Nowadays, it is estimated that are approximately 5.8 million users that own a cryptocurrency wallet. The most popular cryptocurrency, however, is still Bitcoin. Its value has exceeded $60,000, and that triggered a lot of BTC investments by institutional investors and companies like PayPal, Tesla, MasterCard, and many others.
But what makes this cryptocurrency fully decentralized, which comes with its own set of advantages, is a transparent and democratized process of decision-making. And that makes us wonder how the decisions are made in the network. Here we provide an overview of the blockchain network and the governance structure of Bitcoin.
Decentralized Blockchain Technology
Blockchain technology is a distributed ledger where the transactions are recorded, duplicated across a collection of computer systems around the world. Because this is a decentralized system, the information is shared among every participant in the network, and it’s also viewable to everyone.
When it comes to the identity of the users, they remain anonymous and are not linked with their real identity. Another important feature of the network is that it’s highly secure, while the increased number of nodes makes the network tamper-proof.
How it Operates
Because this is a distributed, decentralized ledger, it doesn’t have a central institution that controls the processing of the transactions or the currently available supply of BTC. Instead, the miners, which are the users of the network, work to approve the BTC transactions. When they work on the network, they get a block reward as compensation for their effort.
Another benefit that miners get is that they are the ones that get to vote on changes in the network. As you can tell, the main reason why the blockchain network operates is that the miners are willing to invest time, money in high-end computer equipment and electric energy into mining. This is why they are the ones that get to decide on the future of the blockchain network.
That said, if you aren’t interested in mining, and you still want to invest in BTC, there are many online trading sites where you can obtain Bitcoin. There are even automated trading platforms like bitqs.app where you can start trading as soon as you deposit $250. Another advantage is that it uses AI-driven algorithms that perform both technical and fundamental analysis, while instantly adapting to dynamic market trends. This means that even people that are just starting out in trading can register and earn up to up to 70% daily profits.
The Decision-Making Process
In order for a change to be implemented in the blockchain network, the majority of the miners of the network need to vote in favor of the change. This means that if a group of miners proposes a new solution or new type of blockchain when the majority opposes the decision, it will not be implemented.
This is considered the main advantage of Bitcoin because it supports an entirely democratized process of making decisions, and each of the miners gets a number of votes based on the computational power they add to the blockchain system. On the other hand, centralized occurrences that have been created by an organization are able to quickly adapt to any new changes in the crypto market.
Hard vs. Soft Fork
Basically, a soft fork is a decision that changes the Bitcoin protocol, but it doesn’t affect Bitcoin in another way. This means that the new agreement will be recognized by the old nodes in the blockchain network.
The hard fork happens when the miners vote for a new version of Bitcoin that is completely separate from Bitcoin, and they essentially vote for the creation of another cryptocurrency. One example is the development of Bitcoin Cash which was a result of a hard fork in 2017. It functions separately from Bitcoin, and it has its own sets of rules and governance strategy.