Bitcoin Forum

Ethereum founder Vitalik Buterin wrote an medium (https://medium.com/@VitalikButerin/the-meaning-of-decentralization-a0c92b76a274) trying to explain the concept of "decentralization".

He discussed in three dimensions from the perspective of software. And this three-dimensional dimension is also three rulers for judging whether a thing is "decentralized":


This is an article written by vitalik in 2017. I went to the field of cryptocurrency in half a year and began to gradually understand what is decentralization, what is anonymity, and what is a hash function. Bitcoin is indeed a magical thing and There are still many areas worth exploring.

Of course, as usual. I searched the keyword “Three types of Decentralization” in the bitcoin Discussion section to make sure that no one has sent the same content before.

Okay, then I will discuss the degree of decentralization of Bitcoin from the above 3 aspects（I only discuss the first two points, I am currently unable to discuss the third point）.

• Architectural (de)centralization — the right of accounting is scattered on several nodes in the Bitcoin network, rather than relying on certain centralized servers. Less than 51% of node failures will still not affect the operation of the Bitcoin system.

When Satoshi  designed Bitcoin, his initial assumption was that 1 CPU and 1 computing power. Everyone can participate in mining as long as they have a computer. Satoshi Nakamoto used his computer to mine the genesis block of Bitcoin and received 50 btc rewards. But as the value of Bitcoin was recognized, starting with 10,000 Bitcoins to exchange for $25 pizza coupons, the price of Bitcoin continued to rise. The market believes that it is profitable, a large amount of new computing power is pouring into Bitcoin mining, and the mining competition has become increasingly fierce.

When the computing power of the entire network is increased to a single node or a small number of nodes cannot obtain block rewards in the Bitcoin network, some people are encouraged to develop a method that can combine a small amount of computing power to jointly operate mining, using this method The connected nodes form a mining pool to keep warm.


It is checked and balanced by the upgrade voting logic of the Bitcoin program. When there is a bug in the Bitcoin program or new features need to be added, the Bitcoin core development group , will propose a solution.
The node is marked by the block header. Voting is conducted, and only miners (mining pools) are able to mark votes at the block header. From here we can draw four conclusions:

1Bitcoin program fixing bugs or modifying the protocol is determined by the Core development team
2Whether the Bitcoin program update takes effect is determined by the mining pool.
3You don’t have the right to vote if you own Bitcoin.
4Core development team and miners can jointly modify the program.

• Political (de)centralization — major changes to the Bitcoin program require nodes to vote before they are allowed to take effect.

Going back to the Bitcoin expansion problem, the mining pool and the Core development team battled wits, and a series of expansion plans were not successfully implemented.
The biggest reason here is that the collaboration between the mining pool and the Core development team cannot reach a consensus, and each is considering its own profit.
But the user who suffers is the user who has no right to participate, only the right to use it.（Of course, ordinary users themselves can also compete for computing power with major mines. but...you know ） A large number of transactions are blocked, transactions have not been confirmed for a long time, and transaction fees have increased.

In my opinion, Bitcoin is not completely decentralized. But it is still the most important step in the decentralization process.

• Logical (de)centralization
  I am not qualified to comment on this, I will comment when I learn more
  

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Sorry, I am not a native English speaker country. Please forgive my grammatical error

What does "completely decentralized" means? What standard do we use to determine the level of decentralization? I think those are key questions that needs to be answered before we can judge anything further.

In addition to this, I think your theory also needs to be explained further. For example, to what extent you can call something "political decentralization" and not architecture? Simply from the number of voters? Doesn't that automatically means the number of computers/rig owned can be used to determine the political aspect of the decentralization? etc.

Vitalik should care about his coin first, where decentralisation is less good as Bitcoin. Bitcoins decentralisation is superior to ETH decentralisation.

It does not matter if so many Altcoins are even much worse as Ethereum like Shitcoin Binance or Tron. ETH is far better as Binance or Tron but still not comparable to Bitcoin. ETH 2.0 will need to prove his claims. Until ETH 2.0, it's all talk.

Correction: Vitalik wrote something to play with words and justify the centralization of his own shitcoin called Ethereum which is very much centralized.

Or better said, bitcoin's network security has grown tremendously.

Nodes could never "obtain block rewards" the "work" that the hardware performed did. And the way Proof of Work is designed is increasing the required work with the number of users (adoption) hence it requires more specialized hardware.

Misleading.
Core developers are a handful of people, contributors are a lot more. Any contributor can propose a change to bitcoin protocol not just the core devs.

This is misleading too.
What happens is that any change from anyone first has to be proposed publicly and will be discussed among those with technical understanding of how Bitcoin works. Then if the proposal is deemed worthy it would be implemented as code and then the testing starts to find any possible problems with the code or improve it. Again this happen publicly and anyone can contribute.
Finally after enough time has passed and the proposal is well tested and accepted by "experts" it will be merged into reference implementation for the public to approve which includes miners voting and node owners upgrading their software to show their support.

Suffice it to say that any proposal can fail in any of the above steps if it is not accepted.

The "user" who has only bought some bitcoins hoping to make some profit and doesn't even understand how the protocol works doesn't get to participate in any of the steps including development or signalling.

There is no relationship between these 3 statements that you posted one after the other.
- A major miner is just an ordinary miner who were willing to take a much bigger risk and make a much bigger investment. It is only fair for those taking bigger risk to have more hashrate.
- We can not have blocks with infinite capacity, there will have to be a cap and as long as there is a cap there will be a fee market and competition over that space.
- Decentralization of bitcoin has nothing to do with any of that.

There isn't any threshold, or any figures which I know could affect Bitcoin's operations given the failure of the nodes. Full nodes mostly operate independently without trust on each other.
Actually, he did state that the network would eventually be sustained by specialized server farms with the average users not running a full node to mine at all. Pools helps to eliminate the sporadic payouts that the miners are otherwise subjected to when solomining.

The discussion is quite public, specifically any major changes. For certain exploits, they are done in a way to plug the exploit but doesn't otherwise influence the network in any way.
The problem with BIP9, as we've experienced before is that the activation is largely dependent on the miners. That isn't the intended effect and which is what resulted in the stalemate for a long time after Segwit begun it's signalling. Afterwhich, there were proposals to enforce UASF, and which wasn't required after all.

We're using BIP9 for Taproot, because there isn't any resistance from the miners. If needed, the community can run a client with LOT=True to force activation.


Miners aren't the ones who decide which changes to the network gets activated or not. The users ultimately decide which rules they should follow. Miners are a crucial part of the ecosystem and having their support with any schemes will benefit the network as a whole. The community doesn't seem to be very supportive of forced activation from the onstart, which is why I believe TR used LOT=False?

Yes, Bitcoin is decentralized as we all know it already because it's a system that is decentralized. The first thing that comes to our mind once we heard the word Bitcoin is decentralized and also cryptocurrency. Due to that, it is decentralized meaning no one can control the cryptocurrency even the government doesn't have any access to the real platform of blockchain.

Yes,If nikamato Satoshi is dead

Governments (and hackers) can make regulations and monitor Bitcoin transactions all they want, that does not really affect the decentralization of the Network. The level of freedom a Bitcoin users has depends on how they chose to use it; if you use a custodian wallet, you've already given up control to a third party, submitting KYC documents also makes it much easier to trace your real identity to a wallet address.

The Bitcoin network is transparent and easy to monitor, but no one can breach your pseudo anonymity unless you let them.

While this is an honest attempt at making sense of the crypto space, especially in terms of decentralization, you will never reach honest conclusions if you start prejudiced by someone else's thoughts.

Bitcoin made it fashionable to talk about "Decentralization". Markets were quick to recognize that this sells and the result is that we have Ethereum and 8000+ other Alt-coins that everyone is buying up and dumping to make fiat profits. Try to understand the context of bitcoin network's decentralization. It is a network to exchange value. Till now in history, there has always been a central entity controlling these "money" networks. From kings, empires to modern day central banks under the influence of politicians and corporates, money is "centralized".

That is where Bitcoin is decentralized. Nobody devalues it in the name of fiscal/ monetary stimulus. Nobody makes it less valuable for you by simply changing tax rates. It is capped and its supply cannot be altered. You are free to join the network and able to join in whatever capacity you can afford, (User wallet, Full verifying node, Small Home miner, Mega Miner farm, huge corporation like Microstrategy/ Tesla).

If you use it to save or transact, nobody can keep you hostage to payback charges or reverse your transactions or freeze your money because they don't like your opinions. Even if they tried their best, they wouldn't be able to do that. This'll be at least several magnitudes harder to do for Bitcoin than any of these other coins.  That, my friend, is decentralization for you.

Now, judge bitcoin and others on these basis and these basis alone. If you let people put shit ideas in your brain like:

1. You cannot vote with Bitcoin (Like in case of DAOs on Ethereum).

2. Decentralization measured with simulations of PoS validator nodes and pretty graphs showing the "analysis".

These two are the typical arguments scammers will give you to make you believe that they are "better" than bitcoin. If you believe them, you are, in the words of degens, NGMI.

This doesn't mean that all those other projects are shit. They have there uses and genuine people working to better things. Yet, the most diligent of ethereum devs you find, won't tell you that they are better than Bitcoin. Only the scammers, youtube/ twitter influencers and newbies who are hoping for their bags to 10X will spout such nonsense.

Relying on an article 4 years ago and someone who believes that POS represents the essence of digital currencies is wrong.
You need to read more articles before you start to get an idea of decentralization and how it works.

Absolute decentralization is not possible, but a reasonable percentage of one person's inability to control the network while requiring a lot of computing power for others is necessary.

You will find a lot of misconceptions about this matter because many projects try to interpret decentralization incorrectly to convince people of the feasibility of investing in their project.

There's hereby another failed attemp on decentralization's wording. As you mentioned in the first paragraph of your post, Vitalik chose to define it that way. One other could have simply said that any network whose computers work autonomously doesn't have a central point of failure and therefore, is decentralized. So asking if Bitcoin is decentralized requires a prior definition we'll have to accept to move that discussion further. To me, centralization seems like a function with difficulty and distribution as parameters. It could put be forwarded like this:



Where x the difficulty (which is fixed) and y the array of the distribution. The num variable can be passed through the function as y. I just wrote the above javascript code, it may not be mathematically proper. I'd really want someone to correct me.

Given an array num of the Bitcoin distribution and a difficulty of 14363025673660, we get centralization = 668.18.
If instead of 4 pools owning the 14.95%, 11.74%, 11.39%, 11.03%, 10.32%, we had one owning the 14.95% + 11.74% + 11.39% + 11.03% + 10.32% = 59.43% of the total computational power offered, we'd get centralization = 65971206.1.

Generally, centralization increases explosively if a pool approaches 0.5.

Can you give me an example of a visioned cryptocurrency that would work completely decentralizedly? Even with Vitalik statements, how would perfect decentralization be like?

He will try to proof that how bitcoin is not decentralized but his own coin Ethereum is more decentralized.  ;)

Forget about all the arguments, tell me one thing from common sense. A currency which is leader less like bitcoin can be more decentralized or the currency which has a founder / Leader (ethereum) is more decentralized ?

You cannot accurate measure the decentralization of Bitcoin or it's pool by taking the distribution of the hashrate at face value. There are a lot of factors to take into account when we're measuring the true decentralization of it. The top few pools are all located within the jurisdiction of PRC, which is known for their iron grip on the companies. Is Bitcoin decentralized if those pools owns a majority of the network's hashrate?  While pools matters less for the miners, as they can switch out to another pool whenever they want, there lies the problem with the fact that miners are often concentrated in certain areas, which coincidentally, is China (though it's starting to change). There is also a lack of perfect information; taking the proportion of the pools isn't a good idea. Anyone can own a few large farms and split them across the pools. While it seems to make it seem more decentralized on the surface, an individual still owns a good proportion of it. Measuring how decentralized a network is by purely looking at the numbers will thus often be misleading.

The nature of PoW encourages centralization. Having loads of resources or reducing your costs will maximize your profits. Either of them will encourage some sort of centralization.

How to define the degree of decentralization or centralization is indeed a crucial matter.

However, it seems not enough to simply use the difficulty (the whole network computing power) and the computing power distribution to form a function.

We can introduce some formulas that have been verified repeatedly，I found a very interesting paper when I was looking up the information, and I will share it with you

Measuring Decentralization in Bitcoin and Ethereum using Multiple Metrics and Granularities  (https://arxiv.org/pdf/2101.10699.pdf)

The end result is that, the degree of decentralization in Bitcoin is higher, while the degree of decentralization in Ethereum is more stable.

The specific conclusion can be viewed in the link,  this is a pdf link and will not increase the number of clicks for this article

By the way, I just briefly looked at the methods and conclusions mentioned in the paper, and it does not represent the author’s point of view.