Mining
Last updated
Last updated
What Satoshi wanted was a decentralized network for people to transact on. What Bitcoin has ended up being is a network for the rich to mine, with massive barriers to entry, such as mining equipment cost, electricity, and lack of processing power to ‘beat’ the huge mining facilities.
Bitcoin Spark will be the true path to decentralization. By using a cross between proof-of-work and proof-of-stake, combined with a special algorithm that inhibits linear rewards based on raw processing power or stake size, the network can stay stable, and rewards can be distributed more fairly between smaller and larger network participants. Raw capital does not dictate raw power.
This allows those with increased mining capabilities to earn more, but not in a way that is unbalanced purely by fiat-equivalent net worth. We believe this is a fine and careful trade-off between decentralization, capitalist enterprise, and socialist and community concepts.
As shown in the above graph, as individual validators increase their computational power (for easy comparison this will be called the 'hashrate') on the network, their rewards do not increase linearly. This disincentivizes what has happened to Bitcoin, where two miners (Foundry USA and Antpool) combined can control more than 51% of the hashrate.* This is a great risk to security as if these two miners decide to ‘team up’ and edit the blockchain, they would have the capability to do so.
Distributing the blockchain transaction finality across many more devices and individual miners drastically decreases the risk of any single miner becoming too powerful, increasing security by a factor of multiples.
Because of the revenue aspects of the Bitcoin Spark functionality, providing the revenue continues to inflow, this will supplement and reduce the mining rewards. The mining rewards will run on an elastic system based on the revenue generated, the price of Bitcoin Spark, and the number of miners in the ecosystem. If more revenue is obtained, the rewards minting will be reduced in balance against the revenue, and the minting endpoint will move further away.
The idea is that Bitcoin Spark will end up being a self-sustaining revenue network that allows network participants to remain profitable with a limited supply constantly.
No matter what happens, newly minted mining rewards will finish at the earliest in the year 2144.
*See source for Bitcoin hashrate information https://www.blockchain.com/explorer/charts/pools
