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Recently, the blockchain space has been subject to heated debates about the centralization of the technology. From miner centralization to identity verification, virtual currency enthusiasts have come to the consensus that centralized blockchain components are detrimental to its long-term success.
However, the issue of block space decentralization has been receiving less attention. Bitcoin and subsequent blockchains operate within a finite limit of block space. Whether it’s an increase or decrease in block size, the amount of storage allocated to the blockchain is limited.
The problem arises when scale is introduced and the number of miners, users and technology components grows exponentially. This will require more block space, which means those with the largest resources (and most control) will have the power to control how much direction is given to the chain.
The good news is that Bitcoin blockchains have already incorporated a decentralized approach through the use of Proof-of-Stake. This consensus algorithmic form enables stakeholders to mine blocks off the chain and receive a reward in the form of newly created tokens. The idea is to incentivize miners and reward them for building a digital economy that they are passionate about.
In addition, this decentralization still allows miners to collect fees related to transactions, ensuring that large decentralised networks can sustain themselves without the need for external centralised systems.
In order to maintain a truly decentralized Bitcoin blockchain, stakeholders must adopt a strategy that will balance the resources available and ensure that miners maintain control over the block space. This strategy must also take into account the financial interests of users, miners, businesses and other stakeholders.
Ultimately, the decentralization of block space is essential for the success of the Bitcoin and subsequent blockchain networks, and must be priority to ensure maximum scalability. Doing so will allow us to continue to create a new global economy, as well as strengthen the underlying fundamentals of the technology.