Bitcoin Less Decentralized Than Ethereum: Seven Points by Community

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As a seasoned analyst with over two decades of experience in the financial industry, I have witnessed numerous transformations and evolutions within the digital asset landscape. In late 2024, my perspective regarding Bitcoin (BTC) and Ethereum (ETH) has significantly shifted due to their respective approaches towards decentralization.

Bitcoin (BTC), the pioneer of cryptocurrencies, appears to be faltering in its quest for true decentralization. The lack of client diversity, the dominance of KYC’d mining pools, and the inherent centralizing nature of Bitcoin’s PoW mechanism are all red flags that point towards a potential loss of this battle. It’s reminiscent of a once-great empire that has become too top-heavy to maintain its sovereignty.

On the other hand, Ethereum (ETH) seems to be thriving in its decentralization efforts. With a diverse ecosystem, strong anti-centralization incentives, and a robust “social layer,” Ethereum is proving itself as a more adaptable and resilient contender. It’s like comparing a flexible, agile start-up to a traditional corporation – the former has the upper hand in today’s fast-paced world.

However, I must mention that the price performance of ETH against BTC is still a point of contention for many. But as an old saying goes, “Rome wasn’t built in a day,” and neither will Ethereum’s dominance be established overnight. In the end, it’s all about staying patient and keeping an open mind.

To wrap things up, I can’t help but make a light-hearted observation: Bitcoin (BTC) may be struggling to maintain its decentralization, but at least it still has that “digital gold” narrative going for it. Ethereum (ETH), on the other hand, is like a Swiss Army knife – versatile, adaptable, and always ready for action. So who knows, perhaps one day we’ll say that Bitcoin was the digital gold of yesterday, while Ethereum is the digital swiss army knife of tomorrow.

Bitcoin (BTC), the leading cryptocurrency, struggles with significant challenges in maintaining its decentralized nature, including limited client diversity, weak “social layer” storyline, departures of Bitcoin Core developers, and insufficient censorship-resistance. Conversely, Ethereum (ETH) has demonstrated a robust level of decentralization that Anthony Sassano, investor and advisor, commends as battle-tested.

Bitcoin (BTC) less decentralized than Ethereum (ETH): Opinion

In the latter half of 2024, Bitcoin (BTC) appears less decentralized compared to Ethereum (ETH), according to long-time Ethereum advocate Anthony Sassano, who presents seven key observations that suggest Bitcoin is losing its decentralization fight against the second cryptocurrency.

As a long-time cryptocurrency enthusiast and investor, I’ve noticed some key differences between Bitcoin and Ethereum that make me believe that Ethereum is more decentralized than Bitcoin.

Firstly, the lack of client diversity in Bitcoin means that Bitcoin Core effectively serves as the protocol specification, making it easier for a centralized entity to potentially manipulate the system. In contrast, Ethereum has multiple clients, which allows for greater decentralization and less control by any one entity.

Secondly, the dominance of two KYC’d mining pools in the U.S. as the largest mining pools raises concerns about centralization in Bitcoin. This is not an issue with Ethereum, where there are many more smaller mining pools and individuals participating in the network.

Thirdly, the Proof of Work (PoW) consensus mechanism inherently centralizes over time due to economies of scale, as larger miners have the resources to invest in more advanced equipment and cheaper electricity. This is a problem that Ethereum is addressing by transitioning to Proof of Stake (PoS), which will eliminate the need for mining and make the network more decentralized.

Lastly, it’s nearly impossible for an individual to mine Bitcoin profitably today due to the high cost of electricity and specialized equipment required. This means that the network is effectively controlled by large mining pools, which can potentially be centralized entities. In contrast, Ethereum still allows for individuals to mine and participate in the network, contributing to its decentralization.

Overall, I believe that Bitcoin’s lack of client diversity, concentration of mining power in a few pools, reliance on PoW, and difficulty for individuals to participate make it less decentralized than Ethereum.

— sassal.eth/acc 🦇🔊 (@sassal0x) December 30, 2024

Initially, it’s worth noting that Bitcoin Core is currently the primary software choice for running full Bitcoin (BTC) nodes, as there are no other prominent alternatives in the mainstream. Moreover, two significant mining pools, Foundry and AntPool, enforce Know Your Customer (KYC) procedures on their participants, which could potentially lead to a centralization issue.

For a considerable period, it hasn’t been profitable to mine Bitcoin (BTC) at home due to the expenses outweighing the returns. Over time, the proof-of-work mechanism used by Bitcoin (BTC) is leading to an increase in its centralization.

Within the next 8-12 years, it’s expected that Bitcoin (BTC) will become more vulnerable to attacks due to a decrease in its security resources.

Previously mentioned by U.Today, analyst Justin Bons predicts that Bitcoin’s (BTC) security budget may reach critically low levels between the years 2028 and 2032.

According to Sassano, the number of active Bitcoin Core developers has dropped significantly, potentially increasing the risk of further centralization.

ETH/BTC targeting lows yet again

To sum up, it’s worth mentioning that Bitcoin (BTC) has faced criticism due to its lack of a robust social infrastructure. So far, the primary long-term storyline surrounding it is that of digital gold.

On the other hand, Ethereum (ETH) stood firm against censorship, introduced robust anti-centralization incentives and has over 170 developers supporting its ecosystem. Moreover, according to Sassano, the “tail issuance” of Ether’s tokenomics appears more sustainable.

Moreover, the fractured societal structure within Ethereum (ETH) serves as a venue for open discourse, contributing to its adaptability and variety, the orator summarized.

During this period, Ethereum (ETH) has faced criticism for its relatively poor price comparison with Bitcoin (BTC). On November 21st, it reached a multi-year minimum at approximately 0.032 BTC per ETH, but managed to bounce back slightly to around 0.04 BTC per ETH.

By press time, ETH/BTC is sitting at 0.036.

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2024-12-30 18:51