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If You Think The Decentralized Blockchain Platforms Of Today Are Truly Decentralized, Think Again!

1 17 0
26.07.2021

Bitcoin and Ethereum have witnessed wider adoption than any other cryptocurrency in the market, with Bitcoin’s market cap projecting over $604 billion and Ethereum capping over $234 billion as of writing. A major reason why both Bitcoin and Ethereum have seen mass adoption has been a promise of low-cost and decentralized currency that is independent of governments and any centralized authority.

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However, the reality is quite different. While decentralization is often flaunted by every blockchain, both Bitcoin and Ethereum may not be as decentralized as they claim to have been.

Bitcoin, Ethereum, and any other project based on Proof-of-Work depends on users to use their computing power to prevent double-spending and make Sybil attacks difficult. Given the gigantic computing power, over 102 million terahashes per second harnessed in Bitcoin, users believe that it is highly unlikely for any entity to acquire such power to attack the network.

However, taking a quick look at the distribution of computing power in Bitcoin reveals that the power of mining pools far thwarts the power that individual users dedicate to mining, allowing centralized institutions to effectively control the network. As of today, five mining pools control more than 80% of the hash power in Bitcoin, making it impossible for normal users to run a mining node on their own.

This concentration of hash power is rather dangerous, considering mining and block generation in Bitcoin was initially designed to be decentralized. The emergence and dominance of mining pools has made it increasingly difficult for the average user to contribute to the network. Satoshi Nakamoto initially envisioned the mining process to involve one vote per computer; however, the optimistic vision was later tainted.

By 2012, hardware devices called ASICs built for the specific purpose of mining........

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