Nearly 14 years after its inception, Bitcoin is still the only decentralized payment system, according to influential Bitcoin advocate, educator and content creator Neil Jacobs.
Writing in Bitcoin Magazine, Jacobs stated that Bitcoin deliberately adheres to an inefficient decentralized system, ensuring that it remains the only true online transaction system without the need for a third-party centralized party. While decentralization is often associated with the cryptocurrency ecosystem, the term is more often used as a buzzword.
According to Jacobs, you only have to look at Ethereum to understand the reasons for the lack of decentralization in the ecosystem.
Ethereum transitioned to a proof-of-stake (PoS) system in September 2022, dominated by 4 entities that control the private keys of most staked Ethereum:
Coinbase Lido Kraken Binance
Furthermore, Jacobs believes that the future supply of Ethereum is unknown because the decision on its issuance schedule is very centralized. He even highlighted the control the Ethereum Foundation applies on the network:
Ethereum Foundation insiders have repeatedly delayed their promised difficulty bomb without a community vote, which has changed the ETH supply issuance. They silently activated dozens of hard forks without notice from the community, which passed unilaterally within hours.
On the other hand, the Bitcoin system, which continues to run an intensive proof-of-work (PoW) system, has more than 14,000 fully-validated archive node operators who find the barriers to entry into the network low. As Jacobs said, running a full node is so cheap that operators can join every day.
Jacobs, who has more than 40,000 followers on Twitter, noted that Bitcoin has always prioritized low-cost node operations, enabling the largest and most decentralized network of people to reach consensus without the need for a third party.
“Fully validating archive nodes ensure that no one reuses bitcoin and its 21 million supply cap persists. Full nodes allow anyone to send and receive bitcoin without trusting any central party.”
Jacob doesn’t mean to say that centralization is bad, but he points out that it offers a lot of advantages and benefits to blockchains:
Speed Storage Capacity Responsiveness Minimized Bureaucracy Fast Bug Fixes Reduced Costs Improved User Interface Responsiveness Opportunities
These are some of the qualities that the Bitcoin network may lose by sticking to its current consensus system. However, adding centralized blockchains loses the scarcity that has made Bitcoin an asset people invest their wealth in and is currently the 14th most valuable asset in the world.
“Decentralization is the only thing that provides trusted scarcity to Bitcoin. All other coins are controlled by an oligopoly or a small group of insiders. They can make — and change — the rules,” Johns said.
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Source of information: Compiled from BITCOINKE by 0x information.The copyright belongs to the author kodzilla, and may not be reproduced without permission
0X Simplified Chinese version:Why Bitcoin is still the only truly decentralized payment system – 14 years later