Wikipedia and everyone else keeps repeating “decentralized” word in every mention of Bitcoin.
It is not.
Decentralization - Wikipedia
Decentralization is the process of distributing or dispersing functions, powers, people or things away from a central…
>Decentralization is the process of distributing or dispersing functions, powers, people or things away from a central location or authority
Bitcoin was supposed to be decentralized, but it didn’t end up this way. And never will. Proof-of-Work is dead.
I don’t even need words to explain it, just look at the beautiful charts below! (Let’s obviously assume 51% get the power to do something)
- “Centralization” is decentralization with 1 entity being the center
2. Still centralization…
3. Is it… oh no, still centralized (the right one controls more than 50%, i.e. they are being the most important center)
4. Let’s get back to Bitcoin. (hashrate distribution from https://blockchain.info/pools)
Technically, you need to hijack 3–4 entities to control it. Let’s pretend AntPool, BTC.com, ViaBTC, F2pool, BTCtop are non-colluding businesses and not just one entity pretending to be 5 — which I really doubt. GHash failed because they publicly demonstrated owning 51%. Chinese miners are smarter than that ;) Look how nicely the hashrate is divided with no clear leader…
It is still heavily centralized, because decentralization=3 (short of 2%) is just 2 entities away from a single center. But this is the chart that shows _miners_. Miners are physically located in countries. Let’s get back to real world because:
Countries have full authority over physical entities located in them, including miners.
5. Here is the graph of non-China vs China
Now please look back at the 3rd chart. Anything familiar?
Bitcoin, Ethereum, and all Proof-of-Work coins are cen-tra-li-zed. You can quantify it by business entities (3–4) or by countries (1). These are most obvious one, but you can also quantify centers by hosting companies (All use AWS? Centralized), citizenships/physical locations of CEOs and so on. You get the idea.
Either way, it fits into the term centralization. When someone says they are decentralized, point them here.
This is not “bad but we can live with it”. This is game over. Bitcoin is 1000 times slower version of UnionPay — they both work at mercy of China. And I’m somewhat sure UnionPay has better appeal in their eyes..
It’s only security-through-obscurity that keeps it allegedly “decentralized” in eyes of the public.
In case if you’re really that stubborn to repeat the mantra “miners don’t get to set the rules” look into another article that shows how double spending works https://medium.com/@homakov/how-to-destroy-bitcoin-with-51-pocked-guide-for-governments-83d9bdf2ef6b
It’s true that you can’t change the consensus itself — there’s no in-protocol on-chain governance (which I think is stupid, and Tezos/Dfinity/Failsafe will make way more sense and move faster), but it doesn’t matter. As long as you can mine empty blocks, or re-write the history by mining on other branch, you keep the blockchain hostage.
If you say “but they have no profit in hacking it” you miss the whole point of decentralization. You don’t engineer blockchain’s security on does the center profit from exploiting you _now_. Paypal won’t ban your bank account today either — but they certainly can do it later when they need to. That’s why “nothing-at-stake” and “cost-of-attack” are nowhere as important as just number of entities you need to compromise.
And no hard-fork to different PoW alg can save you from that, because you will start with a much weaker hashrate, form square one, back to 2009-level of security.
Only switch to Proof of Stake can, possibly, help.
This is how true decentralization must look like (51 entities to hijack), both for business entities and for countries where they are located. 100 businesses in 100 different countries have much lower chance of colluding than 3 companies under 1 government.