Who controls Bitcoin?

Does anyone at all control the cryptocurrency?

24 May 2019 - 14:24
Who’s in the driving seat?
Who’s in the driving seat?
Image: Supplied/Luno/Shutterstock

The truth is no one controls Bitcoin —it’s  like the internet in this way.

No one owns it. No one has ultimate power over it. No one can take control of it, shut it down, or change it to suit their own purposes. This doesn’t mean those things are impossible, but that no single person or group has the power to do them, making it decentralised.

Bitcoin is often compared to the internet because, like the internet, it’s managed by its surrounding ecosystem, including:

  • users (people who buy, spend, sell, and store Bitcoin);
  • miners (who process transactions, mine new Bitcoin, and keep the network running);
  • developers (who work on improving the network, as its open source); and
  • companies and their shareholders (like Luno, who enable users to access Bitcoin and keep it safe).

One key benefit of decentralised systems is that they have no single point of failure. This doesn’t mean they’re indestructible. However, it means they’re very difficult to attack. It’s like the story of the Hydra — a monster with numerous heads that grows more when they’re cut off.

In addition to this, everyone involved in Bitcoin — users, developers, miners, companies and shareholders — has ‘skin in the game’. This means they’re incentivised to do what’s best for the network. They’re all taking on risk if something goes wrong.

Cryptocurrency businesses want the industry to grow in a healthy way and to encourage wider adoption by making it simpler to use Bitcoin. The more people buy, store, sell and learn about Bitcoin, the more companies  —  and their investors  —  benefit.

Miners profit from the continued growth of the network. Seeing as they take on the most risk by investing a lot of time and money into their equipment, they have a strong incentive to keep it going and are the more influential part of the network.

Developers want to improve and grow Bitcoin. Whether that’s for financial, political and social gain, or because they enjoy the challenge.

Users want the benefits cryptocurrencies provide: security, lower costs, greater transparency, more control of their money, the potential to profit from investing, and more. As soon as you buy Bitcoin you become part of the network. And by the way, you don’t need to buy a whole Bitcoin to get started.

Money is all around us, touching every part of our lives. However, like a fish that doesn’t know it’s in water, we can find it hard to conceptualise anything other than the current system.

Decentralised cryptocurrencies are independent of any sort of centralised control. Bitcoin is largely immune to some of the most serious problems local currencies face.

It doesn’t shut down on bank holidays and leave people without access to vital services. It can’t experience hyperinflation due to badly managed monetary policies (there’s a fixed supply). It can’t suddenly be withdrawn. It can’t be seized from your account to bail out failing institutions (known as a bail-in.) It can’t be taken away by international sanctions. And it can’t be truly banned or censored.

The way we think about and use money is changing, and the option of a decentralised global currency that belongs to everyone is a big part of that.

Bitcoin belongs to you as much as it belongs to anyone else.

Want to learn more? Read Luno's Bitcoin education series here.

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This article was paid for by Luno.