When Satoshi Nakamoto decided to introduce the world to a new medium of transacting money, called cryptocurrency, he had one motivation; decentralisation. This is mostly captured in statements similar to this “a monetary system that doesn’t need any central authority like a government to oversee it”. That said, one would deduce that any mention of something close to centralising cryptocurrencies is a big slap in the face to the hard fought and established vision of Satoshi.
But is this really what we are seeing now. Many enthusiasts of cryptocurrencies have over that years been divided over a rather unnecessary debate of “totally decentralised” cryptos and the partially “centralised” ones which do not portray the true vison of cryptocurrencies. But do their arguments even have a stand at all, or are they both deceived?
An Expert’s Discovery
Cornell University expert in cryptocurrencies, Emin Gün Sirer, says that for a larger percentage of the time these arguments do not hold sway. All because no one has really taken the effort to analyse just how really “decentralised” cryptocurrencies are said to be.
Emin Gürer says that they do not have “any real metrics yet”. He and his team of researchers have been conducting a two-year-long study on Ethereum (ETH) and Bitcoin (BTC), two of the most popular digital currencies (if not the most). Emin says that the results of their study will soon provide them with vivid figures which will at least do away with the estimates they have presently.
What Emin’s team discovered was that the mining of both cryptocurrencies i.e. the process of verifying any transaction and safeguarding it from external cyber attacks , isn’t decentralized in either cryptocurrencies as most people think.
A Breakdown Of The Study
By principle , anyone at all can mine bitcoin and Ethereum (should he have the prerequisite hardware) due to the fact that they are open blockchain systems. Interestingly, many organizations have formed for the purpose of pooling these mining resources. Emin’s study team found that more than 53% of the mining of bitcoin was done by the “top four” bitcoin mining operations. For Ethereum, things were also a lot more coalesced and not so pleasant. 61 percent of Ethereum mining on a weekly basis was done by just 3 miners.
Another 56 percent of all the computers that run bitcoin’s software were located in specific data centres as compared to 28 percent of that of Ethereum. Emin then concluded that bitcoin was even run a lot more as a corporate entity than most people thought. This could also lead to further deducing that these cryptocurrencies aren’t really decentralised and may never even be at all. Sorry Satoshi.
Is Cryptocurrency Decentralised Or Not
Well, the numbers speak for themselves, the most popular cryptocurrencies aren’t as decentralised as you ever thought. But you also cannot use just the figures for Bitcoin and Ethereum as a yardstick to measure how decentralised cryptocurrencies are in general. First of all, because thousands of cryptocurrencies have sprung up and secondly because a great lot of them work much differently than either Ethereum or Bitcoin for instance in terms of the use of blockchain technology or mining. More so, the idea of decentralisation captures a much broader sense than most people even know, spaning from very technical to even social problems. Even how a digital coin is distributed factors into how decentralised it is.
That said, one would wonder why he or she may have to bother about just how decentralised a cryptocurrency or cryptocurrencies are. But if you are one who has any interest in the future of cryptocurrencies and why you should pick them as an investment option over conventional stocks like gold, then you would need to know things like this. Mainly because, one big thing the sellers of this cryptocurrency technology tell us is that it is decentralised. Thus, as any good investor, knowing things like this will definitely help you on making the right investment decision.
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