Bitcoin Forum

I’m working on a project, and I need input. I am trying to take every factor associated with Bitcoin/altcoins and rank them by “how decentralized” they are. Bitcoin is the gold standard, but what quantifiable factors make it the most decentralized crypto? I’m looking for 10 (at least).

What makes a project decentralized:
1) Is the creator known? Yes or no
2) how are the coins distributed? (Obviously the less spread out, and fewer large bag holders the better)
3) number of full nodes being run? (The more the better)

Can more technical people help me come up with at least 10 factors? They have to be quantifiable.

You don't need 10 factors for a coin/Bitcoin be decentralized. The creator being known or not doesn't even matter, for example.
What you need is:
1. Decentralized database/ledger for recording the transactions; for example, a blockchain.
2. The nodes being as many as possible and geographically spread as good as possible.
3. No central authority that distribute the coins.
4. This may not be necessary, but it surely helps, is to have the miners / pools also spread or geographically.
5. Something useful is also the way the changes in the code/logic (new clients/nodes) has to be accepted by the majority.

1. Minimum number of miners needed to exceed 50% of total hash rate.
2. Number of countries with the minimum number of miners needed to exceed 50% of total hash rate.
3. Portion of transaction activity by exchanges.
4. Number of payment processors.
5. Number of node implementations.
6. Number of wallet implementations.
7. Number of mining equipment manufacturers.
8. Portion of coins held in custodial wallets.

Actually when traders keep on investing with certain percentage. Then the coin will changed to the decentralized one by the market decided. Another way is by the company who made this one by the node. If they make it centralized, then they can control the price of that coin.

Identity of Bitcoin creator Satoshi Nakamoto is unknown, Bitcoin has done pretty good so far and it is most decentralized project in the world.
There is no office for Bitcoin to raid and arrest stuff, so that is obviously a good thing.

Fair distribution is very important, and there should be no premine or presales we see with so many scams.

More nodes network have it is going to help decentralization especially if they are distributed between many countries of the world.

I'm not sure if I would qualify as a "technical person," but I would add this to the list:

• Is there a reward or some other form of incentive for transaction validators (miners). Incentives lead to increased interest from individuals, which in turn leads to a greater level of decentralization
• Does the network have a governance structure? Is the decision-making process decentralized as well?
• Does the project use open source software?

All great so far. To be clear, once I come up with the most important factors, I plan to use this as a ranking system for all other cryptocurrencies (in comparison to Bitcoin).

So I’m trying to understand what makes something quantifiably “decentralized” so that I can attach a grade to the project.

What other factors?

I think whether the author is known is irrelevant, as long as this person doesn't have a monopoly on decision-making when it comes to further development of the project, and Satoshi doesn't. What matters is whether there's an authority in control of the supply and thus able to regulate the price (and with Bitcoin, there isn't). Then what might matter to some is whether there is a small group of people to hodl the vast majority of coins and can thus manipulate the market (with Bitcoin, it's unclear if there is such a group, but I don't believe there is). Other helpful questions to think about: are people in control of most coins also in control of validating transactions and making new coins (they're not with Bitcoin)? Is mining largely monopolized (it's, unfortunately, a yes with Bitcoin).

I understand all the other but there are two points that caught my attention.

I am not sure but how does that matter ? How does it contribute towards decentralization.

Shouldn't it be any wallet and not specifically a custodial wallet ?
If majority portion of coins are held in any wallet then the coin would be less decentralized in my opinion.

Simple way to understand decentralization:

Understanding Decentralization.
https://bitcointalk.org/index.php?topic=5249300.msg54453340#msg5445334

If a project fails to meet the criteria don't consider it decentralized.
A single person could run millions of nodes

More transaction activity by exchanges indicates more control over the economy by exchanges.


Not your keys, not your coins. Custodians, like mining pools, concentrate control of the coins into fewer entities..

I guesses other users already gave you the rest 10 factors that you were looking for. To answer your question:
1. Creator making himself unknown truly did took the most "decentralized" decision. The creator knew that if his identity was known, people would start "following" him. Which means he would have a great influence on the system. If he had any influence, would it be decentralized anymore? Nope.

2. The more spread out it is, the better. If a small group hold majority of the coins, they can manipulate the market with ease.

3. Correct, more nodes, more decentralized.

I try not to adress stuff already mentioned:

1) Software distribution. If Bitcoins Code would be proprietary, it could not be decentral. Open Source is a key part of becoming truly decentral.

2) Userbase. I don't mean Miners or Nodes, I speak of normal pleb Users. If Bitcoin is only used by Miners, Nodes & Traders it is centralised in a certain way.

3) Amount of Developers and how they get paid, maybe?

....the good stuff is already taken / posted :P

These 3 points are not that easy.
1) The identity of the creator is not important at all, what matters is if the creator has any control over the network. For example in a PoS does the creator own a lot of coins that he premined? Or does he have the power to change the blockchain and force a roll-back?

2) The distribution is not important, how the coins were distributed is. For example even if 1 person owned 100% of bitcoin circulating supply it still wouldn't change decentralization of bitcoin as long as that 1 person had bought or mined all coins just like anybody else could. What makes the distribution bad is the way the supply gets distributed for example when the dev premines their coin and out of thin air comes into possession of millions of his own coin. Or coins that give you reward for doing nothing except owning that coin!

3) Number of nodes is important as long as they are run by individuals (1 per person) instead of some company (like the shitcoin foundation) running a large number of nodes to create the illusion of a big network.

Bitcoin is not distributed by one source. Its nodes are spread across in a diversified manner and it does not have a centralized authority or a database.

there is a difference between the decentralisation of the archive data. and decentralisation of the rule control

the decentralistion of the rules is not reliant on 'user' fullnodes
the main controllers (byzantine generals) are the merchants and pools, but ends up leaning more to the merchants

pools cant spend value if merchants accept new block/transaction formats and reject old formats
(NYA2017: "merchants reject old block(not flagging new flag) in 2 weeks, meaning pools need to upgrade flag")
NYA was a byzantine general coercion on pools

yep no point making blocks or transactions if the merchant/exchange group have colluded to accept/reject their non-preference blocks/transactions. as all trade ends up revolving around merchant gateways in and out of fiat

post activation
user fullnodes had to upgrade to remain fullnodes of full verification. else be downgraded to 'bridged'/'downstreeam'/'incomplete' nodes.. receiving stripped blocks that 'pass' validation without doing full validation

add it,

4. can be in the flower of everyone

5. Communities are located all over the world, and get full support from bitcoin.