It is the most popular and valued cryptocurrency in the world, and yet! Between 2009, when Bitcoin was born, and February 2011, when its value reached that of the dollar, the success of the system was based on the simple goodwill of its first miners. This is one of the revelations of a recent study (pdf) of American researchers from Texas universities, led by data scientist Alyssa Blackburn. According to them, Bitcoin is neither so decentralized nor truly anonymous.
64 Agents Made Bitcoin Success
The article has not yet been published in a peer-reviewed scientific journal, but confirms previous work and has gained widespread support among academics specializing in new technologies. Its authors have looked into the birth of Bitcoin.
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Satoshi Nakamoto, the name used by the supposed inventor of Bitcoin, had the ambition, with his cryptocurrency, to do without traditional, centralized financial institutions. He wanted to replace trust, the operating basis of the system in place, with cryptographic proof using mathematics and a computer network, the blockchain.
Alyssa Blackburn explains that he did not necessarily succeed. She discovered, with her team, that during the first two years of existence of Bitcoin, the cryptocurrency managed to operate with only 64 agents, miners. She finds that this does not fit the spirit of decentralized and trustless cryptocurrency “.
To find this figure, the scientists crossed leaks, characteristics of the Bitcoin software, exchanges on forums, specialized blog, as well as more sophisticated investigation strategies. The team targeted miners, the core of the system, as they solve the algorithms that verify Bitcoin transactions in exchange for a few tokens.
Thanks to the data, 324 GB archived in the Blockchain, the researchers have, for example, followed the “extranonce”. 0s and 1s in each string of code that tracked a computer’s mining activity. This breach of anonymity was tolerated by Satoshi Nakamoto to monitor the activity of his cryptocurrency. She disappeared shortly before her disappearance, in December 2010.
Alyssa Blackburn explained that she had not sought to identify “agent no. 1”, the mysterious creator of Bitcoin. His team, on the other hand, gave two names among the 64 central agents of the cryptocurrency: Michael Mancil Brown, “Dr. Evil”, condemned for fraud in 2012 in the United States and Ross Ulbricht, “DreadPirateRoberts”, creator of Silk Road, l one of the largest darknet markets, until his arrest in 2013.
A bitcoin blockchain map built by Alyssa Blackburn and Aiden Lieberman using data leaks. Source: Cooperation among an anonymous group protected Bitcoin during failures of decentralization.
An unequal system, saved by the altruism of its agents
It is by identifying the agents that the scientists were able to analyze the income generated by them. They found, during their observation period, that there were, at times, very few active miners and a high concentration of power and wealth. On several occasions a single agent has accounted for more than 50% of the computing power of cryptocurrency.
This situation can be particularly problematic. Agents with more than half the computing power of Bitcoin could have fooled the system. They had the opportunity to spend the same token several times for several transactions. This is one of the other major findings of the study, if Bitcoin did not collapse because of this type of manipulation, it is only thanks to the goodwill of its agents.
Erez Lieberman Aiden, a specialist in applied mathematics and co-author of the article, points out that ” even on occasions when the mining pool has become centralized, dominant miners have refused to attack it. This is a very different picture from the idealized model people have for why these cryptocurrencies are secure. “.
He concludes that ” Although bitcoin was designed to rely on a decentralized, trustless network of anonymous agents, its early success instead relied on cooperation among a small group of selfless founders. “.
A finding that is not new. Sarah Meiklejohn, a cryptographer at University College London, told the New York Times“ We all knew mining was pretty centralized », adding « There aren’t that many minors. It’s true even today, of course, and it was even more true at the beginning “. In 2018, a study by Cornell University had already shown that in general the decentralization of the web3, based on the blockchain, is more ideological than real.