Bitcoin and the Myth of Decentralization: Socio-technical Proposals for Restoring Network Integrity

Since 2009, the Bitcoin open-source software project has established a commanding presence in the digital currency space as a self-organizing, distributed system. The project stems from a long history of efforts to harness decentralization and progressive cryptography for social good, as espoused by the ethos of the Cypherpunks mailing list on which Bitcoin was first released. However, certain design choices in Bitcoin's core protocol have led to consolidation of the peer-to-peer nodes, rather than greater diversification, thus threatening system integrity. In this position paper, we explore the socio-technical limits that challenge Bitcoin's ability to remain fully decentralized and "self-contained" as an algorithmically governed system. The need to integrate into existing human systems and infrastructures complicates the project's original vision. We propose hardware, software and electricity management modifications to the broader Bitcoin ecosystem, recognizing the need for socio-inspired design strategies to revive network integrity. We then use Bitcoin as an example to discuss the fundamental limitations of "pure decentralization" and algorithmic self-governance.