Between the inception of the cryptocurrency in 2009 and when bitcoin reached the price of $1 in 2011, only a small community of less than 100 people maintained the blockchain. A lack of miners that could have been fatal for the project.
Bitcoin is now a must-have term. The world’s best-known cryptocurrency, officially recognized as a currency in El Salvador and the Central African Republic, trades at nearly $30,000 and its blockchain is maintained by a large network of individuals and businesses. But it still has not been so.
In the early days of cryptocurrency, in 2009, only a very small community of enthusiasts took care of maintaining the blockchain and mining the first bitcoins. Previous calculations estimated this group to be around 75,000 people, but a new study shows that only 64 people were really actively involved in the early days of bitcoin.
A very small community
The study is signed by a group of American researchers from Rice University and Baylor College of Medicine, and was published by Cornell University on June 6, 2022. Titled “ co-operation within an anonymous group helped protect bitcoin as decentralization struggled “, the study looks back on the first years of life of the crypto-currency.
The researchers studied transactions made between January 2009, when it was launched, and February 2011, when bitcoin first reached the price of one dollar. And they discovered that during those first two years, “ the majority of bitcoin was mined by just 64 agents — a number nearly a thousand times lower than previously believed. In all, 2,676,800 bitcoins were mined during this period – which today represents the sum of 76 billion dollars.
This very low number of miners was not a good signal for the health of the blockchain — and was even very dangerous for the future of bitcoin. Mining is the act that allows the creation of crypto-currency units while validating information on the blockchain: it is a very important operation, at the heart of the crypto-currency system. It is also the one that guarantees the inviolability of the blockchain: the more people try to become validators, the harder the calculations to be solved, and the less chance there is that a malicious actor will manage to falsify information or transactions.
Few miners = less security
However, during these first two years, the small number of people involved in the bitcoin project would have made it possible to falsify the data of the blockchain, and would have made it possible to trigger “ 51% attack “, write the authors. As few miners were active, on many occasions a single actor controlled the majority of the hashrate (or computing capacity) of the network. During those times, that miner could have spent the same bitcoin twice or stolen other users’ bitcoins.
” Surprisingly, we realized that potential hackers always chose to cooperate “, write the authors. The first miners always chose to act in a ” altruistic and maintaining the integrity of the system — and that’s what kept the bitcoin experiment going.
The study also highlights another fact: bitcoin has always had problems with decentralization and the situation is not much different today. A study published in December 2021 showed that 10% of miners controlled 90% of mining capacity, and that only the 50 largest miners had 50% of global mining capacity. This problem is reflected in the ownership of bitcoins: 0.01% of owners own a quarter of all bitcoins. Decentralization is not quite there yet.