Read now to learn how "decentralization" means so much more than what you've been told.
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In the minds of many people, “decentralization” is what sets Bitcoin and the “Crypto” space apart from almost everything else in the world. But the conclusion we came to during last Friday’s discussion was that only Bitcoin is truly decentralized and everything else is “decentralized in name only
That’s probably a surprise to a lot of people. After all, most cryptocurrencies and blockchain projects advertise themselves as decentralized in order to attract users. But calling something “decentralized” doesn’t make it decentralized.
So what is decentralization?
Decentralization Is About More Than Just The Number And Location Of Nodes
When most people think about decentralization, they typically think of it in terms of the number and location of nodes, and nothing else. Even in the Bitcoin space, we talk about the percentage of miners and nodes in different countries around the world. But geographical dispersion is not enough by itself.
For example, global datacenter providers these days have their servers in dozens of countries to ensure their networks are more resilient to system failures that might happen in any one location. But we certainly wouldn’t call a company decentralized just because it has buildings in a lot of different places.
Nor could we necessarily call a blockchain that relies more on people than hardware decentralized just because there are a large number of people participating in the project. For example, if most of the people operating a DAO were employed by one or two companies or organizations, could we really say it’s decentralized enough to resist undue influence from outside manipulation?
Don’t get me wrong. Geographical dispersion and high numbers of nodes are important pieces of Bitcoin’s decentralization, but they’re not all that matters.
Decentralization Is All About Control
Decentralization is all about control, or rather, about the total inability for any one portion of the network to take control of the blockchain. In other words, in order for a blockchain to be truly decentralized, it has to be impossible for anyone to have more power over the blockchain than anyone else.
So what does this look like in practice?
A blockchain on which developers can unilaterally enforce their code changes on everyone else is not decentralized.
A blockchain on which founders retain controlling influence, through pre-mined tokens or foundations for example, is not decentralized.
A blockchain on which users or outsiders can buy a controlling percentage of nodes, whether easily or with difficulty, is not decentralized.
A blockchain on which the majority of nodes run on top of services from the same group of infrastructure providers is not decentralized.
A blockchain that must seek the approval or support of governments and regulators in order to survive is not decentralized.
The reason blockchains that fall into one of those groups aren’t decentralized is because those blockchains aren’t resistant to being taken over or unduly influenced. In short, if someone else can take control of your blockchain of choice, it isn’t decentralized.
Bitcoin Is Truly Decentralized
Using the same qualifiers above, we can begin to understand why a lot of people believe Bitcoin is truly decentralized:
No developer can force their changes into the rest of the network since every node operator can choose what version of the Bitcoin software to run.
The identity of Satoshi Nakamoto, Bitcoin’s creator, is not known, nor is Satoshi around anymore. Plus, since Bitcoin isn’t proof of stake, all the Bitcoin Satoshi supposedly owns can’t be used to govern the blockchain.
Anyone at all can run a Bitcoin node, even off of the most basic types of computing devices. As such, any long-term centralization of Bitcoin nodes is effectively impossible.
Since Bitcoin nodes are so easy to operate, there’s no need to rely on certain infrastructure providers, or even to use them at all if it comes to that.
Governments and regulators have tried their hardest over the years to stop Bitcoin and have failed. Bitcoin can continue to run no matter what governments think or do.
No matter what measuring stick you decide to use, it’s apparent that Bitcoin’s decentralization is in a league of its own.
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