How decentralized cryptocurrency?


2019-03-06 17:45:16




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How decentralized cryptocurrency?

Recently, at the conference Financial Cryptography Igor Artamonov made a presentation on the role of decentralization in the public blockchain. After that, he wanted to better reveal their thoughts and position, and we will give them to you in a series of articles.

If we consider the decentralization on a scale from 0 to 100 percent where 100 is fully decentralized blockchain, according to Artamonov, the average for the top ten of the block chain is less than 50 or even less than 25 percent.

Most of the projects in the leading ten not even trying to be decentralized. A centralized blockchain is currently in the lead in the trend, because it is more efficient for most use cases and simpler for market competition, so most of these blockchains excellent feel and centralization.

If we talk only about the Protocol, peer-to-peer network, in most cases, we have a decentralized network. That's where people usually stop to think about decentralization.

However, because the blockchain is the financial part — the cryptocurrency is not just the underlying communications Protocol. The infrastructure consists of many parts, and some of these parts are centralized or tend to centralization. I'm talking about it, about politics blockchain projects, and the centralization of control over the infrastructure.


Decentralization Ethereum

I would highlight the following factors affecting centralization:

  • PreMain, Fund, Treasury, payments and other internal accumulation of capital;
  • the
  • official team leader.

There are several external factors that can have sufficient political weight.

  • whales;
  • the
  • pools;
  • the
  • concentration of nodes.

PreMain, the Fund and other concentrations of Finance

PreMain itself is not a big problem, initially the developer can do what he wants, maybe mined a little for yourself and later be spent on development or on other things. I don't know how Satoshi is planning to spend your PreMain, but fortunately, he did not establish a separate regulatory body like the Fund. Because the Fund on the blockchain tends to be a concentration of power.

Everyone expects that the Fund will develop, looking for sponsors and decision-making. Other companies not financed by the Fund, are in a disadvantageous position, so I prefer not to participate in the development.

As a result, all become dependent on Fund and he decides what will be the right path for everyone. For example, the Fund decides which fork in the case section of the community is correct. As it happened during the split /ETH.

Official team and code

In a perfect world we would have several separate teams working on decentralized Protocol. The Protocol, which is essentially a specification will be written once and remain untouched after. Like most other Internet protocols.

We have not yet reached a maturity in the technology of the blockchain, therefore, the team has a significant advantage and a strong position. They can use their position to dictate the rules, to accept or reject the proposal. If we have several independent teams or developers, they can argue on possible improvements. And the argument is good, we need discussion. It would be bad if everyone agreed with the individual, official and team official code.

The following is the code of Parity — this is an unofficial client:

In this case, the informal code of the client was forced to comply with code written for the official client, although it was not justified by the specification. It's just a decision made by an official team, with which everyone had to agree.


He just makes a decision for the entire network and all external parties.

But a far greater problem is that nobody argues with the leader.

External factors

External factors are more complex in nature, and we don't have many examples to understand all the possible scenarios. But some of them have already shown themselves.


Most people will assume that the whales are manipulating the price, but only one manipulation of the price of this toy war. In fact, the whale can dramatically change the development path of the project.

The First example we saw, when there was a fork of BTC which subsequently led to the fork BCH/. They were all led by groups of whales, which had disagreements with the "core team", with the result that they carried out the fork. Having sufficient capital, the fork becomes more or less successful fork .

Currently we are seeing the same thing in ETC, although whales were smarter and advance took the community under control to avoid a split.


A Possible 51% attack always looming threat. But pools can also sabotage or sasamat network. This is possible because like they are worth nothing, and they are in fact paying the Commission themselves.

It happened during a dispute on block size, which led to the division of BCH/BTC. There was some evidence that the top miners spammed the network to fill in the blocks and lead to higher commissions. It was used as an argument for increasing the block size, and very successfully.

Currently, there are four BTC pool that controls 50 per cent Hasrat, pool and three from ETH, who control more than 50 percent of the network. The majority of other blockchains can also boast three pools, andI think that's the minimum acceptable number.

Concentration of nodes

In a perfect world, each user will have their own full node (node). Unfortunately, this does not work because a full node requires additional knowledge and resource-intensive software, so people typically rely on third-party node.

For some blockchains like Ethereum, it is a big problem with the growth of the blockchain. Even businesses such as small exchanges rely entirely on Central providers like Infura. They can't afford to run a full node on your server, here's how.

Even worse is the situation with the block chain Ripple and EOS that require up to 10 TB and 4 TB of disk space for a full node. This leads to centralization.

Central provider in this case, it determines which fork is correct, which transaction is received and so on. This also applies to split and ETC/ETH, where Infura supported only on one side.



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