Lord of the Blockchain. Who is he?

If you think that the Bitcoin network is at the mercy of miners, you are wrong. If you think that it is at the mercy of developers or users, you are also wrong.

We will look at these groups in three aspects: (1) what function the group performs in the community, (2) what threat can representatives of one group pose to other groups, (3) what mechanisms are there to suppress this threat.

1. Miners

Miners are people and groups of people who use the computing power of their devices to add new blocks to their blockchains, confirm new transactions, and put new coins into circulation. When Satoshi Nakamoto first created Bitcoin, only he and a couple of others were mining the cryptocurrency; now there are entire plantations of computers working on this task.

Functions of miners:

Bitcoin mining helps the blockchain remain decentralized and secure. By confirming transactions and thereby preventing a possible takeover of the network, miners perform the work that ensures Bitcoin can be used as a store of value. 

The threat of miners:

The problem is that there are too many cryptocurrencies, and miners can choose any of them. And if enough of them decide to switch from mining Bitcoin to another cryptocurrency - which, for example, would be more financially profitable to mine - this could have a negative impact on Bitcoin. In this case, transactions will take longer to be added to the blockchain and will take longer to be confirmed, and this will lead to BTC becoming simply useless. 

In practice, other cryptocurrencies (for example Ethereum) have a different hashing algorithm, so users who mine Bitcoin using ASIC cannot easily and quickly switch to mining another cryptocurrency. This is because ASIC miners are designed to mine on one specific hashing algorithm, and this allows them to achieve more power.

Despite this, some cryptocurrencies - such as Bitcoin Cash - have the same algorithm, so miners can choose which cryptocurrency to mine depending on the profitability at the moment. This is one of the reasons the war between the Bitcoin and Bitcoin Cash communities - they constantly take miners’ resources from each other. 

How is this threat suppressed?

What keeps and attracts miners to the Bitcoin network? For the most part, users.. 

Miners are looking for profit, and their profit depends on four factors:

- reward for mining a block

- difficulty of obtaining reward

- cost of mining rigs

- volume of transactions on the blockchain

In the long term, the key point here is the volume of transactions: the more people use the cryptocurrency, the more its value (and, accordingly, the price) will increase. This means that miner fees and block rewards will also increase. 

Bitcoin's transaction volume is many times larger than Bitcoin Cash's, so miners are unlikely to switch to another cryptocurrency. Bitcoin currently has ~50% market share, so miners will still be protecting its blockchain for the foreseeable future. 

2. Developers

Developers are working to improve the efficiency and functionality of the blockchain protocol. Because Bitcoin is open source, many people can contribute to its ecosystem. 

Developer Features:

You don't know as much about Bitcoin developers as you know about Ethereum developers because they don't create fancy and varied decentralized applications, but work to improve the storage and transmission functionality of the Bitcoin protocol funds. 

Bitcoin developers are focused on improving every aspect of the network: its security, transaction speed, scalability, etc. For example, one of the well-known projects Bitcoin Lightning Network helps to reduce the cost and speed up transactions on the blockchain. Such projects help to constantly improve the quality of the ecosystem (thus attracting more and more people).

Threat from developers:

The threat to the very existence of the Bitcoin ecosystem is that developers can create their projects on new, proprietary blockchains, rather than developing them on the Bitcoin blockchain. Why did Vitalik Buterin and other Ethereum developers decide to create their own blockchain rather than work on the Bitcoin blockchain? Among many other answers, there is one very simple one: it is much more profitable to launch your own cryptocurrency than to create the same project on Bitcoin.. 

Of course, creating and promoting a new crypto project is very difficult, but if it works, the developer can hit a huge jackpot.

Ethereum originally cost about $3, now it costs $420 (140 times more)

Litecoin originally cost about $4, now it costs $77 (19 times more)

XRP originally cost $0.0046, now it costs $0.43 (93 times more)

When a developer builds an application on a ready-made blockchain, it is incredibly difficult for him to make such a colossal profit. On the other hand, you can take a risk - create your own project and attract new people to it.

How this threat is suppressed

It is important to note that this threat to the network is unlikely to ever be eliminated. Many developers create their own projects or start working on other blockchains. If the cryptocurrency market divides too much in the early stages, it risks not surviving to the point of general adoption. 

As we discussed with miners, much of the success of cryptocurrencies depends on reaching a critical mass of users who will actually use them. Projects like Bitcoin are proof that blockchain is a single, competitive concept, rather than a fragmented system of many different schemes. Bitcoin's positive image helps attract people, and that image crumbles when projects continue to split off from its blockchain.

3. Users

In the end, Bitcoin was created for them to use it. 

User Functions:

The presence of people who actually use Bitcoin as a store of value and to buy and sell things is a necessary part of this system. Without them, the blockchain has its potential, but loses all value.

This is why the general adoption of the blockchain is so important - it is what turns it from gaming digital money into real assets. In 2010, even though Bitcoin had virtually the same infrastructure as today, it was virtually impossible for a user to spend it. Many people know the story that two early Bitcoin enthusiasts bought two pizzas from Papa John's for 10,000 BTC (currently approximately $75,379,200 USD)... Bitcoin is now more valuable as many people have realized its potential and accepted it as a means of payment. However, it is unfortunately too early to compare Bitcoin with cash or gold. 

Threats from users:

It is a well-known fact that Bitcoin gains momentum when people believe in it, but loses value immediately when doubts begin. The main threat to the Bitcoin ecosystem is that people might simply stop using it. There are many factors that can encourage this behavior:

-People may stop believing that Bitcoin offers something better than fiat or precious metals

-Governments may decide to crack down on digital currencies like Bitcoin

-Users may simply trade Bitcoin for another project

How this threat is suppressed:

There are two pillars that the entire cryptocurrency community relies on to suppressing this threat:

-education

-simple user interface

If we talk about Bitcoin only as a “distributed ledger”, or its “off-chain capabilities”, then no one who does not already know about Bitcoin, won't be the least bit interested. People need to explain in simple and understandable language why Bitcoin is valuable. This is the only way to expand its audience. This is about education.

When a person decides to enter the Bitcoin ecosystem, he should not experience any inconvenience, everything should be intuitive from start to finish. Even if a person understands the value of Bitcoin, he most likely will not use it if he is overwhelmed by all the technical details. This is about the user interface.

What needs to be understood is that Bitcoin always maintains balance - no one group has total power over another. And in order to win in the long term, Bitcoin needs people to understand why they need it, and to be able to use it without any complications.