinary researchers looked at the first 30 months of existence of this currency, from its launch on 1er March 2009 at the time of its parity with the dollar on September 2, 2011. This last date corresponds roughly to the arrival of the Silk Road drug market, the first real use case of bitcoin. At its beginnings,
A frequent risk of attacks at 51%
The researchers have broken down the blockchain into its smallest transactions and what they have discovered seriously undermines the myths of decentralization and anonymity that are generally associated with bitcoin. Thus, by carrying out transactional analyzes and aggregations, they found that during this entire initial period, mining was only carried out by 64 people. “It’s a thousand times less than what we imagined until now”, the researchers point out in their report. And it often happened that more than half of the computing power was in the hands of a single person, who could – therefore – take control of the entire network.
Another discovery: During this period, the distribution of bitcoins was perfectly in line with Pareto’s law, a mathematical tool that makes it possible to model the distribution of wealth in traditional economies. The only difference is that this distribution was much more concentrated in the bitcoin network than in a traditional economy. Not only has the bitcoin system not created any particular revolution in the way wealth is distributed among people, but it has also accentuated it in a particularly unequal way.
A small group of altruistic founders
Faced with the facts, it appears that during this period, the postulates of decentralization and “trustless” functioning (no need to trust between members of the network) were not respected. In other words, if bitcoin did not fail during its first 30 months, it is not thanks to its intrinsic cryptographic qualities, but thanks to the goodwill of users. These most privileged people objectively had the possibility to carry out attacks of 51%, but they did not do it. “Bitcoin’s initial success was built on cooperation among a small group of selfless founders”conclude the researchers.
Finally, the calculations made by the researchers show that almost all bitcoins in circulation can be linked to one of the 64 basic miners in less than six transactions. Here again, it is a consequence of this hyper-centralization of these first months. The concern is that it’s not great for guaranteeing anonymity. “If the police arrived, for example to determine the identity of the 64 main agents, they could de-anonymize almost all bitcoin addresses by going back no more than 6 transactions », say the researchers. Finally, the world of bitcoin is very small, one could almost say cramped.
New York Times