Bitcoin Decentralization

There are a lot of cryptocurrencies that claim to be decentralized, but they are merely distributed, and there is a big difference. Bitcoin is truly decentralized.

Bitcoin Decentralization

In this post, I will describe what "decentralization" means, in the context of Bitcoin. There are a lot of cryptocurrencies that claim to be decentralized, but they are merely distributed, and there is a big difference.

A distributed system has nodes (computers) around the world, that store data (such as a ledger) and share data with one and other. Bitcoin is a distributed network, as are most cryptocurrencies.

A decentralized system is one with no central authority, no official development team, no individual or group of individuals that can be dragged into court or before a government body and upon which demands can be made. There is no one in control of a decentralized system, and no one essential part upon which the network depends, that can be attacked or subverted. It also means there is no one that can be corrupted. Bitcoin is decentralized in this way, and few, if any, other networks are.

A simple test for whether a cryptocurrency is decentralized: does it have an official website? A team behind it? An official spokesperson? Those are all centralized aspects of the project which can be attacked, undermined, subverted, usurped, siezed, or influenced in some way to affect the project. The network can be as distributed as possible, but if its centralized authorities become corrupted in some way, the network will too.

Anyone is free to run a Bitcoin node by downloading the open-source software. There are several implementations of the software, and numerous versions; users can choose the ones they agree with. This one is the most popular bitcoin node software. Anyone is also free to become an economic node by purchasing mining hardware and running it along with their node. There are numerous manufacturers of mining hardware. Participating in the Bitcoin network in this way is how Bitcoin's decentralized governance happens.