Opinion Piece – Gavin Smith, First Global Credit
There’s a lot of discussion about capacity of Bitcoin mining, how do we ensure fair and timely transaction processing? What will happen when there are no more bitcoins to mine? And so on.
This came to a head recently with Gavin Andresen’s proposal to create a hard fork to increase the block size.
You will be pleased to know I’m not going to steam into this debate but instead focus on the concern that this raised about centralisation of mining and transaction processing activity.
This concern has raised its head under many different guises in the past, most recently the concern last year about the possibility of certain mining pools (or future pools) gaining over 51% of the processing power thereby giving them the theoretical ability to introduce fake transactions into the blockchain.
While these problems are currently hypothetical they are, nonetheless, a very real concern for Bitcoin and the Blockchain.
As participants in this market we sometimes have a tendency to watch on and consider it somebody else’s technical issue to resolve and move on with building our business…but hold on. As a business we are completely dependent on the Blockchain.
Our entire business model revolves around allowing individuals who believe in bitcoin to use the value of their currency to invest. We and most other businesses offering products in the cryptocurrency space simply don’t have a business without the Blockchain. We have a responsibility to this ecosystem; to maintain its effectiveness and to ensure its fairness.
With this in mind we, at First Global Credit, are initiating a policy of committing 1% of our revenue to mining activity…not as a revenue generation tool (we are likely to make a loss on the investment as our data centres are geared for security, not for economy) but as a small contribution back to the ecosystem.
I know some in the space will complain that this is another nail in the coffin of the small, independent miner. This is a valid concern but I would suggest a small price to pay to ensure that we continue to maintain a fair and effectively functioning Blockchain.
Just our investment will have a negligible impact to the cause of ensuring decentralised mining activities continue to operate to support the Bitcoin blockchain…but if every exchange, every merchant processor, every wallet provider and every other company, large or small, operating in this space makes a similar commitment then we will start to see an impact.
We can’t afford to sit back and treat the Blockchain as a gift that will keep on giving…for free. If we all take responsibility for ensuring the continued success of the Blockchain by paying back into the ecosystem then we all stand a much better chance of prospering with an efficient, transparent, and secure Public Ledger.
As for the technical debate about larger block sizes or not, I’ll leave that debate to people who can offer an informed opinion.