Oxford dictionary defines centralize as an act to “concentrate (control of an activity or organization) under a single authority.” Merriam-Webster defines it as an act “to concentrate by placing power and authority in a center or central organization”
Although blockchain, in theory, decentralizes power, it cannot completely stop human greed and craving for power from gaming the system. Pooling, syndication, cartelization are the names of the game. As much as blockchain creators keep making decentralization claims, the tendency to centralize is omnipresent across the board in today’s entire blockchain landscape. Let’s look at the ongoing Ethereum vs EOS war triggered by some bold claims made by a report recently published by Whiteblock, a blockchain testing company based in Los Angeles, claiming that EOS is not even a blockchain, and that EOS is centralized. Although Dan Larimer, the creator of EOS personally did not respond to the Whiteblock report, there have been some rebuttals from EOS supporters, particularly EOS Alliance and HKEOS. Nevertheless, a youtuber posted an earlier interview of Dan on how much EOS is centralized compared to Bitcoin and Ethereum: .
How Centralized Is Bitcoin & Ethereum compared To EOS?
In a network, users send each other digital tokens. A decentralized ledger gathers all the transactions into blocks. These transactions need to be confirmed and blocks immutably recorded in a chain, which is accomplished by special nodes called miners, and the process is called mining. Proof-of-Work (PoW) is the original consensus algorithm used to decentralize a Blockchain network such as Bitcoin and Ethereum. PoW algorithm is used to confirm transactions and produce new blocks to the chain. With PoW, miners compete against each other to complete transactions on the network and get rewarded.
EOS is basically accused of centralization because it uses DPOS (delegated proof of stake) consensus algorithm with only 21 block producers elected by the EOS token holders, instead of PoW mining algorithm. In other words 51% EOS network is controlled by 11 block producers. Ethereum’s PoW mining algorithm portends to decentralize by spreading the block production across all the mining nodes indiscriminately. Although it gives an impression of perfect decentralization, in reality that’s not the case because centralization or syndication happens via network mining pools. According to recent stats, just two bitcoin mining pools control more than 52% bitcoin hashing power. In fact recently one of them gained nearly 42% of the network hashrate.
Similarly, in case of Ethereum, two mining pools control more than 60% hashing power. It’s like dividing the Bitcoin or Ethereum hashing power into two entities for confirming their transactions, versus eleven for EOS transactions. If that’s not centralization what is?
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No matter how much decentralization is inherent in blockchain, human intervention will always work to centralize the power by one or the other means. So will it ever be possible to keep human intervention completely out of blockchain’s consensus algorithm?
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