The Bitcoin network running on the SHA-256d algorithm is no longer protected in the form Satoshi Nakamoto envisioned. A significant portion of the hashrate — the combined computing power of miners — has become concentrated in the hands of a few pools, which undermines the basic principle of decentralization.
The Bitcoin whitepaper establishes a fundamental rule: the network remains secure as long as honest nodes together control more power than any group of attackers. In practice, this balance has been broken. A few pools hold the majority share of the hashrate and already possess the potential to impose their terms on the network — even if they are not yet doing so openly. To illustrate, the situation can be compared to a bank that independently decides where a client is allowed to transfer funds.
Network split and transition to Blake2b
The starting point was BIP-110 — a proposal to temporarily limit arbitrary data that can be written into Bitcoin transactions. Major pools did not support it. At block 961,632 they continued the chain under the old rules, while supporters of the restrictions went along their own branch, which, however, stopped after just two blocks.
At block 961,640 this group permanently switched the mining algorithm from SHA-256d to Blake2b. The concentrated SHA-256d hashrate is no longer capable of mining blocks in the new chain. At the same time, a block size limit of about 300 KB and restrictions on data in transactions were introduced there. Later, a rule was added whereby part of the miners' reward cannot be spent for 45 days. The intent is to cut off mining for quick profit, while the network remains distributed among many small participants.
There is an alternative
The main Bitcoin blockchain continues to operate under the previous rules, and the majority of the hashrate remains in it. At the same time, the main chain is increasingly being called a "walking dead," and its users are predicted to eventually be "thrown under the bus."
The new blockchain on Blake2b is known as XBT — a separate network with its own rules. Its blocks are smaller, and part of the miners' reward is frozen for 45 days. It is not excluded that honest nodes may be able to carry out another fork, meaning the rules of this network may change once again. Supporters of the fork have declared the main Bitcoin network unsafe and proposed XBT as an alternative.
Cryptalist analysis: The concentration of hashrate in a few pools is a structural risk that the market traditionally underestimates until it materializes in the form of a split or transaction censorship. The scenario with the fork to Blake2b demonstrates that dissatisfaction with large pools is already moving from the theoretical plane to the practical one, and this is a volatility factor for the entire segment. Institutional investors should monitor the distribution of hashrate and node activity more closely, since it is precisely these metrics that will determine trust in the network in the medium term.