Is Bitcoin decentralized?
The terms decentralized and decentralization are often used, but many people don’t really know what they mean. The real question is why would you want decentralization in the first place? This is a question that a lot of altcoiners don’t even ask, because "decentralization" has become a cool buzzword.
Most of the time, it’s better to centralize. It’s faster, cheaper, and gives you a better user experience and better customer service. Only in a few situations does decentralization make sense. If you don’t want to be banned or censored by a central entity, decentralization might make sense. For example, if you don’t want to trust PayPal, which is a centralized entity, and you don’t want to be subject to its possible censorship, decentralization might make sense. One reason you might like it better than centralization is that it makes it hard to censor. As we’ve said, PayPal, which is a centralized service, can ban or censor you at any time.
At that point, you’ll want Bitcoin, and your main concern won’t be how much it costs, but whether anyone can get it’s hands on it.
The U.S. government lowers the value of the savings of millions of people who keep their money in US dollars. This is because the price and supply of US dollars are controlled by a small group of people, which is the opposite of decentralization.
These are the two main uses I can think of for decentralization: to prevent censorship and to create scarcity.
There are copies of the Bitcoin blockchain all over the world, probably in every country on Earth. The Bitcoin blockchain is just a record of every Bitcoin transaction since 2009, as well as how much unspent Bitcoin is in each Bitcoin address. If a government wanted to destroy Bitcoin, one way to do it would be to delete all records of its transaction history, or wipe out all copies of the blockchain. However, this would be very hard to do. Bitcoiners are obsessed with running their own nodes, and I don’t think any other cryptocurrency has the same culture. For example, most people in Ethereum prefer to trust large corporate nodes run by big companies.
When you compare bitcoiners to Dogecoin holders or xrp holders or or ethereum holders or cardano holders, there’s really no comparison to Bitcoin. If I can get more than 15,000 cardano nodes up and running around the world, will that make it more decentralized than Bitcoin? As we saw, Bitcoin has about 750,000 nodes, which means that First of all, Cardano is a proof of stake protocol. This means that having more coins gives you more control over the protocol. Insiders own a lot of the coins, so they have a lot more control over the protocol than small holders do.
Bitcoin is very different because under proof of work, having more coins doesn’t give you more control over the protocol. This is one of the things that makes proof of work coins so special. Charles Hoskinson and the Cardano team can make changes, and everyone goes along with them because they have a too much coins to be contested. If everyone agrees on the cardano road map, that’s another sign that you might be centralized. In contrast, Bitcoin’s governance is a mess because it really has no one in charge. So, unlike cardano and ethereum, it’s hard to change Bitcoin. This is the key to figuring out how decentralized something is. How hard is it to change the code to change the rules? Is there a small group of insiders who can force changes? If so, it’s not very decentralized and it’s very easy to force changes.
It’s easy for ethereum to force through changes; they do one hard fork after another, and almost everyone goes along with them. On the other hand, it’s very hard to change Bitcoin because there’s no one in charge and no one with a bully pulpit like Hoskinson with Cardano or Vitalik Buterin with Ethereum.
This is why Bitcoin is more decentralized than any other crypto asset in the world. The base layer of money shouldn’t be easy to change. It should be secure, reliable, and change as little as possible so that people can make long-term economic decisions and plan for the future. We know what the future monetary policy of Bitcoin will be until the last Bitcoin is mined in 2040. People need to be able to depend on money and not worry about it. I’m so thankful to Satoshi for making all this possible in the first place.
