Which blockchain has a higher level of decentralization: Bitcoin or Ethereum?
La decentralization It is one of the bases of blockchain technology since its beginnings. He whitepaper of Bitcoin indicates that it is a currency peer to peer that nor will be controlled by a central power.
This is the basis of decentralization: each change falls on the majority consensus of the blockchain users.
Decentralization prevents personal decisions from being made, which benefit only a few. Every decision, every change that is implemented, aims to improve the network for everyone and make it more efficient.
Although at first, Bitcoin and Ethereum shared the same consensus mechanism, Proof of Work, in September everything changed with the arrival of The Merge.
Ethereum met one of its oldest (and most ambitious) goals and changed its consensus mechanism for a Proof of Stake, based on staking Ether on validating nodes.
From this moment on, a part of the community began to worry about the decentralization of the network, since the nature of Ether staking (32 ETH are required to participate in the validation process)causes retail users to flock to staking pools.
This means that the consensus ends up divided between a few actors, who collect users' Ether to participate in the validation, distributing the rewards proportionally among them.
In fact, according to the Nansen data, Lido Finance is the leading validator with over 30% of all ETH staked (more than the next highest validators which are Coinbase, Kraken and Binance).
For some, this raises an issue about whether Ethereum has lost decentralization with the change in consensus mechanism.
Decentralization: Bitcoin vs Ethereum
In our last episode of Satoshi's Voices, our mates Javier Pastor and Íñigo Gastón, they debated in depth about decentralization in both networks.
For Javier Pastor, Bitcoin is a complete product and, therefore, does not need changes or new developments to fulfill your purpose. However, Ethereum has yet to find new use cases to be completed and is therefore still in development.
Íñigo, on the other hand, points out that Bitcoin meets the most basic use case possible. However, with Ethereum, developers have the ability to build new use cases on a fully decentralized network.
For instance, Ethereum allows the creation of a centralized token on a decentralized network to cover a specific use case.
Javier Pastor, on the other hand, points out that after The Merge Ethereum there could be stopped being totally decentralized.
Bitcoin's Proof of Work prevents a single miner or a single wallet address from retaining large parcels of power. No matter how much Bitcoin or hash rate a mining pool has, always has the same voting power.
However, with Proof of Stake The amount of ETH does influence the validation capacity, which may lead to censorship of certain transactions.
On this topic, Gastón points out that, today, it is really difficult for a 51% attack to be launched on Ethereum. On the one hand, most of the supply circulation is already in the hands of the users, so it would have to be bought and, on the other hand, the current emission is very low.
Moreover, In both networks there is a certain centralization in terms of infrastructure.
In the case of Bitcoin, only a few large cryptocurrency mining companies take up most of the hash rate.
In the case of Ethereum, a large part of the validation nodes are found in infrastructures such as Amazon Web Services or are owned by pools like Lido Finance or exchanges, as is the case of Coinbase and Binance (as we have explained previously).
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