Nouriel Roubini, a proclaimed critic of the crypto sector, characterized decentralization as a myth, claiming that no system, currency, or protocol can exist in a peer-to-peer ecosystem.
“Decentralization in crypto is a myth. It is a system more centralized than North Korea: miners are centralized, exchanges are centralized, developers are centralized dictators (Buterin is ‘dictator for life’ ) & the Gini inequality coefficient of bitcoin is worse than North Korea,” Roubini said.
Crypto is Decentralized
Crypto is decentralized in every aspect. Miners could theoretically gain dominance over the market but individual miners that fuel mining pools can leave the pools if they disagree with the decision made by the entities.
Developers of major public blockchain networks like Bitcoin and Ethereum rely on nodes and miners to approve and run their software. If the public decides not to run code written by a certain group of developers, it cannot force the ecosystem to adopt it.
As Ethereum co-creator Vitalik Buterin said in July:
“The thing with developers is that we are fairly fungible people. One developer goes down and someone else can keep on developing. If someone puts a gun to my head and tells me to write a hard fork patch, I’ll definitely write the hard fork patch. I’ll write the GitHub issue, I’ll write up the code, I’ll publish it, and I’ll do everything they say. If I do this and publish a hard fork patch to delete a bunch of accounts, how many people will be willing to download the update, install it and switch to that update? This is called decentralization.”
Not every cryptocurrency or public blockchain are completely decentralized and admittedly, there exists several large blockchain protocols that provide a specific group of individuals more authority over the network to engage in important decision-making.
However, the governance system of most public blockchain networks including Ethereum is structured in a way that developers in the open-source developer community can propose solutions, suggestions, and changes to the existing codebase of Ethereum.
In some cases, code written by anonymous developers have been integrated into the blockchain, because miners, nodes, and developers are always incentivized to run the best version of the software that exists in the ecosystem to improve the blockchain.
In response to Roubini’s claim, Buterin explained:
“I don’t think that’s a fair characterization; if you look more deeply at the actual processes of ethereum governance you’ll find that while a technical elite does exist (as in all cryptocurrencies), my own involvement is much less pivotal than it seems from the outside.”
Positive Approach of Buterin
Still, Buterin further emphasized that public blockchain governance systems could be more decentralized through the implementation of multiple client implementations, decentralized exchanges, and proof-of-stake.
Specifically, multiple client implementations enable miners and node operators to vote for the best software that is available in the ecosystem as several developer communities compete to offer the most sophisticated and efficient codebase.
“That said, I agree centralization of developers, exchanges and miners/validators is a problem! Though we are actively implementing multiple routes to mitigate this (eg. multiple client implementations, decentralized exchanges, various protocol features in PoS,” Buterin added.
Featured image from Shutterstock.